Obama celebrates Chrysler revival
By Peter Whoriskey,
In front of cheering workers at a Chrysler plant in Toledo on Friday, President Obama celebrated the conclusion of the automaker’s bailout and the revival of a company that many had left for dead.
“I couldn’t be prouder of what you’ve done,” Obama said at the plant that makes Jeep Wranglers.
Left unmentioned in his speech, however, were the players that may be the biggest winners in the federal government’s rescue: Fiat, the Italian automaker that is now set to win a majority stake in Chrysler, and its charismatic chief executive, Sergio Marchionne.
The Obama administration arranged the corporate marriage of Fiat and Chrysler during the bailout, putting Marchionne in charge of the Detroit automaker and giving the Italian company a growing ownership stake when it met performance goals.
Now, with the sale of the government stake in Chrysler, Fiat is set to assume a majority role. Fiat’s expected ownership in Chrysler is estimated to be worth at least $4 billion and possibly much more. Fiat has put $1.8 billion into the deal and shared its technology with Chrysler.
As a result, many are crediting Marchionne not only with leading the turnaround of Chrysler but striking a very profitable deal on behalf of Fiat.
“I am in awe of Sergio Marchionne, not just as an executive but as a negotiator,” said Maryann Keller, an auto analyst and author of “Rude Awakening,” a book about the rise and fall of General Motors. “I never thought he could get to a point where he would be the majority owner of Chrysler essentially two years after the company came out of bankruptcy.”
To be sure, Fiat came to Chrysler when many others had assumed there was nothing left to save.
Indeed, as Obama was weighing whether to rescue Chrysler, some in the administration thought the company was too far gone. It had been hollowed out during its merger with Daimler and then, under control of private-equity group Cerberus, Chrysler stood on the brink of liquidation.
In all, the United States invested $12.5 billion in Chrysler; with the stock deal announced Thursday, the U.S. is set recover $11. 2 billion.
Marchionne’s main push at Chrysler has been to refresh the company’s product lineup. He has done so at a remarkable pace — by his count, 16 “all new products” in 19 months. In a speech last month, he called Chrysler “a company that has been to hell and back and yet still dares to dream.”
“Two years ago, nobody would have paid anything for Chrysler,” said Jeremy Anwyl, chief executive of Edmunds.com, the automotive Web site. “The value that exists today is largely of Fiat’s own making. Marchionne is one of those uniquely maniacal executives who can drive people to perform at levels they never thought they could.”
The company announced last month that it had turned its first quarterly profit since the recession and bailout.
Sales have risen at the company, in part because of the refreshed products and in part because of a marketing and advertising campaign that has emphasized the company’s Detroit roots featuring, among other things, an Eminem spot during the Super Bowl. Chrysler sales rose 10 percent in May over a year earlier, to 115,363 units.
With the success, the administration is touting the fact that Chrysler is adding jobs and is no longer reliant on the government. It has repaid its bailout loans. At the same time, however, the company is seeking a $3.5 billion loan from the U.S. Department of Energy under a program meant to encourage the manufacture of fuel-efficient vehicles. Ford and Nissan have been awarded similar loans under the program.
“What’s happened so far is remarkable,” Anwyl said. “But you can’t declare victory yet. Maybe in 10 years.”