"Bruno Le Maire, the French finance minister, sought reassurances as he met with company executives. He wanted a corporate headquarters in Paris, and wanted job cuts in the United States and Italy before anyone in France would be affected, one person involved said. "
Fiat/Chrysler should stay away from the French government making political business decisions if a merger is agreed to. Business decisions should be based on productivity, supply chain efficiency, market share, innovation, and overall cost.
4
Brexit or no Brexit, this story illustrates why the EU will unravel sooner rather than later. There is in fact no "European" identity, rather only (quite distinct and eternally competitive) national identities that predate the EU by many centuries.
It's a shame, because Renault makes some good cars that could well appeal to the more urban and cosmopolitan parts of the US auto market. I remember with great fondness the Renault Megan Grand Scenic that I leased in Provence, carrying four adults and two kids in fuel-efficient comfort, in a car little longer than a VW Golf.
Fiat and Chrysler are the weak links here, because all the Fiat models that have been introduced since their merger (either under the Fiat or Alfa names, or rebadged as Chryslers) have been poor. If Chrysler could ditch Fiat and act as a subsidiary of Renault, that might work better. Or Perhaps we will just get that other French automaker - PSA (Peugeot and Citroen) - instead.
Either way, with the VW brand stained by its emissions scandal, with other European marques getting increasingly "blingy", with Saab gone and Volvo making harsh-riding increasingly-pricey cars, the French manufacturers have a real opportunity.
1
The real back story has to do with legacy laws in France, which makes it impossible for it businesses to succeed in a new technological world. The French setup these laws to prevent companies from laying off redundant workers, who did not want to give up great benefits and wages. Renault and the French Gov't need to learn from Alstom. Alstom gave away their train technology to China, with the idea that they would form profitable Joint ventures with Chinese companies, in order to support their unprofitable business in France. The Chinese stoled the design (i.e., actually they revised a few drawings and claimed it was now a Chinese design). Alstom could not compete with Siemens in Europe, because it could not layoff redundant workers, so they requested a merger with Siemens which was overturned by the EU due to antitrust regulations. Meantime GE bought Alstom turbines, which was also failing because it could not compete with Siemens. GE had to promise not to close Alstom factories plus hire 1000 new employees. What a lousy deal that was for GE whose executives were crazy to agree. Alstom is basically finished and the French gov't does not want the same thing to happen to Renault. Renault is also on the ropes, because of over capacity, which will cause it to lose money in a declining market. Renault needs to do what GM did (filed for bankruptcy), but French laws will not allow this. Interesting, stay tune.
1
I find these stories about Renault/Nissan to be amazing. So many cultural anchors interfering with running a business.
Renault negotiating merger with Chrysler/Fiat while excluding their decades long partner Nissan.
French government fingerprints all over business deal involving French company & workers.
Former CEO, Carlos Ghosn, arrested in Japan nominally for living a high life on his company’s dime.
Japanese laser focused on keeping full control of Japanese company. (See Ghosen above.)
Really — you couldn’t make this stuff up. One of the most interesting business cases I know of. In a few years I expect to be reading about this in the Harvard Business Review.
1
Nissan is bigger than Renault and Fiat combined and actually have presence all over the world. It is not a wose move to tie up a global company with petty European politics
creating a company that would...