Handing the keys to government

Among Sergio Marchionne's many quips last week, one stood out. Noting the public dispute between Renault and France about where the next Clio should be built, Marchionne said: “If we get to that point, we might as well turn over the keys.”

He said it lightly, a throwaway line, almost a joke that Marchionne as CEO of Fiat and Chrysler might share with Carlos Ghosn, the other double CEO of Renault and Nissan.

But Marchionne wasn't making a joke. He was making a point.

It's easier for a government to escape temporary ownership of a business if it doesn't try to run it. You know, like the U.S. government's majority stake in GM and Chrysler.

Now, I might be reading too much into what Marchionne said. But I don't think so.

President Obama says he intends to unwind the government's positions as soon as possible. Marchionne echoes that. He wants to take Chrysler public quickly: “I like the discipline the market imposes.”

The mess in France ought to stiffen the resolve on both sides in the States. Ghosn had to meet this weekend with French President Nicolas Sarkozy and assure him Renault would not move production of the next Clio outside France to Turkey.

It may have felt like a trip to the woodshed for Ghosn. But Sarkozy has his own problems, such as baying French unions and voters asking why spend all that tax money rescuing its national automakers last year if they ship French jobs overseas.

Now Sarkozy didn't have to play his trump card: France owns 15 percent of Renault. But Sarkozy doesn't really want to. France has spent decades reducing its ownership of Renault (since it accused Louis Renault of collaborating with the Nazis in World War II and nationalized the entire company).

Yeah, France is up to its elbows in Renault – and to its dismay has discovered the automaker is really, really sticky.

Marchionne knows first hand about getting stuck in a deal neither side likes. Italy doesn't actually own any of Fiat, but it has rescued Italy's largest employer many times. Now a quid pro quo is haunting both Fiat and Italy.

Decades ago in a scheme to combat the Mafia's hold on Sicily, the government hatched a plan to build a Fiat assembly plant there.

Now if an outsider had said, “Hey let's build a plant on an island in the Med and ship parts there and finished cars back by boat,” Fiat would have tossed him out the door.

But it was the government.

Fiat may have gotten a virtually free plant, but paying 50 percent more for combined wages and logistics than at any other plant in Italy wiped out any capital savings a long time ago.

Fiat will stop making cars there next year -- finally -- and convert the plant to another product. But protests are so loud, Fiat has an image problem and Italian politicians are queasy.

In Washington, lots of folks have both firm notions of how to run a car manufacturer and the power to do something about it.

Marchionne and Obama have the right instincts. Get the automaker fixed, go public and get the stock off the public books before hordes of bureaucrats and 535 representatives and senators find their fix-it itch irresistible.

At that point, you might as well turn over the keys.

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