PAOLO FRESCO wants to fix Fiat. But does Paolo Cantarella agree that it is broker?
Fresco's recent letter to shareholders included a searing criticism of the status quo at Fiat. Hidden between the lines of Fresco's letter may be sharp differences between the chairman and the managing director.
Fresco, who became chairman of the group in October, brings a fresh perspective to an old world company. He comes from General Electric in the USA, by many standards the world's most successful business conglomerate.
He is a measurer. That's the GE way. Fresco sees the world through the prism of 'return on average net invested capital.'
Shareholder value is his mantra, which is fine. But Fiat still needs Cantarella and his raw instinct for creating great cars and for building them efficiently.
These are anxious times in Turin. The advancing age of honorary chairman Gianni Agnelli, now 77, and the death of 33-year-old Giovanni Alberto Agnelli in December, 1997, leaves a void. Young Agnelli would have replaced Cesare Romiti as chairman last year. Instead, Fresco was brought in.
Meanwhile, sales and earnings have plummeted at Fiat Auto. The removal of Loic Caperan, the top sales and marketing executive, and Umberto Sturchio, the sales boss in Italy, may be the first signs of a wider management shake-up.
Designers are also leaving. Peter Davis is out as head of Fiat's central studio after a long string of successful cars.
Enrico Fumia has also left. He designed the Alfa Romeo 164 and the new GTV and Spider and he created the Lancia Styling Center.
Some think that Fresco is preparing to sell Fiat or merge it with another company. Fresco has denied that and indeed Fiat recently sought to buy AB Volvo.
In fact, there may be nothing wrong with Fiat that a new Punto and economic recovery in Brazil won't cure. Even the talk of a rift between Fresco and Cantarella comes as no real surprise. It is natural speculation when one strong man goes to work alongside another.
But, if true, it could be disastrous. At BMW we have seen the damage that can be done when the top two executives become adversaries.
Fresco and Cantarella can make a great team at Fiat. Cantarella is a car guy, with a flair for product that helped Fiat to survive the early 1990s.
Fresco is a maximizer of value. But the auto industry is a business like no other. No product that General Electric sells has the emotional coda of Fiat's automobiles.
Not all business principles can be applied interchangeably between car companies and mere mortal companies. Fresco must appreciate that.
Fiat cannot afford for this partnership to dissolve in conflict. The two Paolos need to be one.