Sergio Marchionne, former CEO and chairman of the Fiat Chrysler Autombile group (FCA), Ferrari and Maserati passed away on the 25th of June, aged 66, due to complications from a shoulder surgery. FCA had previously been forced to remove Marchionne as CEO due to the increasing complications post-surgery. The legendary figure was being treated at Zurich’s University Hospital. The hospital said it had used “all the options offered by cutting-edge medicine” but did not disclose the exact nature of Mr. Marchionne’s illness.
Sergio Marchionne speaking at a press conference (Source: Wall Street Journal)
According to FCA policy, any health conditions or complications suffered by their leading members are private matters, and do not amount to a disclosure in any form. This means succession plans and company ambitions have the potential to be thrown into a cloud of smoke in emergencies such as these.
“Succession has been a topic that has obsessed all of us,” FCA Chairman John Elkann said at the company’s business plan event in early June. “This has been taken incredibly seriously by the board [and] by myself and we’ve been working on it for many years with Sergio,” he said. “We were also very clear about the timing of it, which is 2019.”
Elkann and Marchionne were in agreement that Mike Manley (currently in charge of Jeep) would be the next CEO, but the board had not made a decision, a spokesman said Thursday.
— Scuderia Ferrari (@ScuderiaFerrari) July 26, 2018
Drivers Sebastian Vettel and Kimi Raikkonen wear black armbands, in mourning,
Ferrari, on the other hand, were caught unawares as they were unaware of the “complications” and did not know the severity of Marchionne’s condition. They have since announced enlisted Philip Morris International Inc. veteran Louis Camilleri to run the company. Mr Camilleri was at the helm till 2013 when he voted to step down but remain on the board. He oversaw the transition when key markets faced cigarette bans, with he and the company since adopting a policy of incorporating new technologies in the industry.
Now some musical chairs have to be played to get the right people back in place. But the void left by Marchionne is large and will be hard to fill. Ferrari, as we see above, called in a Philip Morris vet, and FCA have Mike Manley lined up, but Sergio was a visionary and one the most brave men the industry witnessed. He orchestrated the merger of then-struggling FIAT but just turned profits and Chrysler to form the FCA corp.
The FCA headquarters, Auburn Hills, Michigan (Source: FCA)
He arrived in the auto industry as an outsider in 2004, taking over from Umberto Agnelli, whose family founded Fiat in 1899. He cut middle management jobs and reduced wages to help lessen the company’s multi-billion dollar losses. Then chairman Luca Cordero di Montezemolo handled the politics and unions. Going beyond the family hierarchy model and bringing in outsiders clearly paid diviends. About two years after Marchionne took over, Fiat turned its first profit in five years. There was a transformation in the brand’s car portfolio, with the hit Grande Punto being introduced under Marchionne’s stewardship. In addition he reintroduced the “people’s car”, FIAT 500, which became one of Fiat’s iconic exports as it expanded abroad. While he started small with limited industrial alliances, his ambitions soon grew.
Spinning off CNH (a reputed construction company) and Ferrari was another brilliant move that saw increased shareholder value but well after came the masterplan that saw him invest in the nearly bankrupt Chrysler in 2009, even in the midst of a global auto crisis. Over the years he gradually increased the share percentage and implemented the FIAT model in Chrysler. In 2014 he oversaw the tax office move from Italy to London as the Italian system essentially ran companies into the ground.
Marchionne was grooming Elkann (incidently part of the hereditary Agnelli family) to be his successor along with Manley. Elkann led the investment company EXOR based in the Netherlands, making him a sensible option for succession. More recently Marchionne layed out a plan to transform Ferrari and was fighting the two tier salary system negotiated by the UAW in 2007 in the United States.
At his last public appearance as CEO, in June, Marchionne attended a ceremony in Rome at which a Jeep was presented to the Carabinieri police. He noted that his father was a Carabinieri officer and he recognised in the Carabinieri “the same values at the basis of my own education: seriousness, honesty, sense of duty, discipline and spirit of service.”
Marchionne is an embodiment of all those values and a source of inspiration to all business and people who want to break into the automotive industry. He showed everyone what it meant, when you dared to be different in the right circumstances.