LARRY P. VELLEQUETTE

What FCA employees need to hear from their leaders

Larry P. Vellequette covers FCA US for Automotive News
UPDATED: 4/25/16 10:42 am ET - adds FCA response

Editor's note: FCA human resources chief Mike Keegan has responded to this column. Click here to read.

In a letter to investors this month, Fiat Chrysler Automobiles Chairman John Elkann turned to a quote from 13th century Persian poet Rumi to describe the path FCA is on:

“Yesterday, I was clever, so I wanted to change the world. Today I am wise, so I am changing myself.”

But how wise is that path if it leaves your employees twisting in the wind?

Indeed, a year after FCA CEO Sergio Marchionne’s “Confessions of a Capital Junkie” laid open the ridiculous way the auto industry burns cash, the loudest response has been from FCA itself.

Spurned last year by General Motors, Marchionne and Elkann are still seeking a marriage partner -- most recently citing Ford, Volkswagen and Toyota as potential mates.

FCA’s first-quarter earnings this week might be up or they might be down, but it really doesn’t matter much in the long run because the year-long obsession with a merger is taking a toll within FCA in ways that don’t show up on a balance sheet.

Over the last year, I’ve spoken with scores of current and recently departed FCA employees who have expressed deep concern over their boss’s crusade to merge FCA with another automaker.

They understand, fundamentally, that any merger that promises “annual savings close to $10 billion,” as Elkann noted this month, is likely to mean a significant chunk of that savings will come from jobs lost in a consolidation.

Saved

Think about that.

Imagine you’re a longtime Chrysler employee. Seven years ago at this time your employer was circling the drain. Art was being sold off the wall. Co-workers were jumping ship. Others were being laid off. On April 30, 2009, Chrysler was shut down and placed into bankruptcy.

With Fiat and help from the U.S. and provincial Ontario governments, Chrysler’s heart is miraculously restarted. You’re told that if you work insanely hard over the next several years, the company might survive. So you do. Everyone you work with does, too.

Slowly, things get fixed. New products are introduced; they’re not perfect, but they’re way better than before. Consumers notice. They begin to come back to Chrysler. Sales rise, and they keep rising.

The CEO declares that the company will be a “War Machine” of profits when it gets going. You start to believe. You redouble your efforts, even though your pay lags what you could make elsewhere. You notice that the former Chrysler has become fairly profitable again, but you also see the fruits of those labors heading elsewhere -- to Europe to rebuild Alfa-Romeo from scratch, or to Latin America, to build a factory to build Jeeps.

Jeeps? Built in Brazil? Yes, and in Italy, and China, and Mexico and India, too.

Okay, that’s different, but you’re part of a team that has saved a great American automaker from the scrap heap. And you know that there are billions of dollars being invested in North American plants, too -- like the $1 billion spent to improve Sterling Heights Assembly in Michigan to build the 2015 Chrysler 200.

Stepping up

So your belief grows. You work harder. You skip your kids’ ballgames and piano recitals. You give up weekends. You’re part of the team.

And then...

The CEO declares in April 2015 that nope, he’s looked at it closely, and it’s not going to work. In essence, thanks, but he can’t make enough money here. The business is in a state of “mediocrity.” Not worth the effort. Forget those plans. Your faith is shaken.

Later, he abandons two huge projects -- cars built on the very platform he brought to the table in 2009.

That $1 billion invested in Sterling Heights three years ago? It’s going to be almost useless before long.

You look around. Your colleagues who left for competitors are making more money. Their careers look secure. You, on the other hand, see products delayed or abandoned altogether.

You watch as the CEO raises wholesale prices without increasing sticker prices, angering the dealers who make the sales that keep you working. You also see the CEO gird up to mount what looks like a hostile takeover of GM -- only to sheepishly recant months later as he name drops other automakers who, at least publicly, have no interest at all.

This is the world that FCA employees find themselves in now -- every FCA employee, from the guy on the line to the woman in the corner suite.

And that is unfortunate and sad.

If FCA is truly wise enough to change itself, Elkann and Marchionne ought to start by making it clear to employees that they are committed to the automobile business.

Employees aren’t getting that message now.

You can reach Larry P. Vellequette at lvellequette@crain.com -- Follow Larry P. on Twitter: @LarryVellequett

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