MILAN/LONDON (Reuters) – Sergio Marchionne bowed out on Saturday as one of the auto industry’s most demanding and tenacious chief executives, his health in crisis after a career in which he rescued Fiat and Chrysler, two of its most storied brands.
FILE PHOTO: Fiat Chrysler Automobiles CEO Sergio Marchionne speaks during a media conference in Balocco, northern Italy, June 1, 2018. REUTERS/Massimo Pinca/File Photo
Fourteen years after he first took the wheel of Fiat, the gruff 66-year-old was replaced as boss of the Fiat Chrysler (FCA) group he built. He had suffered serious complications from shoulder surgery and his health was worsening, the company said.
FCA gave no further details.
In Italy, where his turnaround of Fiat earned him legendary status, he was treated like a rock star. The former philosophy student and accountant almost never wore a tie and preferred casual sweaters, half-joking that it saved him time on dressing.
A heavy smoker until giving up the habit a year ago, he was known for working extraordinarily long hours before falling ill. He demanded others keep a similarly grueling schedule, earning him the reputation from friends and foes alike for being stubborn and arrogant.
“I feel like I live in a tunnel. He is not just demanding; he wants all your life devoted to him,” said one banker who has worked with Marchionne on various deals in recent years.
Some could not keep up with his round-the-clock approach.
“He emails you at all hours and wants an answer within five minutes, even in the middle of the night. If you don’t answer promptly you lose the mandate,” another banker said.
“I only started having a life and seeing my family when I stopped working with him.”
In his last public appearance on June 26, wearing his signature sweater, Marchionne appeared fatigued and out of breath as he presented a Jeep Wrangler to Italy’s paramilitary police, the Carabinieri, at a ceremony in Rome.
Days later, he went to Switzerland to undergo what FCA described as a shoulder operation. FCA has not said what happened after he left the operating theater, except that he suffered complications that suddenly worsened on Saturday.
In an emergency board meeting on Saturday, FCA chose the head of its Jeep division, Mike Manley, as his successor and voiced “profound sorrow” at Marchionne’s condition.
Marchionne has done what many thought impossible, most notably his huge gamble just over a decade ago when he set in motion the marriage between the then ailing Fiat with bankrupt U.S. rival Chrysler. It is now the world’s seventh-largest carmaker and is debt-free.
“Sergio Marchionne’s time as CEO of Fiat is already the stuff of legend,” Bernstein analyst Max Warburton said earlier this year.
His shrewd dealmaking kept investors onboard and earned him accolades, even from competitors. Fiat’s value grew more than 11 times, helped by the spin-off of trucks and tractor maker CNH Industrial (CNHI.MI) and sportscar group Ferrari (RACE.MI), fuelling expectations of other transformational deals to come.
‘I LIKE TO FIX THINGS’
“You can argue Sergio has a bad temperament. You can say he is a bad father, as he never spends time with his kids, but you cannot ever question his leadership as a manager. He has done miracles at Fiat,” said another a person who worked with him.
The son of a carabiniere, Marchionne was born and raised in the impoverished central region of Abruzzo, Italy. His family moved to Toronto when he was 14 to escape what his father viewed as the confines of an Italian society obsessed with status over talent.
His background is in finance, not autos, but Marchionne earned kudos for his turnaround skills in 2004-5 when he saved Fiat, Italy’s biggest industrial group with a century of history and a 200,000-strong global workforce, from near bankruptcy.
“I like to fix things and to be blunt, Fiat needs a fix right now,” he said after his appointment as CEO in 2004.
For 14 years he relentlessly pursued those goals, sleeping on the couch of his private plane while jetting between offices in Detroit, Turin and London.
A tough negotiator known for getting his way, in 2005 Marchionne forced General Motors (GM.N) to pay Fiat $2 billion not to exercise an option to sell its auto division to the U.S. carmaker.
He flattened an inflexible hierarchy, replacing layers of middle management with meritocracy.
He took a knife to costs, drastically reducing the number of car platforms, and formed joint ventures to share development and manufacturing.
He clinched a partnership with Chrysler before eventually buying out the rest of it in a deal he orchestrated over his Christmas break in 2013, at a Florida beach, in a one-on-one meeting even those close to him were unaware of.
He revived Chrysler betting that its Jeep brand should be taken global. Jeep is now Fiat Chrysler’s growth engine.
He took the bold step to end production of unprofitable sedans in the United States and retool plants to boost output of lucrative SUVs and trucks, a move since emulated by rivals.
Known by direct reports in Italy as “il Dottore” and by his U.S. lieutenants as “The Boss”, Marchionne ran the executive team with an iron fist, people who work closely with him say.
LOSING THE MIDAS TOUCH?
Marchionne has an impressive track record of creating shareholder value, but he has been less successful at delivering a string of recent, ambitious turnarounds.
Profitability in Europe is only gradually recovering and FCA has yet to make any significant inroads in China. It has also yet to turn a profit with Alfa Romeo which along with Jeep and Maserati was the focus of the last strategy launched in 2014.
Marchionne refused to follow rivals and invest in electrification, before finally making a U-turn as part of a strategy unveiled in June.
He also leaves FCA overly reliant on North America, a region expected to come off its peaks soon.
Even though his bid to merge with bigger U.S. rival GM (GM.N) to share the costs of making electric and autonomous vehicles was repeatedly rebuffed, Marchionne admitted a merger for FCA was “ultimately inevitable” to be able to compete.
“Being small, cute is going to do nothing,” he said last year. “Go home, go to a beauty parlor and do something else.”
Editing by Mark Bendeich and Diane Craft