Howes: Transnational Fiat Chrysler-PSA deal promises cultural mash-up
Maybe the new name for the proposed merger of Fiat Chrysler Automobiles NV and Groupe PSA of France, confirmed Thursday, should be United Nations Motors.
Rarely has the global auto world seen a cultural mash-up like the one contemplated by the makers of Jeep SUVs and Peugeot cars, among others. Here’s an Italian-American automaker incorporated in the Netherlands, headquartered in London and led by a Brit that makes all of its money in the United States pursuing a 50-50 tie-up with a French automaker that bolted the U.S. market 28 years ago.
PSA's headed by a guy from Portugal, Carlos Tavares, who burnished his turnaround cred by buying Germany’s Opel and Britain's Vauxhall brands from General Motors Co. Under PSA management, the pride of Rüsselsheim accomplished in two years what it couldn’t do in the last 20 under American ownership: make a profit.
Forget pooling technology resources and rationalizing vehicle architectures. If this combination is gonna work — and there’s no guarantee it will — success will ride on the shoulders of its leaders, the example they set and their ability to simultaneously navigate the traditional and next-generation auto industry with humility, creativity and cultural patience in equal measure.
FCA CEO Mike Manley said as much in his letter Thursday to company employees: "Merging companies and cultures is something we know how to do well. FCA is a product of our ability to leverage each other’s backgrounds, embrace diversity and collectively drive for results. The combination we envision with Groupe PSA will build on that success."
It had better, or the grow-or-die gambit driving the combination will end up being less of the former and more of the latter, a recipe for impatient investors and unhappy employees. The simple fact is that success in the transnational space pioneered by, say, the likes of DaimlerChrysler AG and the Renault-Nissan alliance hinges on just how well cultures are merged and shaped around a hyper-competitive industry.
A key difference marking the relative success of FCA under Manley and the late Sergio Marchionne, and the failure of DaimlerChrysler's "merger of equals" under German control, is reflected in leadership. Over time, FCA's Global Executive Committee reflected more a "best available athlete" mindset instead of a bias for Europeans whose names end with vowels.
In fact, the Italian-born Marchionne reared in Canada showed an uncanny knack for "getting" Detroit, the industrial Midwest, blue-collar values and the kind of people who make it all work. He spent more time, publicly, anyway, transcending the kind of national preconceptions that undermine the effectiveness of transnational corporations.
Not so DaimlerChrysler under Jürgen Schrempp and Dieter Zetsche. The farce of German-American parity on the company's management board was soon revealed by the serial retirements of one American executive after another; by the refusal of Mercedes-Benz engineers to countenance deploying their powertrains in Chrysler-brand vehicles; by the ritual denunciations of American management and metal by German-speaking shareholders at the interminable annual meeting.
I know because I was there, realizing with each passing year in the early 2000s that the promise of the industry's first transatlantic tie-up would not withstand the cultural arrogance deeply rooted in Stuttgart and the Mercedes mystique. Chrysler's lowly brands didn't stand a chance, and neither did the combined company.
The FCA of Marchionne and now Manley proved the Germans wrong. A decade removed from a Chapter 11 bankruptcy owed, in part, to former German ownership, FCA is home to arguably the hottest brand in the automotive world — Jeep — and, in Ram, the fastest-growing truck brand in the rich U.S. market. This from guys with roots in the old countries of Europe.
Tavares and the PSA-nominated majority on the new company's board would be wise to heed the example set by Marchionne, Manley, even the Renault-Nissan alliance under former CEO Carlos Ghosn. He was Tavares' boss until the understudy tired of waiting for the boss to retire and took the top job at rival PSA.
Ghosn's legal troubles in Japan notwithstanding, the alliance he commanded for roughly a generation demonstrated the ability to meld a multinational powerhouse from disparate cultures. Renault-Nissan, joined later by Japan's Mitsubishi Motor Corp., Russia's AvtoVAZ and Romania's Dacia, spanned two continents, operated in more and showed that a French automaker can play globally.
It's now Tavares' turn to prove he can outperform his old boss. Should the merger survive due diligence, regulatory scrutiny and inevitable meddling from the French government (that owns more than 12% of PSA), the new CEO will have a brief window to set the tone for the new group.
At the Detroit auto show last year, Tavares signaled his company's interest in returning to North America and the mindset it requires: "It’s not because we are successful in Europe that we would be successful in the U.S. We are making good profit. We have no debt. We don’t need to rush.
"We want to make sure we are not arrogant in the way we think consumers are viewing us. We need to do things right." Exactly.
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.