You know there's a free-for-all in the global auto space when Germans are entertaining a three-way deal with Italians and Americans.
Been there, done that.
And it didn't end well -- unless you're Fiat SpA CEO Sergio Marchionne, credited with a $2 billion depantsing of General Motors Corp. earlier this decade. Yet the General is coming back for more in a desperate bid to off-load massive financial obligations to its Adam Opel AG unit, theoretically enabling Fiat to create an automotive Frankenstein from the assets of GM Europe and bankrupt Chrysler LLC.
This pan-European tie-up makes so little sense on so many levels -- a sure-fire recipe for operational chaos, transnational infighting and titanic cultural clashes -- that I'm not sure where to start, no matter how many times Marchionne calls it a "marriage made in heaven."
The GM-Fiat alliance was supposed to be that, until it wasn't. The abortive nine-year Daimler-Chrysler affair was supposed to be one of those, too, but we here in Sad-Sack Town know how that ended up: the debonair European owners caught the last flight out and we got left with no business plan, very little cash and few viable options.
Comes now the Italian suitor with charm and an opportunistic sales pitch but no cash, a sizable debt load and no demonstrated ability to manage the multi-cultural challenges inherent in a would-be Fiat-Chrysler-Opel behemoth. Only those who stand to profit in some way -- Marchionne, investment bankers, President Obama's auto task force or Fiat's controlling Agnelli family, desperate to get out of the volume car business -- could rationalize this combination.
Reading the news accounts from Europe over the weekend strains credulity. A Fiat-Opel deal would enable the companies to "weather" the global economic downturn. The pairing would create a European powerhouse. A Fiat-Opel fusion wouldn't lead to plant closings, just reduced production.
Huh? Hasn't the global automotive recession exposed the fact that there's too much excess plant capacity in much of the developed world, most of it held by the companies in the most distress (Chrysler and GM-Opel)? Aren't the Daimler-Chrysler and Renault-Nissan alliances persuasive counter-arguments to the canard that "synergies" create global automotive powerhouses quickly?
In the case of DaimlerChrysler, a lesson in the folly of these deals, they never materialized. Renault-Nissan, the only tie-up of the past decade worthy of being called a success, took years to deliver commonly engineered vehicles to key markets. And why would GM, however distressed, bargain away a core piece of its global product development expertise to a company controlling a major domestic competitor?
It wouldn't, if it harbored any hope of being a (quasi-) global enterprise on the other side of this workout. GM CEO Fritz Henderson is smart enough to understand the potential peril here, that losing control of Opel would be akin to de-globalizing GM and that alliances succeed or fail as much on cultural fit and execution as they do strategic logic.
Years ago, about the time of the GM-Fiat alliance, a German friend offered this about Italians: "Sie werden die Milch aus dem Kaffee stehlen" -- they'll steal the milk out of the coffee. Monday, I asked another German contact about a potential Opel-Fiat deal. His response:
"Deutsche lieben Italiener, achten sie aber nicht; Italiener achten Deutsche, lieben sie aber nicht." Loosely translated -- Germans love Italians but don't respect them; Italians respect Germans, but don't love them.
The point? Cultural mistrust, however stereotypical, begets resistance, cynicism, even confrontation and a clamor for control. Opel's relationship with its American owners, 70 years on, remains marked by a recurring desire to shirk the yoke of foreign ownership and return Opel to German hands.
Based on what would the Italian control be any different -- a corporate strategy? Not good enough.