Sergio Marchionne
Executive who transformed the fortunes of the ailing Fiat Chrysler but made enemies along the way
SERGIO MARCHIONNE, who has died following surgery aged 66, was until a few days ago the CEO of Fiat Chrysler Automobiles (FCA), the giant car manufacturer controlled by the Agnelli family which he in effect created in 2009. Credited with reinvigorating both its ailing constituent businesses, as well as subsidiaries such as Ferrari, Marchionne was among the most widely admired – if divisive – managers of his generation.
In 2004, he was introduced to the startled Italian press as the new boss of Fiat. He was almost unknown in industrial circles there after a career spent largely in Canada and Switzerland. The firm was haemorrhaging £1.5 million per day, and with the death a few weeks earlier of Umberto Agnelli, brother of Gianni, it seemed as if the family’s control of the business was about to end.
With General Motors (GM) expected to exercise an option to buy Fiat, it had been thought that the Agnellis would turn to an experienced company executive to guide John Elkann, the 28-year old grandson and heir of Gianni Agnelli. Instead, reputedly around the coffin of Umberto, the family had opted instead for Marchionne.
He had joined the board only a year earlier after catching Umberto’s eye by streamlining management at SGS, a Swiss certification and valuation company part-owned by the Agnellis.
Marchionne’s first words to journalists were a vow: “Fiat will make it.” Fifteen years later, he had undoubtedly done as he had promised, although the business had been radically transformed. Once the champion of Italian industry, the Agnellis’ holding company is now a global concern, based in the Netherlands for tax reasons with Italy providing only 8 per cent of its market.
As well as assuring the family’s continued ownership, Marchionne’s strategy on the domestic front was to increase its worth by hiving off parts of it which, by continued inclusion in the wider group, were under-valued. These included NCH, which owns the New Holland agricultural business, and Ferrari, which he succeeded in floating and doubling in value.
Marchionne also faced down GM, secured new lines of credit from the banks and persuaded the unions to break national agreements on pay in return for long-term investments in plant. Relishing his status as an outsider – “it meant I didn’t have to defend 30 years of cr--” – he was also able to keep politicians at more of a distance than had predecessors.
The success of the Fiat 500, the introduction of which he had sped up, as well as booming sales in Brazil, strengthened his hand. But he became convinced that the scant ratio of profit to investment was such in the industry that scale was the only solution, and in 2009 he forged an alliance with Chrysler, taking a 20 per cent stake in return for Fiat know-how.
The third-largest US car manufacturer was then in bankruptcy, but within two years it had paid off all its federal loans. In 2014 Fiat (which had little presence in the US) acquired full control of it.
With Marchionne at the helm in the corporation’s offices in Michigan – after the Pentagon, the second-largest building in North America – Chrysler began to thrive. Sales in particular of the Jeep brand rocketed, driven in part by Marchionne’s bet that fracking would keep petrol prices for thirsty SUVS low. By 2017, FCA had combined sales of £90billion, with profits of £3billion, and had largely paid down Chrysler’s debts.
A chain-smoking workaholic, who was at his computer by 4am when not on an international flight, Marchionne drove his employees hard. Sackings of those who failed to resolve problems were frequent, but decisions such as making managers and those who worked for them share offices undoubtedly helped re-energise the business. Both Presidents Obama and Trump became fans of his, not least because he had saved some 300,000 jobs in the US.
Journalists also enjoyed his briefings, which were peppered with cultural allusions, and his informal, non-corporate style. Famously, Marchionne had latterly dispensed with a suit and tie, always wearing a black sweater, some said as a homage to one of his heroes, Steve Jobs.
Yet while he could be good company, he was also easily riled. He and Volkswagen, which had long wanted to buy Alfa Romeo – which Marchionne failed to revive despite pouring £5billion into it – were for many years at odds. In 2012, this culminated in Marchionne appearing to challenge the German manufacturer’s CEO, Martin Winterkorn, to a fight at the Paris motor show.
How much of this was mere gamesmanship, of which Marchionne was a master, must be conjecture. A proposed merger with GM was rebuffed, leaving observers wondering what his vision was, not least since he had doubts about the profitability of electric cars. “It’s the big picture that counts,” he had said. “To be in it, I’m prepared to strike a deal with the devil.”
Sergio Marchionne was born in Chieti, in the Abruzzo region of Italy, on June 17 1952. His father Concezio was a carabiniere who after the war had served in the Yugoslav border region. There he had met his wife, Maria, a refugee from formerly Italian Istria. They also had a daughter, Luciana, who died in her early thirties.
Although a chubby and shy child, Sergio’s intelligence was apparent and it was in part to offer him more opportunity that when he was 13 the family moved to Toronto, where an aunt had settled. He learned English quickly – he would say later that it was better suited to business than Italian as it could express ideas more pithily – and took three degrees in Canada, including in business and in law.
He initially studied philosophy, however, and credited it with allowing his mind to absorb new concepts when he had to master the details of a chemicals or agricultural business. Others pointed to the continued influence of Machiavelli.
Between 1983 and 1985, he worked as a tax accountant for Deloitte & Touche before taking on a series of posts in industry. In 1994, he joined Algroup, the Swiss aluminium packaging company, becoming its CEO three years later, shortly before it was merged with Alcan.
At a salary of some £9million, Marchionne was the best-paid manager in Italy, though he attracted criticism by paying his taxes in Switzerland. A car enthusiast – he had tried to restore an E-type Jaguar as a student – he also enjoyed poker and collecting wine.
His marriage ended in divorce and he is survived by two sons.
Sergio Marchionne, born June 17 1952, died July 25 2018