Marchionne: Appalled by Jeep's lack of luxury
RECKONING to REVIVAL: PART II

For Detroit 3, obstacles were closer than they appeared

Marchionne: Appalled by Jeep's lack of luxury

From left, GM CEO Rick Wagoner, Chrysler CEO Robert Nardelli, Ford CEO Alan Mulally and UAW President Ron Gettelfinger, hear opening statements at a House Financial Services Committee hearing on an auto rescue package in Washington, D.C., on Nov. 19, 2008.

Photo credit: BLOOMBERG
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Editor's note: The U.S. auto industry has come full circle, from boom to bankruptcy to boom. Detroit's road from reckoning to revival was shorter than expected. This 4-part series examines how workers defied history and why Detroit's new strength is embodied in Chrysler's reborn Jefferson North assembly plant in Detroit.

DETROIT -- Jim Blanchard was horrified as he watched the Detroit Three CEOs stumble through the congressional bailout hearings in November and December 2008. They seemed blindsided by the shots they took and came with no ammunition to fire back.
 
"Oh, my God, it was terrible," said Blanchard.

As a baby-faced, 37-year-old congressman from Michigan, Blanchard was the architect of Chrysler's earlier federal bailout, which gave the automaker government backing for $1.5 billion in lifesaving loans.

Blanchard convened congressional hearings in October 1979 to try to win over reluctant lawmakers who, like some of their successors 30 years later, believed Chrysler deserved to die.

By summer 2009, Blanchard, still round-faced and thick haired, was almost 67 and in the twilight of a career that saw him rise to governor of Michigan and serve as ambassador to Canada for President Bill Clinton.

As he was packing up on a Friday, Blanchard's phone rang.

On the line was Ron Gettelfinger, president of the UAW, with an intriguing offer: Would Blanchard accept a seat on Chrysler's new board?

The UAW could name one member to Chrysler's post-bankruptcy board to represent the union's health-care trust and Gettelfinger said he could think of no one better than the company's original savior.

Skeptical friends

Blanchard said yes and immediately called his wife to marvel at the unexpected opportunity to help Chrysler again.

Some of his friends didn't see Blanchard's new assignment as heaven-sent.

Blanchard: Marveled at the unexpected opportunity, in 2009, to help Chrysler again.

Photo credit: BLOOMBERG

"People were saying to me, 'Oh, you poor bastard, they're not going to make it.'"

Marchionne wasted no time in the first board meeting that summer explaining why he was the right man for the job.

At the top of Marchionne's agenda was the new Jeep Grand Cherokee about to go into production at Jefferson North.

Everyone in the room knew that the profits the Jeep could generate had the potential to save the company.

"Our question was: When the updated version rolls out, will it be really good?" Blanchard said.

Marchionne took directors on a field trip to Chrysler's proving grounds, a test track in the countryside west of Ann Arbor, Mich.

He had a secret.

Surprising greatness

A few months earlier, just before Chrysler filed Chapter 11 on April 30, 2009, Marchionne arrived in Auburn Hills to take his first look at the Grand Cherokee -- the one Gilles and his team had designed.

The CEO, sporting his signature sweater, offered his unvarnished opinion: good, not great.

"He thought it was handsome, but I think he thought it was a little innocuous -- probably a little safe in his opinion," Gilles recalled.

Marchionne was appalled by the Jeep's lack of luxury touches -- such as the sparkling LED headlights and taillights that had become standard adornment on luxury cars, like the Ferraris and Maseratis that Fiat makes in Italy.

"Where are the leds? Where are the leds?" he demanded in his low, Italian rumble, pronouncing the letters like a word.

Gilles explained Chrysler couldn't afford them.

Chrysler CEO Sergio Marchionne at the production launch of the 2011 Jeep Grand Cherokee at the company's Jefferson North assembly plant in Detroit in May 2010. Chrysler added 1,100 workers at the assembly plant at the time to increase Grand Cherokee output.

Photo credit: BLOOMBERG

New summit

The new boss commissioned a new $60,000 high-end version of the Grand Cherokee, to be known as the Summit, and told Gilles to get those LED lights back in the design as soon as possible.

