NEWSMAKER-Fiat boss Marchionne: A man in a hurry

Thu Apr 30, 2009 3:35pm EDT

* The consummate dealmaker

* Cost-cutter: "I like to fix things"

* Brought Fiat back from the brink

By Gilles Castonguay

MILAN, April 30 (Reuters) - When it comes to taking on a challenge, Sergio Marchionne does not waste any time.

No sooner did the hard-driving chief executive of Fiat SpA (FIA.MI) say the Italian car maker needed a partner to survive the worst industry crisis in decades than he announced talks with Chrysler LLC [CBS.UL] in January to do just that.

And on Thursday, he made his biggest -- and some say, riskiest -- move by entering into a partnership with Chrysler that could leave Fiat the majority owner of the U.S. automaker. [ID:nLU940906]

And rather than wait for the deal to close, the chain-smoking troubleshooter last week raised the possibility of opening a second series of talks with another car maker. He declined to say which one, but Opel, the troubled German unit of General Motors Corp (GM.N), is the likely candidate.

Having become a star for his feat of turning around Fiat after it had been written off for dead, people do not doubt his ambitions nor his abilities to take on ever bigger challenges involving troubled car makers.

Another deal, such as one with Opel, for example, would create the second-biggest car maker in Europe after Volkswagen AG (VOWG.DE).

"There are not that many people who have the force of conviction ... to pull it off (like Marchionne)," UBS Warburg analyst Philippe Houchois said.

With the car industry in crisis, Marchionne has not only called for its consolidation but also made Fiat a proponent by entering talks with Chrysler.

The 56-year-old Italian-Canadian has often spoken of the need to reduce the number of car makers, arguing that they have been operating beyond their means, producing more cars than the market can absorb.

Marchionne has insisted that he harbors no dreams of empire-building, despite his aim to gain scale for Fiat, Europe's sixth-largest car maker by unit sales.

"We are trying to drive an argument purely based on industrial efficiency. That is the only thing I care about," he told analysts in his typical no-nonsense style on a conference call last Thursday.

A lawyer and tax accountant by training, Marchionne does not come across as a corporate Caesar. In contrast to most Italian executives, he shuns expensive suits and ties in favor of a blue sweater over an open-necked shirt.

He does allow himself to enjoy some trappings of luxury, however. After long spells at Fiat's offices in Turin, Italy, Marchionne gets behind the wheel of a Ferrari when he goes back to see his wife and two children at their home in Switzerland.

NO STRANGER TO MERGERS

Empires aside, Marchionne is a no stranger to mergers involving more than two companies.

He was chief executive of Alusuisse Lonza when it joined Canada's Alcan in 1999 and later added France's Pechiney.

Passed over for the top job at the combined group, he took over at Lonza Group (LONN.VX) when it was split from Alcan. With a tightly focused strategy, he turned the chemicals and energy group into one of the sector's top performers.

His reputation as someone who produces results had spread wide enough that news of his move to SGS (SGSN.VX) sent shares in the Swiss inspection and certification firm up more than 8 percent and those in Lonza down nearly 2 percent in 2002.

The following two years saw Marchionne turn SGS into one of the best performers on the blue-chip Swiss Market Index by slashing management and boosting margins.

Impressed by his achievements, Italy's Agnelli family, an SGS shareholder, invited him to try his hand as CEO of Fiat in 2004.

"I like to fix things and to be blunt, Fiat needs a fix right now," he told a news conference after his appointment to the Italian car maker, whose survival was in doubt.

Marchionne's first task was to take Fiat out of a bad relationship with GM, which included a cross-share ownership and cooperation on engines and models for the European market.

Aware of GM's desperation to free itself of the obligation to buy Fiat's car business as dictated by the terms of their alliance, he got GM to pay $2 billion to end the affair once and for all.

Marchionne then turned his attention to Fiat.

In place of a structure with an inflexible hierarchy, he shed entire levels of middle managers and instilled a meritocracy.

He took a knife to costs, drastically reducing the number of platforms used for cars and the time to bring new models to market.

Following the industry trend, he formed joint ventures to share development and production costs with an aim of becoming as efficient as Toyota Motors (7211.T), which he considered the industry standard.

Confounding his skeptics, he soon made Fiat profitable again, leading it to beat not only short-term targets but also set new records, quarter after quarter.

The successful launch of an updated version of the Cinquecento (500) city car in 2007 marked its recovery from near death.

The crisis brought this winning streak to a halt, however. By the first quarter of 2009, Fiat was back burning cash, juggling a huge debt and running a loss. (Editing by Patrick Fitzgibbons and Steve Orlofsky)

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