Fiat announced on Wednesday (yesterday) that it had signed an agreement to buy the remaining 41.46% stake it does not own in Chrysler Group from the United Auto Workers VEBA Trust, the last step needed before the Italian and U.S. carmakers can merge to become the world’s 7th largest auto manufacturer.
Currently, under Fiat’s World Class Manufacturing system, its most productive plants in North America are the Windsor (Ontario) Assembly Plant, the Toledo (Ohio) Assembly Complex and the Dundee Engine plant in Dundee, Mich. All three plants have achieved “bronze” status under the system’s scoring, which measures a broad array of manufacturing metrics and boils them down into a score on a 100-point scale. To achieve bronze status, the plant has to have a score of at least 60.
Other Fiat plants globally implemented World Class Manufacturing earlier than did Chrysler’s plants, and some have achieved silver or gold status.
Full ownership of Chrysler will enable Fiat boss, Marchionne to create a global industry player with better scale to challenge General Motors Co. and Volkswagen AG. He has tried since taking the helm at Fiat in 2004 to buy a competitor to give the struggling Italian manufacturer a worldwide market strategy for growth.
Merging the two companies would allow Fiat to pool cash with Chrysler and tighten cooperation between its Alfa Romeo, Lancia and Maserati brands with Chrysler, Dodge and Jeep.
Fiat has relied on Chrysler to sustain profit amid losses in Europe, where the car market has fallen to a two-decade low. Group net income, including minority holdings, totaled 1.41 billion euros (USD1.94 billion) in 2012. Without Chrysler, Fiat would have posted a 1.04 billion euro loss.
Fiat started accumulating Chrysler stock in June 2009 as part of a government and labor union bailout of the U.S. carmaker, which was losing as much as $100 million a day at the time. Rather than paying cash for the initial 20% holding and subsequent 15% stake, Fiat provided management experience and technology and helped Chrysler meet various performance milestones, such as developing models.
