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Abu Dhabi, UAESunday 18 November 2018

Obituary: Sergio Marchionne, 'rock star' of Italian car industry

Fiat Chrysler group chief who died last week garnered legendary status at home and deep respect worldwide

Sergio Marchionne. Getty
Sergio Marchionne. Getty

Sergio Marchionne was one of the car industry’s most demanding and tenacious chief executives and he rescued Fiat and Chrysler, two of its most storied brands.

The gruff 66-year-old, who died last week after succumbing to complications from recent surgery, spent 14 years at the wheel of Fiat Chrysler, the group he built. He was replaced as boss last weekend after his condition worsened.

In Italy, where his turnaround of Fiat earned him legendary status, he was treated like a rock star. The former philosophy student and accountant almost never wore a tie and preferred casual sweaters, half-joking that it saved him time on dressing.

A heavy smoker until giving up the habit a year ago, he was known for working extraordinarily long hours before falling ill. He demanded others keep a similarly gruelling schedule, earning him a reputation from friends and foes alike for being stubborn and arrogant.

“I feel like I live in a tunnel. He is not just demanding; he wants all your life devoted to him,” said one banker who worked with Mr Marchionne on various deals in recent years.

In his last public appearance on June 26, wearing his signature sweater, Mr Marchionne appeared fatigued and out of breath as he presented a Jeep Wrangler to Italy’s paramilitary police, the Carabinieri, at a ceremony in Rome.

Days later, he went to Switzerland to undergo what Fiat Chrysler (FCA) described as a shoulder operation. FCA said he suffered complications that suddenly worsened on Saturday.

In an emergency board meeting at the weekend, FCA chose the head of its Jeep division, Mike Manley, as his successor. On Wednesday, FCA Chairman John Elkann announced that the longtime CEO had passed away, saying: “Sergio Marchionne, man and friend, is gone.”

The news agency ANSA reported on Wednesday that the cause of death was cardiac arrest.

Mr Marchionne has done what many thought impossible, most notably his huge gamble just over a decade ago when he set in motion the marriage between the then-ailing Fiat with bankrupt US rival Chrysler. It is now the world’s seventh-largest car maker and is debt-free.

“Sergio was a unique blend of a visionary and an executor. He combined a grand vision and the ability of getting things done. This is a real tragedy,” said Domenico Siniscalco, a former Italian finance minister, now country head at Morgan Stanley Italy.

In the clubbish world of Italian business, where change often happens slowly and chief executives bend to the prevailing political wind, Mr Marchionne stood out as an exception, taking on trade unions and rowing publicly with politicians.

He pulled Fiat out of Confindustria, Italy’s top business group, determined to negotiate directly with unions rather than pursue national wage bargaining via Confindustria.

However, his shrewd deal making kept investors on board and earned him accolades, even from competitors.

Fiat’s value grew more than tenfold, helped by the spin-off of trucks and tractor maker CNH Industrial and sportscar group Ferrari, fuelling expectations of other transformational deals to come.

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The son of a carabiniere, Mr Marchionne was born and raised in the poor central Italian region of Abruzzo. His family moved to Toronto when he was 14 to escape what his father viewed as the confines of an Italian society obsessed with status over talent.

His background was in finance, not cars, but Mr Marchionne earned kudos for his turnaround skills in 2004-5 when he saved Fiat, Italy’s biggest industrial group with a century of history and a 200,000-strong global workforce, from near bankruptcy.

“I like to fix things and, to be blunt, Fiat needs a fix right now,” he said after his appointment as CEO in 2004.

He relentlessly pursued those goals, sleeping on the couch of his private plane while jetting between offices in Detroit, Turin and London.

A tough negotiator known for getting his way, in 2005 Mr Marchionne forced General Motors to pay Fiat $2 billion not to exercise an option to sell its auto division to the US car maker. He flattened an inflexible hierarchy, replacing layers of middle management with meritocracy.

He took a knife to costs, drastically reducing the number of car platforms, and formed joint ventures to share development and manufacturing.

He clinched a partnership with Chrysler before eventually buying out the rest of it in a deal he orchestrated over his Christmas break in 2013, at a Florida beach, in a one-on-one meeting even those close to him were unaware of.

He revived Chrysler, betting that its Jeep brand should be taken global. Jeep is now Fiat Chrysler’s growth engine.

He took the bold step to end production of unprofitable saloons in the United States and retool plants to boost output of lucrative 4x4s and trucks, a move since emulated by rivals.

Known by direct reports in Italy as “il Dottore” - the Doctor - and by his US lieutenants as “The Boss”, Mr Marchionne ran the executive team with an iron fist, according people who worked closely with him say.

He had an impressive track record of creating shareholder value, but he was less successful at recent ambitious plans.

Even though his bid to merge with bigger US rival GM to share the costs of making electric and autonomous vehicles was repeatedly rebuffed, Mr Marchionne admitted a merger for FCA was “ultimately inevitable” to be able to compete.

“Being small, cute is going to do nothing,” he said last year.

“Go home, go to a beauty parlour and do something else.”