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Chrysler’s Survivors of Tumult Unfazed by ‘Just Another Merger’

Gabrielle Coppola
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Chrysler’s Survivors of Tumult Unfazed by ‘Just Another Merger’

(Bloomberg) -- Just five months after a proposed merger between Fiat Chrysler Automobiles NV and Renault SA fell apart, employees at the Italian-American automaker’s U.S. headquarters in Auburn Hills, Michigan, are once again contemplating the arrival of a new boss.

Stock markets were jolted by news this week that Fiat Chrysler and another French suitor, PSA Group, mapped out an agreement to create the world’s fourth-biggest automaker and install Carlos Tavares, PSA’s chief executive officer, to lead the combined company.

While younger Chrysler employees may be unnerved, veteran workers were unfazed by the latest in a series of corporate transformations at the company dating back two decades.

“This is the fifth time in 20 years this has happened to me,” said Greg Ezyk, an engine-durability technician who works at the U.S. headquarters complex in Auburn Hills outside Detroit. “I don’t get worried.”

Most global automakers have gone through their share of buying sprees and spinoffs as the industry weathered cyclical ups and downs. But Chrysler, Detroit’s perennial underdog, has seen more action than most, passing through the hands of Germany’s Daimler AG, private equity firm Cerberus Capital Management LP, the U.S. government and Italy’s Fiat -- and that’s just in the past 21 years.

Even the late Sergio Marchionne, who struck a deal with then-President Barack Obama in 2009 to take control of a bankrupt Chrysler and then returned the company to profitability, spent much of his decade-long tenure shopping for deals and preaching the virtues of consolidation.

Joining forces with PSA could be a positive for Fiat Chrysler and its upcoming contract negotiations with the United Auto Workers union because it will make the automaker more stable in the long run and better position the company for the rise of electrification, said Marick Masters, a management professor at Wayne State University in Detroit. The UAW will turn its attention to hammering out a deal with the company as long as its tentative agreement with Ford is ratified in the coming weeks.

Mergers are such an ingrained part of Chrysler’s culture, Ezyk said, that he’s picked up on tell-tale signs one may be in the works. When Fiat Chrysler started limiting unionized salaried employees like him from working overtime early this year, he viewed it as an attempt to improve the company’s financial results and make it more attractive to a partner or buyer.

That’s when the old timers, including me, said ‘Here we go again,’” Ezyk recalled.

When Daimler sold a troubled Chrysler to Cerberus in 2007, the private equity firm had clocks yanked from the walls and toilet paper taken out of the bathrooms in Auburn Hills, to save on battery and maintenance costs, Ezyk said.

The phrase “merger of equals,” which Fiat Chrysler and PSA used to describe their plan, is usually a sarcastic joke in Auburn Hills referring to the Daimler-Chrysler era, when American employees felt mistreated by German counterparts.

It’s taken Chrysler years to rehab its product portfolio from the “Tonka toy” plastic interiors and quality issues that plagued the company when it was cutting costs during the Daimler-Chrysler era, said Mark Kudla, a 29-year Chrysler veteran who retired as a director of product planning in 2017.

Kudla is more optimistic about Tavares, whom he worked with on a vehicle platform-sharing project around 2007, when Tavares was leading Nissan Motor Co.’s U.S. operations. Kudla describes Tavares as “brilliant” and a strong personality who didn’t waste time and was eager to get things done.

“He’s one of those guys who walk into a room and pick up everything right away,” he said. “Marchionne was brilliant at that, and Tavares sort of rings that same bell to me.”

Under the proposed deal terms, Tavares, a French-speaking Portuguese national known for cost-cutting, rally-car driving, and an impressive turnaround of Opel, General Motors Co.’s jettisoned European business, would succeed Mike Manley, who has served in the CEO role for just 15 months.

“This has happened to us so many times, we don’t even care anymore,” said Kathy Wittig, an attendance counselor who has worked for Chrysler for 25 years. “It’s just another merger.”

--With assistance from Melinda Grenier.

To contact the reporter on this story: Gabrielle Coppola in New York at gcoppola@bloomberg.net

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Chester Dawson

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