Share

Stellantis, Marchionne's legacy overshadowed by Tavares' short-term gamble but the wind is changing

Marchionne left the American market of Fiat and Chrysler and the new work organization to Stellantis while Tavares bet everything on the electric engine and short-term results but the bet did not work. Palmer's recall is however a good sign of change

Stellantis, Marchionne's legacy overshadowed by Tavares' short-term gamble but the wind is changing

The group stellantis, born to be the world's fourth largest car manufacturer, was supposed to integrate, on an industrial and commercial level, the strengths of Fiat and the French company PSA.

Fiat brought with it the North American market (USA and Canada), after the acquisition of Chrysler, where the French were completely absent, and the greater production capacity of South America, with its own plant in Belo Horizonte, against those of Volkswagen, Ford and General Motors.

READ MORE Stellantis, after Tavares, here's Elkann's chance

Furthermore, Last but not least, the new group could have taken advantage of the organization of the workers' work desired by Marchionne, the WCM (World Class Manufacturing), which overcame the prescriptive system of Taylorism with the objective, by encouraging the motivation and participation of workers, of "zero accidents" and "zero musculoskeletal diseases" (the so-called carpal tunnel); a methodology engineered entirely by Fiat men and also exported to the American factories with great appreciation from the powerful American metalworkers' union UAW. Not a secondary aspect, given that the situation of accidents at work, especially fatal ones, places France itself in first place in Europe.

Stellantis and the electric engine

Compared to its European competitors, PSA boasted the best knowledge of electric motor technology, thanks also to the participation of a Chinese partner in its shareholding, in addition to its decades-long industrial presence in China and in the Far East and African countries, the result of the legacy of France's colonial past.

And it is right on the electric motor that Stellantis, in the person of Tavares and its entourage, have thought of building a competitive advantage in Europe compared to their competitors, not only with a view to 2035 but also with the entry into force of the sanctioning system on CO2025 emissions from new cars and new light commercial vehicles as early as 2.

Stellantis and the arrival of Marchionne

While Fiat overcomes the crisis of the early 2000s with Marchionne's arrival which focuses on development with new models, investments in Mirafiori and Pomigliano and entry into the American market, without state incentives for investments and especially those to drug the market (which, despite popular belief, have favored foreign car manufacturers more than Fiat in the past and today, on the electric market, have given a big push to Chinese penetration).

Marchionne also underlines that the labor cost is only 8% of the total costs of an automotive company and, in this perspective, it starts a season of industrial relations that lead to the renewal of employment contracts with salary levels higher than those of the national metalworkers' contract.

PSA, on the contrary, overcame the crisis by allowing the French state to acquire a stake in its capital and, since 2014, entrusted Carlos Tavares with the success of its recovery plan, based on staff reductions and cost cutting, without however giving up on the acquisition of a bankrupt company like Opel to increase its share of the European market in view of possible alliances, as in fact happened.

Stellantis, here's what Tavares does

Tavares, appointed CEO of Stellantis, to consolidate its position aims to bring immediate positive results to shareholders, in a short-term logic, according to what the financial markets require today, focusing first and foremost on cutting fixed and variable costs.

Factories such as those in Grugliasco and Rivalta are closed and sold, in the factories eliminated the Wcm, deemed too onerous, the contracts for the canteens and cleaning of general services and those for ordinary and extraordinary maintenance were revised downwards, the Palazzina del Lingotto was sold and the one in Mirafiori was emptied, the sale of the Fiat Historical Museum was avoided thanks to the intervention of the Fine Arts, but its management was entrusted to the National Automobile Museum.

Italian suppliers are being “advised” to transfer their production to Morocco where the cost of labor is significantly lower, an invitation that has not been accepted since our automotive supply chain is now over 70% dependent on German industry, despite the current critical situation.

I workers are asked to retire or resign with economic incentives: approximately 8 thousand since the establishment of Stellantis.

Moreover, French “engineers” have always envied our social safety net of the wage supplement fund, which allows the management of temporary or structural staff surpluses for periods much longer than their “chomage technique”.

And Tavares, or whoever, has taken full advantage of this tool by assigning niche and expensive electric cars to Italian factories, but with a market that is smaller than their production potential, desaturated their production capacity and condemning them to a slow agony, if a new industrial plan is not implemented.

The belief that the technological competence of the electric motor was superior to that of other European competitors, particularly Renault and Volkswagen, led Tavares, and the French engineering management, to believe that the European timescales for the green transition could be respected and that this constituted a competitive advantage over other manufacturers.

This is why Stellantis, not sharing the warnings raised by ACEA, the European Association of Automobile Manufacturers, on the negative impact of community policies on European industry, starting with the sanctions foreseen for 2025 on the failure to respect the production ratios between electric and endothermic vehicles, came out of ACEA itself in open controversy,

The day after Tavares' resignation, Stellantis he immediately expressed his intention to rejoin this association from next January 1st.

Furthermore, given the fact that the electric market is not growing but rather decreasing, and therefore with a declining electric production, to stay within the parameters expected from 2025, under current rules, Stellantis should also further cut the production of internal combustion engines, conversely increasing the redundancy fund in Italian factories.

Stellantis: The American Front Did Not Go Any Better

For years the American market, thanks to Sergio Marchionne's stroke of genius, was the “goose that laid the golden eggs” first for the shareholders of FCA and then for Stellantis.

To operate in North America, however, you have to know and be known by the Americans, and for them (presidents, trade unionists and workers) Marchionne was simply Sergio, an American, who frequented the Oval Office and the union tables, and on family days you could find him at the barbecue serving hamburgers and chips to Chrysler workers.

In the United States, however, the “Tavares school”, as it was called there, to make short-term profits, i.e. cost cutting and a high-price policy, did not work.

The dealers with yards full of unsold cars rebelled and the UAW union started a series of strikes, made even more rigid by the absence of the CEO from the union table, contrary to a tradition of American labor relations that sees the CEO directly as the protagonist in the negotiations, and not his delegates.

Result: Profits plummeted.

The end of the “goose that lays the golden eggs”, after the profit warning in October, led to the sudden resignation of Tavares.

However, the wind at Stellantis seems to have changed.

La John Elkann's first move was to recall as his special advisor Richard Palmer, a lifelong Fiat numbers manager, former financial director of Stellantis and removed by Tavares over a year ago to replace him with a person with experience in the food sector and already dismissed last October.

The Italian question remains, central to our country but with the awareness that for Stellantis national production is now worth about a tenth of its total, and that to double it to at least one million cars there will be a need for a consistent industrial plan and a new demiurge, as Fiat had in the past, for example, with Valletta, Ghidella and Marchionne.

The fact that the shareholder has reserved the right to identify the new CEO by June 2025 It could indicate that in reality a choice has already been made, but for contractual reasons, for example for a non competition agreement, cannot be released except on that date.

comments