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Chrysler's success isn't the only good news in the auto industry. Ford and GM have also proved that, stripped of legacy pension and health care costs and with the United Auto Workers (UAW) willing to craft a competitive labor agreement, they can compete with Japanese and European rivals. Surging carmakers have outstripped the lumbering recovery in the rest of the economy; unit car and truck sales are up 14% through November. GM, which will sell more cars in China than in the U.S. in 2011, grew about 7% and Ford 13% in the last quarter, and both will be solidly profitable this year. The Center for Automotive Research, in Ann Arbor, Mich., believes the auto industry (including foreign brands) will add 47,000 direct manufacturing jobs and 120,000 indirect jobs at parts suppliers in the next four years, bolstering places like Youngstown, Ohio. Mercedes is adding a shift in Vance, Ala. Volkswagen is building a plant in Chattanooga, Tenn. Chrysler is selling so many Jeeps that it is investing $500 million in Toledo, Ohio, to add a second line.
Fiat now owns 53.5% of Chrysler, a stake that will likely grow to 58% next year. (The UAW holds 46.5%.) But it has all the opportunity to grow the business--60% by 2014, according to Marchionne's plan. The Fiat brand had been absent from North America since 1983. (Fiat also owns Alfa Romeo, Lancia, Ferrari and Maserati.) It is now returning with the kind of small cars that Chrysler could never produce: the stylish Fiat 500 Cinquecento and its sportier cousin, the Abarth. A line of Fiat vans could follow.
Clad in his signature black sweater because it simplifies decisionmaking (he drives a black-on-black Challenger and Maserati too), Marchionne brings an analytical ability that allows him to drill down to the smallest detail of manufacturing or even advertising. At the same time, he is blind to rank and open to new ideas, no matter where they come from. "We flattened the organization out. We reached out and brought people on the management team who had been buried underneath the classical hierarchy of corporate America," says Marchionne. "They were given an opportunity to play. These are people who had been two or three layers down from the senior leadership."
It's sometimes known as loose-tight management, meaning that Marchionne is also unforgiving in holding people accountable for executing their ideas. "It's pretty intense, because he questions--and again, rightfully so--and there are times when you think you're so prepared and ready and he'll bring something completely that you weren't thinking of," says Laura Soave, a bright young marketing executive who was in charge of the Fiat 500's American introduction until Marchionne moved her out for not moving fast enough to establish a new Fiat-dealer network.