Howes: FCA's Italian ranks slim after Marchionne

Daniel Howes
The Detroit News
New Fiat Chrysler Automobiles NV boss Mike Manley, a Briton, drove leadership of the group's Jeep and Ram brands straight into the office occupied by Sergio Marchionne the past 14 years.

As prominently as Italy’s most storied industrial icon figures in the name of Fiat Chrysler Automobiles NV, the leadership of the transatlantic automaker now is less Italian than at any time in the company's nine-year history.

The gravely ill Sergio Marchionne, replaced Saturday by Britain’s Mike Manley, is officially out after 14 years as CEO because of what the company describes as serious complications following shoulder surgery. And the 66-year-old Marchionne’s trusted lieutenant, Alfredo Altavilla, resigned Monday “to pursue other professional interests” because FCA’s directors bypassed him for the top job.

The result: FCA’s governing Group Executive Council will contain just two Italians among its 19-member governing group, which met with Manley in a regularly scheduled meeting Monday in Turin, Italy. What that shift portends for Detroit’s No. 3 automaker will unspool over the coming weeks as FCA reports second-quarter earnings Wednesday and Manley, the longtime head the Jeep and Ram brands, shapes his team and telegraphs his hard-working style.

The international character of FCA's leadership team reflects Marchionne's own Italian-Canadian makeup and his belief that a global team with varied experience and points of view is better equipped to manage the nuances of competition in the global auto industry. Unlike the German-dominated management that prevailed in the failed union between Chrysler and Daimler-Benz AG, FCA's GEC features members from at least nine countries.

The challenges will not wait. Manley is ascending to the top job amid stressful times for the automaker. Marchionne's plan to step down next April was accelerated by his apparent health crisis; North American sales, the profit engine for the group, are moderating; a brewing global trade war, complicated by talks to revise the North American Free Trade Agreement, threatens to raise costs and prices for consumers.

The automaker is dogged by a continuing federal corruption investigation into its joint-training center with the United Auto Workers. Its strategy in mobility and autonomy so far is limited to providing Pacifica minivans to Alphabet Inc.'s Waymo unit, even as FCA pushes to catch rivals in China, the world's No. 1 market.  

And Altavilla, FCA's top executive overseeing operations in Europe, Africa and the Middle East, is leaving at the end of August — a portfolio Manley will manage on an interim basis as he pushes to decide who will oversee the region that accounted for more than 20 percent of the group's revenue and 11.3 percent of its pre-tax profit in the first quarter.

Altavilla "probably thought he couldn't support Mike Manley," said Carla Bailo, CEO of the Ann Arbor-based Center for Automotive Research and a former senior vice president for research and development and quality at Nissan North America. "The negative is what" Altavilla "takes with him. Any time you have someone on your team who has a bitter pill, it's better to remove it and start fresh."

Altavilla's departure presents a short-term obstacle and loss of institutional knowledge. But that could prove a longer-term opportunity for a new FCA CEO keen to shape his executive team around his priorities and the global strategy developed by Marchionne and other members of the leadership.

Still, the 54-year-old Italian born to a Fiat dealer in Taranto, in the heel of Italy's boot, leaves with deep knowledge of the company's alliances, its deals and the 2009 bankruptcy of the Chrysler Group. Altavilla joined Fiat SpA in 1990. From 2002-04, he coordinated the Italian automaker's alliance with General Motors Corp., before heading their powertrain joint venture in 2004.

During Chrysler's 2009 bankruptcy, Altavilla represented Fiat in the federally imposed bankruptcy case, fielding questions from the court on Marchionne's plans for the parent of Jeep, Ram, Dodge and Chrysler. But he lost the top job to the guy who led FCA's most valuable brands, Jeep and Ram, and helped position them as the future of the automaker.

Stephen Wolf, left, and Alfredo Altavilla greet Sergio Marchionne in this file photo.

Among Manley's first steps should be to reassure investors that Marchionne's strategy of maximizing profits with a broad array of Ram trucks and Jeep SUVs will continue; that margins will keep expanding even as net-industrial debt declines; that the company can successfully negotiate the trade minefield laid by the Trump administration's tariffs on imported steel and aluminum, as well as threatened tariffs on imported vehicles.

What likely won't change is the itinerant life of the FCA CEO. Marchionne owns a house in Oakland County and an apartment in Zurich, among other things, but spent enormous amounts of time on a corporate jet. That's a lifestyle Manley is likely to emulate while leading a company headquartered in London, incorporated in the Netherlands and run out of offices in Turin and Auburn Hills.

Officially, the old Chrysler tech center on I-75 isn't likely to become any more of a power center under the new regime than it was under Marchionne. But it will remain home to the leading brands that generate the vast majority of the group's revenue and profits, the most important score-keeping there is in the global auto industry.

Altavilla vied to succeed his mentor, a unique personality and whip-smart executive who challenged conventional wisdom (FCA was the first major automaker to end U.S. production of cars) and challenged rival CEOs (see his bid to merge FCA with GM and his "Confessions of a Capital Junkie").

But Manley is The Man who will follow the legendary Sergio, the Philosopher CEO who paid the feds nothing to gain control of Chrysler before investing in it and merging it with one of Italy's industrial crown jewels. Succeeding legends is not easy — for just about anyone.

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Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.

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