Sergio Marchionne, Chairman and CEO of Chrysler Group and CEO of Fiat, addresses the media during the NAIAS on Monday in Detroit. (Todd McInturf / The Detroit News)
Detroit — Sergio Marchionne says the location of a new headquarters for the combined Chrysler and Fiat doesn’t matter.
The global CEO is mistaken — at least here in a town that has defined itself by its indigenous automakers. This is the Motor City, home of the much-less Big Three, the witness to such automotive mendacity as the abortive “merger of equals” and the dual headquarters farce of the failed Daimler-Chrysler union.
“Talking about headquarters is almost an anachronistic term in the way multinational corporations operate today,” Marchionne said this week at the North American International Auto Show. “Power travels,” but Detroit is “especially relevant” in any headquarters consideration because of the outsized role Chrysler Group LLC plays in the combined company.
Headquarters matter. They matter in terms of prestige and bragging rights, whether human and financial capital goes where it is invited and stays where it is wanted, how the concentration of executive talent, technical expertise and philanthropic heft bolsters community leadership.
Or so goes conventional wisdom. Ask the leadership of General Motors Co., circa 2009, whose consideration in the shadow of bankruptcy to consolidate its Renaissance Center brass at its Tech Center in Warren sparked a furious lobbying push by then-Mayor Dave Bing and influential members of the congressional delegation that reached all the way to the Oval Office.
GM would remain, President Barack Obama assured the mayor. And the truth is that the chance to (re)claim the headquarters for Detroit’s No. 3 automaker is not being overlooked by Gov. Rick Snyder or his business recruitment sharpies at the Michigan Economic Development Corp.
In an interview Tuesday, the governor said the headquarters “subject has been broached” by him personally with Marchionne, adding: “We’re very proud of Chrysler’s presence in Michigan. Chrysler has a bright future in Michigan.”
Mike Finney, president of the MEDC, explains: “In general we think that corporate headquarters locations are critically important because it allows us to build relationships with corporate decision-makers. But we also know corporations can be successful without having their corporate headquarters here.”
Translation: The governor and his people are well aware the directors of Fiat SpA are scheduled to consider options on Jan. 29 for a new name of the combined entity, the likely site of its corporate headquarters and the preferred market for listing its shares. Less important is where the merged entity would be incorporated, or whether it would maintain regional headquarters in Auburn Hills and Turin, home to the Italian automaker.
In an interview nearly two years ago, Marchionne said “this machine” of Chrysler’s headquarters off I-75 “is ready to take it any time it wants it. And if I had no constraints, it would already happen because, unfortunately, the only way to deal with the Italian side is to take Mother Goose outside and say, ‘OK, now I’m a foreign investor in this country. Do you believe this?’ That they would understand.”
Times change. Now Fiat is absorbing Chrysler in a deal announced New Year’s Day. Now the single biggest element of the headquarters decision is not where the combined entity’s leadership sleeps most nights (not including the aluminum fuselages of corporate jets), but where the company’s shares would be traded for maximum access to liquid capital markets.
Those requirements favor New York’s Wall Street, Marchionne signaled this week. Meaning the headquarters prize motivating Snyder, his team and others viewing the quest through a distinctly 20th-century prism may not be as sweet as it would’ve been in, say, the heady days of DaimlerChrysler.
It’d be different. Nearly five years into the Italian-American tie-up, fewer than 30 Fiat hands work primarily in Auburn Hills, says Gualberto Ranieri, Chrysler’s chief spokesman. That’s fewer than the Chrysler veterans who run critical pieces of the global enterprise from Turin, including Scott Garberding, head of global purchasing.
The bottom line: Marchionne’s preferred headquarters play is likely to look a lot less like Old Detroit than an exemplar of the “distributive power” he sees in the evolving Chrysler-Fiat. Expect the emerging player to keep small-car expertise in Italy, truck and SUV development in Auburn Hills and top executives managing both geographic regions and key functions from an airplane seat.
Or look to Fiat’s CNH Industrial NV truck and farm equipment for a clue. The company is registered in the Netherlands; corporate headquarters are in the United Kingdom; the CEO and CFO are based near Chicago; the Case brand hails from Racine, Wis., and its New Holland partner comes from New Holland, Pa.
Will the next time be different? Ask Sergio and the Fiat directors poised to make decisions that will not go unnoticed in Detroit.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays