The Chrysler Miracle
Berman, Laura, Newsweek
Byline: Laura Berman
Revived from bankruptcy, the automaker is repaying its bailout debt. How an Italian saved a Detroit icon.
It was two years ago when Fiat CEO Sergio Marchionne appeared at the airline-terminal-size Chrysler headquarters near Detroit to address a demoralized staff. They were as skeptical as the rest of the auto industry about their newly installed chain-smoking, sweater-clad, Italian-Canadian CEO and his mission to rescue Chrysler, a company burning through $1 billion a month.
Fast forward to the present, when Chrysler stands out as an improbable bright spot in a still-struggling U.S. economy. Not only is the company showing faster sales growth than its rivals, but paying back its $7.6 billion in U.S. and Canadian loans well ahead of schedule. So when President Obama, who had approved the long-shot bailout and merger with Fiat, visited the Chrysler plant in early June in Toledo, Ohio, where Jeep Wranglers are made, the factory tour had the feeling of a victory lap. "I placed my bet on you," Obama told workers. "What you've done vindicated my faith." Marchionne doesn't mind being part of Obama's PR offensive. "I love Obama to talk about Chrysler," he says. "It's the cheapest bloody advertising I can get."
If Chrysler's Marchionne still isn't exactly a household name (pronounced "Mar-key-OWN-ee"), his workers now hang on his words. Last month a sea of faces looked to their leader expectantly at company headquarters as 11,000 employees crowded to see him. Marchionne spoke about their status as survivors, recognizing aloud how hard he had pushed them. As he spoke of their commitment, his voice broke, forcing him to stop to regain control. After all, car guys don't cry.
Later, in his Chrysler office, he described the moment of silence to me as "a never-ending period of time that was absolutely still quiet -- not a chair moved, not a phone went off" as the crowd waited for him to continue. What had caused that moment of emotion for Marchionne? "When I asked them to go further and further and kept on saying, 'No, that's not good enough, we're going to go there,' and this house never said no. The more I asked, the more they gave."
Marchionne, a lover of opera, jazz, and classical music, can himself be operatic. The drama of the automaker's revival includes a cosmopolitan CEO who consciously leads by example and stays visibly onstage. At Chrysler, where he boldly laid out a five-year plan for the company six months after joining it, Marchionne has stripped out layers of management and vacated the lavish penthouse office used by previous chairmen for a cookie-cutter fourth-floor office in the technology center--close to the engineering, design, and production executives. He flattened the organizational structure, creating a system--as he did first at Fiat--where 25 executives report directly to the chairman. It's his way, he says, of creating a tribal bond among top managers. In a Harvard Business Review article, Marchionne described how the "great man" CEO model was dead. More likely, he is in the process of updating it, just as he's overseen ways to recast dated Chrysler models like the Sebring into the Chrysler 200, or launched the Fiat 500 here as a retro-chic competitor to the Mini Cooper.
At the depth of its woes in 2008, Chrysler was such a lost cause that Cerberus, the private-equity firm that controlled it, reportedly offered to sell the automaker to the federal government for $1. In a close-call decision, Obama decided to offer the financing in support of the Fiat deal, based at least in part on Marchionne's stunning turnaround of the long-troubled Italian automaker. For Marchionne, taking on Chrysler was an audacious personal gamble: betting the future of Fiat and Chrysler's 47,000 employees on an automaker long past its prime. The company he took over in June 2009 was battered by a decade of inattention, massive layoffs, and cheapening tactics by previous owners. …