The fake globalization of Mr Marchionne’s Fiat

All the big car groups have a national landmark, while Fiat has been reduced to a peripheral province of Detroit.

The fake globalization of Mr. Marchionne’s Fiat

All the big car groups have a national landmark, while Fiat has been reduced to a peripheral province of Detroit.

For once, we should believe the words of Mr. Marchionne, when he says that the total acquisition of ownership of Chrysler by Fiat marks a decisive step towards the globalization of the Fiat-Chrysler Group, of which he is the absolute dominus. With nearly 4.5 million cars and commercial vehicles sold worldwide, the group ranks seventh in the list of major car companies.

Surprisingly,  Fiat was deeply in crisis in Europe and Chrysler that was close to bankruptcy in the U.S, once brought together, become a globalized car company. It would be a miracle, but for the choice of Barack Obama for saving the American auto industry after the bankruptcy of General Motors and Chrysler. A clear and enlightening rebuttal of the stupidity of the Italian government, prisoner of the ideology that requires the State to ignore the fate of the country's industry- except for announcing the privatization of the very little remaining of the Italian industrial and service companies.

So far so good, for unscrupulous and ambitious Marchionne. He used the money offered by the USA to take over Chrysler and merge it with Fiat. He won full control of the group that for its international size can be defined a global company. But the misunderstanding lies in the meaning that the enthusiastic Italian commentators ascribe to the notion of "global". Indeed, all the largest companies that dominate the car market have a global dimension in terms of production and sale. .

Toyota, Volkswagen, General Motors and Ford were the globalized car businesses for excellence, also before the current concept of globalization.  However, they are not “stateless”. Each of them has a clear national landmark.Those we have mentioned have their reference centre in Japan, Germany and the United States. Their factories and the markets are scattered in different continents. However, there is a reference country where the command center is located - that is, the relationship of mutual interference with the government as well as the financial institutions, the trade unions and the communities.

The rescue by Barak Obama of the Detroit two big companies is a striking example, but not the only one, of the relationship between big business and government in the car industry. We may have forgotten that in the mid-90s, Volkswagen, which now competes to be number one in the world, was saved by Gerhard Schroeder, the governor of the Lower Saxony where its main production center is located. In 2011 Nicholas Sarkozy, the French President, gave a heavy financial aid to Peugeot-Citroën to avoid the announced massive layoffs.

In other words, each of the big global car companies stands and is known worldwide for the country of origin that is its strategic center for production, finance, technology research, and global planning. The Fiat-Chrysler Group will be no exception. The strategic center of reference is Chrysler. After the bankruptcy, Chrysler has regained ten percent of the U.S. market, which is equivalent to the whole faltering European market of Fiat.

Chrysler has produced 1,800,000 cars in 2013 against 450 000 produced by Fiat in Italy. In the North American market - the NAFTA, the free trade agreement between the U.S., Canada and Mexico - Chrysler sells more than three times as many cars Fiat sells in the Eurozone - included the large markets of Germany, France and Spain - while in Italy the Fiat-Chrysler group is present with only  10 percent of its total output .

The group led by Mr.Marchionne will be interested in maintaining the Fiat trademark, to the extent that it will be useful, as in Brazil, where the Fiat produces more than in Italy.  With the double mark, Mr Marchionne will likely maintain and try to develop production in Poland, Turkey or Serbia, and will try to enter the huge Chinese market, possibly in alliance with a minor Japanese company. But the head, the house will be in Detroit, and the financial site in Wall Street. The globalization of Fiat-Chrysler will be an American one.

The Italian newspapers have written in a burst of proud nationalism (or subservience to Mr Marchionne.) that Fiat in full decline in Italy and marginalized in Europe, has acquired a global role, owing Chrysler. But more simply, this is  an operation of the Agnelli family in the era of the Italian de-industrialization The deus ex machina is Sergio Marchionne  who controls  the group, a classic case in which top management exercises his command in a substantial independence from the property.

 Finally, Fiat, the secular Italian car-makers, will be reduced to an appendix to Chrysler, the parent company. And Italy, following the Marchionne’s strategy, acclaimed by a ruling class with no courage and no sense of the future, remains the only major European country with a long history in the automotive industry reduced to a marginal province of an industry mistakenly deemed obsolete.