Marchionne also drove a prototype devoid of identifying brand badges on a weekend getaway to Toronto, where he was disturbed by how few people recognized it as a Jeep. He returned with a to-do list for Gilles before the Grand Cherokee would be ready for the road.

At the same time, Marchionne ordered an overhaul of Jefferson North, a stem-to-stern cleanup, with new lighting, a fresh coat of paint, hospital-clean restrooms and legions of high-tech robots to bring the aging factory into the 21st century.

The attention the new boss lavished on the Grand Cherokee invigorated the designers.

"We just needed to be believed in, to be honest," Gilles said. "And he really came in and gave us that -- that beacon of hope."

In return, designers worked through Marchionne's to-do list and made the good Grand Cherokee great.

That was the model the directors drove at the proving grounds -- and after hot laps in it, they were impressed. They still wanted to know how Marchionne would tackle Chrysler's history of sub-par quality.

Marchionne explained he has instituted a policy that if anyone in the company had been "muzzled" by their boss for finding a flaw, he would fire that supervisor.

He also promised not to let a single Grand Cherokee out the door of Jefferson North until "it's just perfect."

"We can't afford any little thing to go wrong with this car," Marchionne told the directors.

Jay Cimino, CEO of Phil Long Dealerships, in 2009 at one of his dying Saturn stores. The 12 Phil Long dealerships Cimino runs are more profitable today than the 15 stores he ran back in 2008.

Done dealership: Collateral damage to a war hero

Car dealer Jay Cimino once moved platoons of new Jeeps out of his Denver Chrysler-Jeep showroom. It was a point of particular pride for Cimino because the dealership's namesake and his mentor, Phil Long, had been a World War II hero.

Long did his work over the South Pacific as a Hellcat fighter pilot, rather than traversing the war's Asian theater in an earthbound Jeep.

Still, there was a nice historical symmetry between Jeep, the World War II workhorse, and the fighter pilot who flew 120 missions, won a Gold Star for heroic acts in the Battle of the Philippine Sea in 1944 and was shot down twice by the Japanese.

President's club

One month after being honorably discharged in 1945, Long opened his first showroom, a Ford store, and began building an auto empire.

Thirty years later, Long hired Cimino, an ex-Marine with dark, penetrating eyes and auto experience, to run his thriving group of dealerships.

Cimino got Phil Long into the Jeep business by acquiring a Chrysler-Jeep franchise. He built Phil Long Denver Jeep-Chrysler into one of Colorado's top Jeep dealers.

For meritorious service, Chrysler awarded him membership in its President's Club, bestowed on dealers with the best sales and customer service.

All of that history didn't protect Cimino, 77, from becoming collateral damage in Chrysler's bankruptcy.

In June 2009, about a month after Chrysler filed Chapter 11, Cimino was informed that his franchise was being terminated.

The Obama administration, as a stipulation of giving Chrysler its $12.5 billion bailout, required the automaker to drop a quarter of its dealers to bring its bloated retail network closer to the proportion and profitability of Toyota's.

Felt 'un-American'

The president was concerned Chrysler wouldn't survive if it continued to sell its cars through unprofitable, underperforming stores. Obama left it to Chrysler to choose who to dump.

Cimino's store was among 789 dealers Chrysler axed.

"What really was painful to me is how un-American I felt all of that was," said Cimino, who went to college on the GI Bill. Cimino was so stunned he refused to close the showroom and lay off his employees. Instead, he kept it operating as a used car showroom he dubbed "ValuCar."

"We kept our Chrysler store open, hoping we'd get our franchise back," said Cimino.

That didn't happen. Cimino appealed in an arbitration process set up by Congress. Chrysler accused the Phil Long Automotive Group of being on the edge of collapse and mistreating customers, which Cimino denies. Ultimately, Cimino prevailed, but it didn't matter.

By then, Chrysler had awarded the Chrysler-Jeep franchise to a store across the street owned by AutoNation Inc., the largest publicly traded dealer network in the United States.

Chrysler vehicles being shipped for distribution to dealers.

