Here’s a biz maxim: You
can’t make a winner by combining two losers. Examples: HP and Compaq.
American Airlines-TWA-USAir. The Pennsylvania and New York Central Railroads.
AOL-Time Warner. Wendy’s-Arby’s. Alcatel-lucent. Sears-Kmart.
Seen enough? Well,
here comes Fiat-Renault or Renault-Fiat. In one corner, wearing Green
White and Red, Italy. The great wellspring of western culture, art and science.
Vivaldi. Scarlatti. Da Vinci. The Vatican. Sophia Loren. The Roman Empire.
Pizza.
In the other corner
wearing Blue, White and Red. France. The great wellspring of western culture,
art and science. Descartes. Voltaire. Sartre. Offenbach. Debussy. Bardot.
Quiche.
What do these
miraculous, incomparable titans of culture, music, and food have in common?
Bad tin.
Renault is partly owned
by the French government. That means the politicians will do battle over
how much control they have to give up and to whom. It’s always great news
when politicians have a say in anything.
They’re such a bunch of cuddle-bunnies with your best interests at
heart.
The Agnelli family of
Italy is Fiat’s largest stockholder and they’re ready-set-go to escape from
their sizeable chunk and can put its money elsewhere, which is what members are
said to want.
At this point, the deal
would consist of this: Renault stockholders would get 50% ownership of
Fiat, while Fiat stockholders would get half of Renault.
But it’s not really that
simple. Renault owns a big piece of Nissan which owns a big piece of
another Japanese automaker, Mitsubishi.
Head ready to explode
yet? Wait, there’s more.
Some of these chunk
ownerships are actually “partnerships,” but the partnerships are hard to define
and so is the influence the partners have on each other.
Sergio Marchionne was
the last known Real Car Guy to run a major automaker. Marchionne was a
brilliant deal maker, and an eight cylinder heart. But he had the audacity to up
and die at the ripe old age of 66 in the middle of a plan to raise the quality
of the fumbling Fiat and the Catastrophe-prone Chrysler.
Few if any French cars
are any better. Renault, Peugeot, Citroen. Get out and get under.
Fiat says the
combination will “cure each other's faults.” Yeah, that’s what they all
say about these mega-mergers. How’d that
turn out for the Pennsylvania Railroad and the New York Central? Or
Chase-Chemical.
All these Ivy League
MBAs are running around like they’re attending the Mad Hatter’s Tea Party.
Renault flopped in the
US when people realized the cars got old after 40 thousand miles. Fiat
flopped in the US the same thing. Fiat
returned by buying Chrysler from the disassembly line at Cerberus Capital.
So, what do we have here?
Two top tier producers
of bad tin will combine to lift themselves in rank to somewhere near the top of
the list of companies disgorging vehicles. A result: gargantuan company with a manufacturing and
management structure that would drive even Rube Goldberg nuts.
And bad tin.
SHRAPNEL:
--Speaking of bad tin,
someone hand Bob Mueller an oil can because he seems to have frozen in place
there in the woods of the District of Columbia. As Gail Collins noted in the
New York Times the other day, his little speech about his report on trump
needed an on-screen translation into standard English. Go away, Bob… join
a law firm where you can be a rainmaker and do no further harm.
I’m Wes Richards. My
opinions are my own but you’re welcome to them. ©
Comments? Send them here: wesrichards@gmail.com
Comments? Send them here: wesrichards@gmail.com
But be aware I know tin
doesn’t really rust.
© WJR 2019