Sergio Marchionne, who saved Chrysler and Fiat, dies at 66

Sergio Marchionne, an accountant turned auto executive who is credited with saving both Fiat and Chrysler, has died. He was 66.

The holding company of the Agnelli family, which founded Fiat, confirmed the death Wednesday.

“Unfortunately, what we feared has come to pass. Sergio Marchionne, man and friend, is gone," John Elkann, chairman of FCA, said in a statement.

"I believe that the best way to honor his memory is to build on the legacy he left us, continuing to develop the human values of responsibility and openness of which he was the most ardent champion."

A tireless worker known for candor, sweaters and chain smoking, Marchionne did not fit the mold of a carmaker's CEO. Named Fiat's chief executive in 2004, he had worked primarily in finance and nonautomotive industries. But he rescued Chrysler from the brink of liquidation in 2009 with help from the U.S. and Canadian governments, and implemented an improbable turnaround plan that transformed the automaker into a global force.

Marchionne, who was scheduled to retire in April 2019, was hospitalized in late June for shoulder surgery and what was expected to be a short stay. The Italian newspaper La Stampa said he had confirmed appointments in early July. His last public appearance was June 26 in Rome for a Jeep presentation to the Italian Carabinieri, a military police force in which his father was once an officer. Observers said he looked haggard that day.

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Following his surgery, he took a sudden turn for the worse July 21. That prompted the boards of FCA, Ferrari and tractor maker CNH Industrial — affiliated companies all led by Marchionne — to replace him and announce he would be unable to return to work.

Sergio Marchionne dies at age 66 Sergio Marchionne has died at the age of 66.

Italian media reported that weekend that he was in intensive care at University Hospital in Zurich, with his sons and companion of 12 years, FCA communications manager Manuela Battezzato, at his side.

Marchionne is a dual Italian-Canadian citizen with an MBA from the University of Windsor and a career spent mostly in Europe.

He obtained a bankrupt Chrysler with no cash down as the Obama administration's auto task force struggled to figure out how to save the company and 300,000 jobs during the depths of the Great Recession in 2009.

Fiat initially obtained 20 percent of Chrysler and about $10 billion in U.S. taxpayer support. Marchionne extracted the first-ever no-strike pledge from the UAW and convinced the Canadian Auto Workers to cut Chrysler production employees' pay and benefits to the same level that Toyota and Honda paid their hourly workers in Ontario.

Marchionne seemed to work around the clock in those days, jetting back and forth between Italy and Detroit with extraordinary stamina.

"He looked like he just got off a 20-hour shift, and he probably had," Ken Lewenza, the Canadian Auto Workers president who met with Marchionne in 2009, told the Free Press at the time.

Marchionne demanded equally long hours from the many executives who reported to him. The schedule drove some out of the company, while others ended up with jobs they couldn’t have imagined pre-Marchionne.

Quick to adapt

The company grew into an international force. Fiat completed its deal for Chrysler in 2014, and in 2017, Fiat Chrysler reported a pretax profit of $4.4 billion (3.5 billion euro). It said this summer that it would wipe out its industrial debt by the end of June.

Marchionne's pitch to take control of Chrysler included fuel-efficient cars using Fiat’s European technology, but adapted when it became clear American tastes and low gas prices were fueling sales of utility vehicle and trucks.

Jeep and Ram are centerpieces of the company's new five-year strategy, unveiled seven weeks ago during a typical Marchionne-led daylong meeting at the company's famed Balocco Proving Grounds in Italy.

Unlike former Chrysler owner Daimler AG, Marchionne quickly integrated Chrysler Group technology, design and leadership into Fiat’s global structure.

While the German-led DaimlerChrysler had been a dead end for executives and ideas from Chrysler Group, Marchionne built a meritocracy.

People from Chrysler Group rose to leadership positions throughout FCA, and Chrysler’s Auburn Hills tech center took on companywide projects that Daimler’s territorial German management style would never have allowed.

“Chrysler would not exist today without Sergio Marchionne’s guts, vision and dogged execution of the vision," said Michelle Krebs, executive analyst at Autotrader. "He set high goals, and more often than not, they were met. He was one of a kind — international, intellectual, outspoken and direct, untraditional and always quotable."

FCA’s downtown offices, and its name on the Chrysler House skyscraper in Detroit, reflect Marchionne’s belief that it was important the company have a presence in downtown Detroit.

At the same time, he handed key roles developing an important Jeep model, the subcompact Renegade, to the Italian engineers who knew small vehicles best.

He was the first executive to understand the magnitude of changing U.S. buying habits, announcing Dodge and Chrysler would stop building midsize and smaller cars and concentrate on utilities and trucks years before Ford’s highly publicized recent decision to do the same.

Jason Vines, who ran Chrysler public relations in 2003-07, last worked under Chrysler CEO Bob Nardelli before the automaker filed for Chapter 11 bankruptcy protection and Marchionne and Fiat stepped in.

