Ever hear of the Committee on Foreign Investment in the United States?
Don't worry; I hadn't either. But CFIUS, as it is known, could weigh in on any potential Chinese purchase of Fiat Chrysler Automobiles, and it's where things are likely to get very interesting.
CFIUS is a nine-member committee composed of the U.S. secretaries of commerce, defense, energy, homeland security, state and treasury, along with the Attorney General, the U.S. Trade Representative and the director of the Office of Science and Technology Policy, or their appointed representatives. Its mission is to ensure that foreign acquisitions of American companies aren't a threat to U.S. national security.
FCA, it's worth remembering, is a multinational corporation legally based in the Netherlands and a tax domicile, for now, in London, with 231,000 employees in more than 40 countries and $131 billion in annual revenue. FCA US -- what you might think of as "the automaker formerly known as Chrysler" -- is a wholly owned subsidiary of FCA.
So could CFIUS block a potential sale of FCA to a Chinese buyer? Maybe. I can't think of a way in which FCA would impact national security. But would a potential sale hurt national pride? Well, that's a different deal altogether.
Here's how I see it: Chinese ownership of FCA is far more desirable -- in terms of the U.S. economy and employment -- than the merger of FCA and General Motors that FCA CEO Sergio Marchionne unsuccessfully tried to engineer in 2015.
Consider that a potential FCA/GM merger would have involved, at its outset, closing plants, shuttering duplicative departments and culling thousands of dealerships across North America. But a potential Chinese owner would look at FCA's manufacturing footprint and dealer network as the company's vital assets, enabling access to Jeep as well as a ready-made retail network with which to import Chinese-made vehicles to the U.S.
Long story short, at least under the Chinese, FCA dealers would continue to have something to sell, and FCA employees would continue to receive paychecks -- something not assured under any merger with GM.
A Chinese owner also likely would have deep pockets from which to reinvest in FCA's ancient product portfolio -- instead of the lint left after spending $6 billion to resurrect Alfa Romeo from scratch. With resources at their disposal, FCA's talented teams of designers and engineers could really do some open field running, potentially even delivering promised vehicles on time, instead of delaying development for years on end to focus on other programs.
OK, so you still have doubts that a Chinese company can successfully operate an automaker in the Western world? Tell you what: Why don't you go prepare your argument in the luxurious front seat of a Volvo XC90 -- the 2016 North American Truck of the Year -- and we'll talk.
To me, if CFIUS would intervene to block a potential sale of FCA to Chinese ownership, it would be a decision based on pride and emotion, instead of on national security.
And really, if it was OK for the Germans to own Jeep, and then the Italians/Dutch, why wouldn't it be OK for the Chinese?
I mean, at least it's not Cerberus.