Operations will continue at Chrysler's former World Headquarters in Auburn Hills, but the Pentastar logo will be replaced. (Charles V. Tines / The Detroit News)
Chrysler’s 17-year odyssey is finally over, and Detroit’s No. 3 automaker is 100 percent foreign-owned — again.
Fiat SpA’s total embrace of Chrysler, punctuated Wednesday by a new corporate name and dual share listings in New York and Italy, carries rich symbolism in a town long identified by its hometown auto industry. Most importantly, it means the Auburn Hills-based automaker finally has owners who see real value and cash-generating power in Chrysler’s people, products and brands.
It hasn’t always been that way.
Locals fretting that CEO Sergio Marchionne’s complex recasting of the renamed Fiat Chrysler Automobiles NV is busting up Detroit’s traditional Big Three are forgetting their history. In lamenting yet again the end of an era already gone, they overlook the reality of the global auto industry today and the fact that Chrysler likely would not exist at all but for its rescue five years ago by Fiat at the behest of the U.S. Treasury.
Start with three undeniable facts. First, the abortive Daimler-Chrysler fusion of the late 1990s marked nearly a decade of foreign ownership and unambiguous German control. The “Merger of Equals” proved to be nothing of the sort, with the grand transatlantic union morphing into a campaign to protect august Mercedes-Benz from any American taint and then scramble for the exits.
Second, the last time Americans owned and managed the company — the Wall Street interregnum of Cerberus Capital Management LP, named for the mythical three-headed dog guarding the gates to hell — Chrysler’s countrymen nearly killed the company. And that was before the global financial meltdown arrived, pushing the maker of Jeep, Ram, Dodge and the eponymous Chrysler into a federal bailout.
And, third, Chrysler’s revival and improving product cred bolster the fact that Italians led by the Canada-reared Marchionne worked with Chrysler’s Americans. Together, they charted a road back built on steadily improving cars and trucks, smart marketing and brand positioning, and methodical integration of purchasing, engineering and manufacturing.
Does this mean Detroit’s Big Three is dead?
It does if you haven’t been paying attention the past 15 years. It does if you forgot nine years of DaimlerChrysler AG. It does if the definition of “The Big Three” requires that all three companies be 100-percent American owned, or that corporate headquarters (if not the actual site of incorporation) be in southeast Michigan.
It does if any profits generated anywhere in the world must be be deposited in American banks, or distributed only to American shareholders, or disbursed in part to American employees and communities in the form of bonuses, profit-sharing checks and charitable contributions.
But the real world doesn’t work that way, and it hasn’t for some time. The profits General Motors Co. earns in China, for example, are reinvested there in new products and plant expansions to feed the largest market in the world. Profit-sharing payouts for members of the United Auto Workers — including the Italian-owned Chrysler — are calculated on profits generated in the United States, even as executive bonuses are calculated globally.
Ford Motor Co.’s Ford Fund, the charitable arm of the Dearborn automaker, is funded annually by the company. Its charge is neither local nor regional, fund Chairman Jim Vella explained in a recent interview; it is global, and he and his team are expected to look for worthy causes near Ford sites around the world.
Chrysler’s Jeep is a quintessential American brand that cannot be separated from its World War II heritage and connection to the industrial Midwest. FCA may be incorporated in the Netherlands, domiciled for tax purposes in the United Kingdom and traded in New York and Milan, but Detroit will build its Grand Cherokee and Toledo will build its Wrangler until further notice.
Moreover, what’s more important — who owns Chrysler, decides investments, makes product allocations and signs paychecks? Or whether there’s any Chrysler at all? The Real Automotive Reckoning of the past decade, and especially the past five years, is marked by indigenous resilience (Alan Mulally’s Ford), federal intervention (GM and Chrysler) and foreign-owned rescues (Chrysler and more).
The old Rouge Steel Co., bankrupt and targeted for elimination by its American rivals, is the North American beachhead of OAO Severstal, the Russian steelmaker that 10 years ago rescued the Dearborn operation and hundreds of jobs. Chinese investors acquired Nexteer Automotive, GM’s old Saginaw steering division, retained jobs and listed the company’s shares in Hong Kong.
Not American? Absolutely right.
But the companies live; the jobs are backed with real wages; the wages pay mortgages, taxes and patronize local merchants. Like it or not, foreign investment is a fact of life in a global economy — and it’s proven to be the lifeline Chrysler needed at its darkest hour in two generations.
Daniel Howes’ column runs Tuesdays, Thursdays and Friday.