Vines, who is now a communications consultant and author, has met Marchionne several times. He said Marchionne made “the most brilliant marketing move” in the auto industry in the past decade when he got rid of the Dodge name on Ram. Making Ram trucks a standalone brand has “proven to be pure genius.”

“I had nothing but respect for him,” said Vines. “He was a hard-working son of a gun. He wasn’t afraid to get his hands dirty and get in the trenches with the team.”

One of most insightful CEOs

Karl Brauer, executive publisher of Autotrader and Kelley Blue Book, said the "unique combination of style, capabilities and personality embodied by Sergio Marchionne will likely not be seen again.

"Decades of international experience in finance, corporate oversight and automotive management resulted in one of the most insightful CEOs to ever direct a global automaker," Brauer said. "Marchionne‘s vision gave him the confidence to make bold moves while others waffled. He often captured market opportunities ahead of competitors, and he was just as quick to identify a failing effort and cut his losses. His larger-than-life personality matched his decisive management style."

Marchionne was reluctant to join the race to make electric cars — though the new five-year plan changes that — saying he hadn't seen a case to make money on them, and chose to be a supplier of self-driving vehicles built to others' specifications rather than having FCA work to develop its own technology. Waymo, Google's autonomous vehicle arm, has ordered more than 60,000 self-driving Chrysler Pacifica minivans.

In January, FCA announced that it would shift production of its Ram Heavy Duty trucks from Mexico to Warren, investing $1 billion in the metro Detroit factory. At the same time, it announced $2,000 bonuses for employees, saying U.S. tax changes, cutting the corporate tax rate from 35 percent to 21 percent, made it all possible.

"These announcements reflect our ongoing commitment to our U.S. manufacturing footprint and the dedicated employees who have contributed to FCA's success," Marchionne said at the time. "It is only proper that our employees share in the savings generated by tax reform and that we openly acknowledge the resulting improvement in the U.S. business environment by investing in our industrial footprint accordingly."

That prompted President Donald Trump in May to call Marchionne his "favorite person in the room" during a White House meeting with U.S. auto CEOs.

Typically rumpled, he was known for candor, offending the U.S. government and Jews in 2011 by complaining about the 11 percent interest rates Washington set for repayment of Chrysler bailout money.

“I want to pay back the shyster loans” as soon as possible, he said, and then apologized for the term that some consider an anti-Semitic slur referring to unethical lawyers.

Italian-born Marchionne also offended Italian-Americans before the 2013 Detroit auto show. When asked about a new Alfa Romeo car to be sold in the U.S., he said, "with all due respect to my American friends, it needs to be a wop engine."

'Capital Junkie'

In 2015, in a conference call with Wall Street analysts, he criticized the industry for spending too much on product development with his presentation "Confessions of a Capital Junkie."

"We have failed, I think, collectively as an industry to deliver value," Marchionne said.

Marchionne, pitching a tie-up with GM, argued that the auto industry needs consolidation to become more nimble and profitable.

FCA nonetheless has remained its own entity and has gained strength. It earned a net profit of $1.2 billion (1 billion euro) during the first quarter of 2018, a nearly 60 percent gain from the same period a year before.

At the time, Marchionne reiterated his plan to retire in April 2019, saying, "I think the likelihood of me staying on beyond what we announced is between zero and nothing."

His background

Sergio Marchionne was born June 17, 1952, in Chieti, Italy. His family emigrated to Toronto, where they had relatives, in his early adolesence, leading to his dual citizenship.

He earned a bachelor of arts with a major in philosophy from the University of Toronto; a bachelor of laws from Osgoode Hall Law School, York University, Toronto; and bachelor of commerce and master of business administration degrees from the University of Windsor.

Marchionne didn't want to be a traditional executive. In a 2008 article he wrote for Harvard Business Review, he said one of his first objectives at Fiat was to kill what he called the "Great Man" theory of leadership, which might explain why he routinely passes on suits and sets up in an engineering conference room rather than the penthouse of Chrysler's 15-story executive tower in Auburn Hills.

"My job is not to make decisions, but to set stretch objectives and help our managers work out how to reach them," he wrote.

His distaste for ties was made a joke and social media sensation a few weeks ago when the new five-year plan was laid out.

Marchionne unzipped his sweater to reveal a tie — a gesture he had promised to make if FCA was on track to eliminate its industrial debt by midyear. Twitter observers — FCA executives, analysts and journalists — said it was the first time they'd seen him in a tie since 2007. The tie was gone after a lunch break, though.

During his closing remarks at the meeting, Marchionne again advocated against too much structure:

“The answer is that there is no script or instructions. Instructions are institutional and temporary. FCA is a culture of leaders and employees that were born out of adversity and who operate without sheet music. That is the only way we know.”