C.A.R.- Big Shots Spill Their Beans in Travis City - Management Briefing Seminars - Day 3

MANAGEMENT BRIEFING SEMINARS DAY 3
By Steve Purdy
Photos by Bob Benko
TheAutoChannel.com
Detroit Bureau

By mid morning today we had enough to write about for the rest of the week between Sergio Marchionne, CEO of Chrysler and chairman of Fiat, and Bob King, UAW’s dynamic new president. From the former we heard about the survival and future plans of the smallest of the “Detroit Three.” And, from the latter, we heard what sounds like an enlightened new direction for the industry’s primary labor union.

Marchionne strode casually to the stage dressed in all black with shirttail out. Dress is always fairly casual here but it’s unusual to see an industry big boss dressed so comfortably.

Marchionne is known for his crew neck sweaters and lack of pretension. His demeanor as well projected an air of relaxed confidence without arrogance. Even at the later press conference he answered questions without apparent caution or reserve.

And he is a mighty smart and well-educated guy. Not only was his speech peppered with classic literary references, his depth of knowledge, not just of the auto business, is obvious. He did not hesitate to share information and opinions freely.

Marchionne talked about the challenges of combining the cultures of two disparate companies, a process that became a millstone around the neck of those trying to incorporate different cultures to form Daimler-Chrysler. He insists that his approach is not so much a merger as the making a mosaic, insuring that the unique identities of the companies, the people and the brands are not homogenized. The goal, he said, is to make sure that both entities have “unfettered” access to each other’s technology, platforms, processes and everything else they need. He expects no barriers between them.

Marchionne sees last week’s agreement on new CAFE standards as a great thing for the industry “like walking into a toy store,” he says, where everything is possible. Like most pundits within the industry he believes it would be a big mistake to make rules that would favor any technology over another. This way, with just a goal set, any route there is in play.

Chrysler does not plan to invest heavily in electrification. They’ll have an electric Fiat 500 available, but they’ll put most of their resources into improving conventional powertrains, including natural gas capability. In fact they’re coming out now with a new Chrysler 300 featuring a powerful V6 mated to an 8-speed ZF transmission (a transmission that Chrysler will soon make themselves in Indiana under license with ZF) that gets 31 miles/gallon on the highway. That’s an amazing accomplishment for a full-size, rear-wheel drive luxury sedan.

Marchionne downplayed the speculation that an IPO might be in the offing for Chrysler in the next couple of years. He’s concentrating on structuring the company with the right administrative balance to build value.

He gave plenty of hope to the folks at the Toledo Jeep plant by talking about what a great brand Jeep, particularly Wrangler, is now and what potential it has world wide. He insisted that the Wrangler is not a vehicle that could be easily made in other markets so Toledo should feel secure. Wrangler will even be a good product for China where they are not yet securely established. Their first Chinese partnership did not go well but he said a new partnership there shows great promise.

One of the biggest upcoming challenges for the industry, Marchionne says, “is the coming confrontation with China.” He later clarified that to mean that China will be an ever-stronger competitor in the world market, not just in their own.

With upcoming UAW negations looming, preliminary talks already started and Bob King poised to take the stage, Marchionne talked about his confidence that negotiations for a new contract would not be disruptive. The classic German codetermination approach will not work for Chrysler, said Marchionne. The union should concentrate on electing the best leadership they can, not worry themselves about corporate representation. It sounded to this observer like he didn’t think there any sense in having union reps on boards of directors.

Bob King then took the stage and continued the redefinition of the UAW’s role in the auto industry that he began presenting to this group at last year’s conference. Repeatedly emphasizing the partnership relationship, he insisted that no one is more dedicated to improving quality and efficiency than the new, enlightened UAW and its members. After all, they know that their jobs depend on the success of the companies.

That philosophy has only recently evolved within the union. It was traumatic for much of the rank and file as well as former leaders to give up the notion that union/management relationships must naturally be adversarial. That philosophy evolved over the years for good reason, of course, but no longer serves anyone.

King began his talk with a plea for rebuilding and supporting the middle class. He noted the increasing gap between the wealthy and the average worker lamenting the shrinkage of the mass of people in the middle who buy most of the cars.

“There has never been a successful democracy without a strong middle class,” King insisted, “and there has never been a strong middle class without strong unions.” He lamented, as have many on the left side of the political spectrum, that the gap between the haves and the have-nots has been widening over the past couple of decades and without addressing that disparity we risk serious problems, not the least of which would be the inability of the middle class to buy the cars they make.

King also talked about his union’s efforts to organize transplant factories located in “right-to-work” states. Last year at this conference he promised strong action against any company that aggressively rebuffed the unions efforts and reported this year that so far they have not had to make good on that threat.

In my years observing politics and the auto industry I don’t recall a union leader referring to auto company leaders by their first names as if they are good pals. He talked about Sergio, Allan and Dan being business people that come from outside the automotive tradition without the prejudices that plagued some of their predecessors allowing them to approach negotiations more reasonably. I was surprised that as he came off the stage he and Marchionne hugged instead of shook hands.

With the Detroit Three now profitable the union will be looking to share some of the gains. On the other hand, a later speaker made the point that existing UAW workers (all of which are back on the payroll after layoffs) gave up little in the past contract with veteran workers giving up no pay or benefits. Yes, the union lost such things as the jobs bank and painfully agreed to a two-tier wage system effecting new workers but most workers lost little if anything.

To finish the day I sat in on a panel discussing how cars will be designed to accommodate all the technology that continues to boggle my mind and overwhelm my sense of what a vehicle is. The discussion ranged broadly into areas of social media’s role in marketing the car as well as how it integrates into the connectedness that will continue to evolve.

Sean Sullivan, formerly of Toyota now working for Facebook, talked about the automobile having always been a social thing and a natural extension of our need to be connected. Instead of cruising Woodward racing our pals and looking for loose women (my analogy, not his) we can connect with our pals and scout women with internet access on our center stack. Then, Chris Weber, president of Nokia, presented, among other amazing tricks, their new application that allows entirely voice-operated texting. So, with hands free phone access like Bluetooth, we can text safely (or relatively safely) in the car.

Jim Farley, marketing and sales VP at Ford, acknowledged that one of the risks of using these new tools for marketing is that they often have too much input and data with the challenge being to sort it all out. He also verified what I’ve heard from a couple of friends who’ve purchased Fords lately that it is becoming difficult to keep up with upgrades and patches for the popular Sync system.

Glad I don’t have to deal with all that.

Tomorrow wraps up the conference with presentations by, among others Jonathan Browning of Volkswagen and Mark Reuss of General Motors.

Stay tuned once more.

2011 C.A.R. MANAGEMENT BRIEFING SEMINARS

Day 1
Day 2
Day 3
Day 4