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Fiat Names CEO, 5th in 2 Years, to Fill Sudden Void

Sergio Marchionne says he'll follow the revival plan of his predecessor, who quit unexpectedly.

June 02, 2004|From Reuters

Fiat quickly plugged a power vacuum in its upper ranks Tuesday when it named turnaround expert Sergio Marchionne to be its fifth chief executive in two years.

Marchionne, who was CEO of Swiss testing services firm SGS and a Fiat director, immediately pledged to stick to the turnaround plan drawn up by his predecessor, Giuseppe Morchio, who quit unexpectedly Sunday.

"The plan was approved by the board. We have every intention of completing it," he said, easing concerns that a new CEO would mean a new plan for the loss-making giant. Marchionne was part of the board that passed the plan.

However, Marchionne hinted that there might be more changes ahead as he evaluated the managers Morchio brought in to breathe new life into Italy's biggest industrial group.

"I don't know them well enough. We need to start working and see what happens," he said.

Marchionne is a hard taskmaster who sets tough targets and expects people to meet them. At SGS, he stripped down management to save cash. As chairman of chemicals firm Lonza, he was instrumental in the resignation of its CEO after bad results.

Marchionne, 51, arrives two days after Fiat's controlling Agnelli family named Ferrari chief Luca di Montezemolo chairman, replacing Umberto Agnelli, who died last week. Morchio, who had been after the top job, quit as a result.

The new appointments were seen as a sign that the Agnellis did not plan to loosen their ties to the carmaker their ancestor founded 105 years ago. Instead, they named the most prominent member of the younger generation, John Elkann, vice chairman.

Montezemolo said Elkann, 28, would have an operating role at Fiat and would not just sit on its board and strategy committees.

Elkann said the new team would speed up Fiat's recovery plan, which includes moving the tractor-to-components group back to operating profit in 2005 and net income in 2006.

To do that, analysts and fund managers said Fiat needed to boost its top line as fast as possible or sell more assets. Last year, revenue fell 7% while core car sales dropped 10%.

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