Top Fiat Chrysler exec shrugs off CEO's merger talk

Brent Snavely | Detroit Free Press

TURIN, Italy -- A top executive for Fiat Chrysler Automobiles says he isn't losing sleep over the CEO's loud calls for a potential partnerships and or a merger.

Sergio Marchionne' s efforts to reach out to other global automakers to discuss the industry's need for consolidation raises questions about what would happen to the company's current employees and management team if FCA did merge with another automaker.

Scott Garberding, FCA's global head of purchasing and a member of the automaker's influential group executive council, said the company's management team is unfazed.

"I can sincerely tell you I am not laying awake at night worrying about that," Garberding said in an interview in FCA headquarters in Turin.

In fact, Garberding said the company's core management team and the managers who report to him have developed an ability to block out the noise created by rumors about potential mergers because many of them have been through three ownership structures as well as Chapter 11 bankruptcy over the past decade.

"People are people and they are always curious but at the same time…regardless of what the external conversation might be, we need to execute well," Garberding said. "And I don't have people sitting in my office wringing their hands and saying 'what about this.'"

Garberding moved from Michigan to Turin 20 months ago when he became the company's global purchasing executive. He also is a member of Fiat Chrysler's 21-member group executive council that meets regularly to make decisions on the company's biggest issues.

Earlier this year Marchionne stirred up both Wall Street and the global automotive industry when he issued a 25-page report during an earnings conference call called "Confessions of a Capital Junkie."

Marchionne said the automotive industry is wasting billions of years on product development because there are too many automakers making similar cars and trucks with similar engines and other components. Automakers, he said, could save billions per year if some automakers merged with each other.

Since then, Marchionne has become even more aggressive, even though almost every automaker has publicly rejected the idea of a merger now. Media reports have emerged that have said Marchionne has enlisted the support of hedge funds and activist investors to pressure General Motors into considering a merger.

FCA's own controlling shareholder, Exor, is currently recently launched a hostile takeover bid for PartnerRe, one of the world's largest reinsurance companies. Exor is an investment fund based in Turin with 13 billion euro (about $14.6 billion) in assets. It is controlled by the Agnelli family and its Chairman and CEO John Elkann -- the same Elkann who is chairman of FCA.

Reuters reported last week that GM and FCA have hired financial advisers to evaluate a potential deal. GM has hired Goldman Sachs and FCA has hired UBS, according to the report.

Since the two companies both have a huge presence in North America, have full product lineups of top-selling pickups and SUVs and have thousands of employees working on similar projects. That means full merger between the two companies would surely lead to painful job cuts.

Despite all of this, Garberding said FCA's management team is able to stay focused on conducting business because they have faith that Marchionne and the company's ownership has the best interests of the company's future in mind.

"Our leadership, our board, and our owners have been extremely responsible dealing with people and the company over the years and I think that people expect that that will not change," he said.