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Detroit and Silicon Valley: When cultures collide

Culture is a subject that rarely, if never, gets discussed when traditional auto companies buy — or hugely invest — in Silicon Valley-based companies. The conversation surrounding the investments is usually about how the tech looks appealing and how it's an appropriate step to move the automakers toward autonomy. Culture — the way things are done, the expectations, and the approaches — is something that is overlooked only at one's peril. The potential cultural gap is almost always evident in the obligatory photos of the participants in these deals, with is essentially a photo op of auto execs with their Silicon Valley counterparts. The former — rocking jeans and no ties — look like parochial school kids playing hooky. Don't worry: The regimental outfits will be back in place once they get back in the Eastern time zone. Consider what happened back in 1998 when Daimler bought Chrysler. First of all, there was a denial in Detroit that it happened. It was positioned as a "merger of equals." Which it wasn't. In any corporate situation, when one has more than 50 percent of the business, it owns the whole thing. And the German company was in the proverbial driver's seat. People who were around Auburn Hills back then kept their heads down and their German Made Simple books at hand. Things did not go well. Daimler had had enough by 2007, when it offloaded Chrysler to Cerberus Capital Management — which brought ex-Home Depot CEO Bob Nardelli into the picture, which is a story onto itself. But when you think about the Daimler-Chrysler situation, realize that these were two car companies (at least the Mercedes part of the Daimler organization), so they had that in common, and the language of engineers is something of an Esperanto based on math, so there was that, too. Yet it simply didn't work. It doesn't take too many viewings of HBO's Silicon Valley to know that the business people in that part of the world are far more aggressive than people who ordinarily head and control car companies in Detroit. About 20 years ago, a book came out about the founder of Oracle titled The Difference Between God and Larry Ellison* - and the asterisk on the book jacket leads to: God Doesn't Think He's Larry Ellison. It would be hard to imagine a book about a Detroit executive, even a book that had the decided bias that the tome about Ellison evinces, that would be quite so searing. Sure, there are egos. But they are still perceived to be, overall, "nice" people.

FCA to idle Belvidere Jeep plant again for a week in February

Bloomberg reports that Fiat Chrysler will shut down the Belvidere, Ill., plant that assembles the Jeep Cherokee for a week this month, starting February 17. FCA has been tweaking the plant's headcount and production schedule for a while now, usually downward. The automaker laid off 1,371 workers last February and fired 32 more in May, the same month it eliminated the third production shift. In August, the automaker shut down the plant for one week, then did so again for two weeks last month. As in August and January, FCA explained this month's idling by saying it needs to get production in alignment with demand. Cherokee sales declined 20% in the U.S. last year, helping to account for Jeep's overall 5% domestic drop in 2019. On top of the shutdown, FCA is offering buyouts to certain plant workers among the 3,600 hourly and 300 salaried personnel. The choices are either taking a "separation package" that comes with a $60,000 lump sum payment, or accepting voluntary termination that pays a lump sum based on seniority. Employees that choose a buyout can't return to Chrysler, becoming no longer "eligible for recall, rehire or reemployment." Belvidere personnel have until March 11 to make their decisions. Bloomberg says the aim is to reduce the number of workers with more seniority and higher pay grades; a company spokesperson said the move would "create opportunities for those employees still on layoff," who were lesser-paid. Around 900 of those laid-off workers remain on standby for reassignment to another plant. Analysts predict a soft year for car sales, so FCA might not be the only automaker pruning the rolls. Early estimates have come in below 17 million, and if that comes true, 2020 will be the slowest year since 2014, when 16,531,070 units left lots. The new contract between FCA and the UAW made provisions for Belvidere, which has tempered talk of a total shutdown.The automaker will invest $55 million for "fresh models/features off of the current (KL) platform" that underpins the Cherokee as well as the Chinese-market Jeep Grand Commander (it was previously used for the Dodge Dart and Chrysler 200). Outside of that, some observers think the carmaker could be planning a three-row Chrysler crossover based on the KL platform, akin to the Grand Commander, for the United States. Related Video: This content is hosted by a third party. To view it, please update your privacy preferences. Manage Settings.

FCA goes all-in on Jeep and Ram brands on cheap gas bet

It's no surprise that as SUV and truck sales remain strong in the wake of unusually cheap gas, Jeep and Ram sales are taking off. What is a surprise is that FCA CEO Sergio Marchionne thinks that cheap gas will be a "permanent condition," and feels strongly enough about it to change up North American manufacturing plans. Jeep appears to be the biggest beneficiary of the product realignment. In addition to increasing the sales estimates for the brand worldwide upwards to 2 million units a year by 2018, the brand will get a flood of investment for new product and powertrains. Consider the Wrangler Pickup to be part of the salvo, as well as the Grand Wagoneer three-row announced in 2014 as part of the original five-year plan. The Wrangler four-door will get at least two new powertrains, a diesel and mild hybrid version, in its next generation. That mild hybrid powertrain may utilize a 48-volt electrical system like the one that's being developed by Delphi and Bosch – which the suppliers think will be worth a 10 to 15 percent fuel economy gain at a minimum. Down the road, in the 2020s, the Wrangler could adopt a full hybrid system. The diesel powertrain is planned for 2019 or 2020. The Ram 1500 is also pegged to receive a mild hybrid system, again potentially based on 48-volt architecture, sometime after 2020. Lastly, Jeep and Ram will take over some of the production capacity of existing plants. The Sterling Heights, MI, plant that builds the Chrysler 200 will now build the Ram 1500; the Belvidere, IL, facility that produces the Dodge Dart will take over Cherokee output; the big Jeep facility in Toledo, OH, will be used for increased Wrangler demand. In 2015, according to FCA's numbers, car and van demand went down by 10 percent, but SUV demand went up 8 percent and truck demand 2 percent. Considering that these are high-margin vehicles, FCA can't ignore the math. FCA also won't build any new factories to supplement production to meet demand, but instead are reshuffling production priorities. Think of it this way: FCA is gambling on cheap gas being a permanent part of our lives, at least into the 2020s. By doubling down on SUVs and trucks, the company stands to win big, unless a spike in gas prices changes the landscape. FCA isn't talking about a Plan B, so they're all in. It'll be interesting to see how this plays out.