Published: November 03, 2009 11:07 pm      

Chrysler to discuss 5-year strategy

Marchionne at helm of today’s six-hour session

For six hours today, the rubber will meet the road.

Hopefully for the Chrysler Group LLC, where the road and rubber meet, there will not be any potholes waiting to flatten its tires.

Investing no money, this summer Fiat SpA — along with $10 billion in U.S. taxpayers’ money — helped Chrysler emerge from bankruptcy.

While Fiat did not contribute one dime for the acquisition, its share of small-car technology, engineering and diesel technology is valued at $3 billion. Fiat also owns 20 percent of Chrysler and ownership can increase by meeting preset requirements.

The Fiat-Chrysler marriage resulted in the world’s sixth-largest automaker, but because very little has been said about the merger, no one is certain how happy or unhappy the couple is or what the future holds for them.

Today, Chrysler Group CEO Sergio Marchionne — Chrysler’s fourth CEO in three years — will discuss the company’s five-year plan at the company’s Auburn Hills, Mich., headquarters. Scheduled to begin at 8 a.m., the session will be attended by journalists, dealers, analysts and special guests, including Kokomo’s Mayor Greg Goodnight.

Goodnight received a hand-signed invitation from Marchionne.

Consumers were not invited to the event, yet, but that doesn’t mean they won’t want to know what Marchionne has to say, especially when American consumers helped pull the company out of bankruptcy, said one automotive economist.

“A consumer has to be looking at the long term to see if there will really be any real improvement in Chrysler’s cars,” said Howard Wial, an economist who directs the Brookings Metropolitan Economy Initiative. Wial has visited Kokomo to discuss the automotive industry.

“The ultimate survival of Chrysler will be the quality of its cars. Consumers have a big stake in that outcome. Chrysler will have to take steps to address quality problems like Fiat did in Italy.

“Chrysler will have to gain consumer trust and get consumers to trust them. They need to know Chrysler isn’t going anywhere, and it will be there when consumers need them. That is what a big part of their success is going to depend on. There is a reason for hope. Fiat was once known as a mediocre brand. It’s not anymore. That bodes well for Chrysler.

“Ultimately, can this work? Like everything else, we will have to wait and see.”

Although much of what Marchionne will discuss remains wrapped in secrecy, sometime during the six hours, he will have to explain his vision and plan for Chrysler, where the company’s future lies and how long this merger is expected to last.

“I say it can last more than five years, but less than 10. I could be wrong, but no one really knows the truth,” said Jim Hossack, an industry analyst for AutoPacific.com. “Daimler was with Chrysler for 10 years and lost a fortune. Daimler had tremendous resources and was very market savvy and it still could not sell Chrysler.

“Fiat has less strength financially and technically. It is not known for having stellar quality, and it doesn’t know the North American market. Now, they are going to try and save Chrysler. I say this relationship is going to be high risk at best.”

With everything being “kept quiet” since the June 10 bankruptcy emergence, when Marchionne is done today, Shawn Fain, a member of the UAW/Chrysler National Negotiation Committee, hopes to have heard “the heart of the issue: Are we creating jobs that will stimulate the economy? Are we returning workers into the plants and paying them a decent wage so they can buy a car?

“People gave us money to bail us out. They want to see the benefit behind that and that we are not shipping jobs off somewhere else. Everything has been kept quiet and tight-lipped. We haven’t been given any update about what is going on.

“I am as anxious to hear what he has to say as much as anyone else. But my biggest concern is hearing what he has to say about jobs.”

• K.O. Jackson is the Kokomo Tribune’s business writer. He can be reached at 765-854-6739 or via e-mail kirven.jackson@kokomotribune.com



On the agenda:

Although much of what Chrysler Group CEO Sergio Marchionne will discuss today remains wrapped in secrecy, these plans, nonetheless, have been discussed:

• How to repay the taxpayers’ loans.

• Annually building and selling at least 6 million vehicles.

• A new look for minivans.

• Using Fiat’s gas-and-diesel engines in Chrysler and Dodge vehicles. The engines can help the company meet the government’s standard of 35.5 miles per gallon by 2016, which in turn will increase Fiat’s ownership shares in the company.

• Returning Alfa Romeo to the United States. Alfa left the U.S. market in 1995. Chrysler and Alfa may share a Fiat-engineered foundation.

• Introducing three versions of Fiat brand’s 500 to the U.S. by 2012. The 139.6-inch 500 comes in a hatchback, convertible and station wagon. It will have a 1.4-liter gas engine. Analysts predict Fiat will sell about 50,000 cars a year in North America.

At the meeting today, he could address:

• A Chrysler plant adding about 900 temporary workers for its Belvidere, Ill., location while it is offering 23,000 hourly United Auto Workers buyouts. Workers have until Nov. 13 to accept a buyout offer that includes cash, a vehicle voucher and some pension and health-care benefits.

• While General Motors Co. and Ford Motor Co. both reported sales increases in October and during the late summer Cash for Clunkers program, Chrysler’s sales were down during both periods — October’s sales were down 30 percent from last year.

• Re-entering the upscale, luxury car market and splitting Dodge into two brands: Ram truck will be a separate brand, and Dodge cars will be its own entity.