Photo credit: BLOOMBERG

Attack on hero

To Cimino, it was more than an attack on his business acumen. Every shot at the Phil Long dealership felt like an attack on someone with as hallowed a history as Jeep itself and someone he considered a father figure. Until Phil Long died in 2001, Cimino always turned to him when times got tough.

Chrysler sees it differently. While spokesman Mike Palese didn't directly address the Phil Long termination, he said Chrysler used "sound business judgment" in deciding which dealers to drop.

Today, the 12 Phil Long dealerships Cimino runs are more profitable than the 15 stores he ran back in 2008.

That's thanks to booming sales at his Ford outlets and the Chevrolet showrooms he was awarded by General Motors to replace the Saturn stores he lost.

He never had the opportunity to sell the hot new Jeep Grand Cherokee produced by the revived Jefferson North plant.

"It's been a challenging journey," he said. "But we are growing again and we are stronger now than we were before."

If Chrysler offered Cimino a Jeep dealership today, would he take it?

"No," he said. "We'll stay with people who have integrity and people we can trust."

He paused to compose himself.

"Life's too short."

Idling: Father and son live through layoffs

By 2009, Mark Harrington was no longer living the dream.

The maximum overtime he worked during the '90s SUV boom had been replaced by an alternating schedule of two weeks on and two off as Chrysler teetered on the brink.

The workforce at Jefferson North had been cut in half because of slack demand. Gone were the days when Harrington bunked in his parents' basement, enjoying the riches of $28-an-hour auto work. He now had a mortgage, a wife, two kids and another on the way. "We were living one day at a time," he said.

Then Chrysler went bankrupt and Jefferson North went dark.

Beginning May 4, 2009, Harrington was on indefinite layoff for the first time. So he turned to the only person he felt he could trust, the one responsible for him going to work at Jefferson North in 1994: his father.

Iacocca years

Harrington's dad hired into a Chrysler truck plant in 1964 for $2.60 an hour. He lived through the Iacocca bailout and endured an almost two-year layoff while Chrysler built Jefferson North, where he was one of the first workers and from where he retired in 1999.

As soon as Chrysler turned out the lights at Jefferson North a decade later, Mark picked up the phone to tap into all that experience. And maybe get a shot of courage.

"You're not working for some no-name company," Harrington's father told him. "It's Chrysler. There will always be a Chrysler."

The elder Harrington compared his son's plight to what he had lived through in the Iacocca years.

"You're going to come out of this," he told his son.

Mark suddenly felt a little more secure.

"He was good to talk to," he said, quietly.

Unlike some of his co-workers, he didn't consider another career. When his dad got him into the plant 15 years earlier, Harrington stopped taking classes at the community college. The only other job he'd had since high school was as a cook. "I had no other options. I wasn't going to be a cook again," he said.

Awkward domestic role

Harrington took on a role he found uncomfortable: homemaker and caregiver for his children, while his pregnant wife went to work each day.

After leading a team of workers bolting together Grand Cherokees in a bustling factory, Harrington had a hard time adjusting to domestic life. "You're supposed to get up at 4:30 in the morning, get dressed, pack your lunch and drive to work in the wee hours," he said. "Instead, I was getting up at 6:30 and getting the kids ready for school."

Chrysler raced through its "quick rinse" bankruptcy, cleansing itself of plants, dealers and debts. On June 10, 2009, Fiat took control of the newly created Chrysler Group.

Harrington had just finished mowing his lawn on a Friday afternoon in June when the phone in his garage rang.

"It's one of those moments where you remember exactly where you were," Harrington said.

"We're now owned by Fiat," his union steward told him.

"We got a new process called 'world-class manufacturing.' Report for training on Monday."

Harrington was elated, but he remained stoic. "See you Monday," he said. Then he rushed in the house to share the news with his wife, who smiled and said: "It's about time."

Walking into the plant that Monday morning, Harrington had butterflies. "It was like my first day of school."

About this series:

Tuesday: How U.S. workers rebuilt the U.S. auto industry

Today: For Detroit 3, obstacles were closer than they appeared

Thursday: Recalled -- insourcing workers from Detroit

Friday: Differential -- the divide over wages and 5 scenes of new life in Detroit

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