By Peter M. DeLorenzo
Detroit. The swirling maelstrom otherwise known as the AutoVerse was in full-throated roar this week, with a kaleidoscope of stories that captured everyone’s attention.
First up? The GM lawsuit against FCA, which accused the Italian-owned automaker of bribing UAW officials to gain advantages in their contracts over the years of Sergio Marchionne’s reign, which negatively affected GM’s competitive position, big-time. GM was accusing FCA of underhanded dealings from the moment Marchionne took control of the company. Was this a surprise? No. After all, from the moment Marchionne was gifted FCA by the U.S. government it was clear that he was willing to manipulate the system in any way possible, or that he could get away with. As I wrote in my column “An Unfortunate Denouement” (7/23/18):
“Make no mistake, Marchionne & Co. did not endear themselves to anyone in the trenches with the real nitty-gritty dealings of this business. Again, if it weren’t for the True Believers out in Auburn Hills, none of this latest Chrysler ‘miracle’ wouldn’t have gotten off the ground, something that some of the homers in the automotive media don’t even bother mentioning.
I was also interested to read the glowing comments from certain dealers over the weekend, who insisted that without Sergio they’d be out of business. That may be true, but what about the dealers who bought into Sergio’s promises of world domination, but first they had to spend money on new brick and mortar for Fiat stores? And if they did that, they would be first in line to get a glittering array of Alfa Romeo products, the brand that would be ‘the next Audi.’ I noticed that none of those dealers were asked for quotes, because there were countless numbers of them that lost their shirts because of Sergio’s calculated carnival barking.
And what about the constant shenanigans that FCA pulled with their sales reporting? Marchionne was so hell-bent on showing an uninterrupted monthly sales increase that the company misreported sales figures for six years, all the way back to 2011. It was another reminder of Marchionne’s almost unlimited hubris, that if he said it enough and pounded the table enough, the automotive media would believe it and dutifully spread the word accordingly. And he was right, until FCA got caught, and then Marchionne was strangely silent.
I have just barely touched upon all of Marchionne’s misdeeds at the helm of Chrysler. He was an absolute tyrant behind the scenes and easily in the Hall of Fame for Horrible Bosses. His egomaniacal insistence that only he knew what was best and only he knew what needed to be done lead to a withering 30+ direct reports, taking micromanaging to unheard of heights.
Oh well, enough. I only wish the serial offenders in the automotive media would have deigned to expose ‘the other Sergio’ because there are at least two of him. And the less appealing one is petty, belligerent, egomaniacal and forever ungrateful.”
But of all the sins Marchionne perpetrated on this business, his calculated manipulation of the UAW was most egregious. Interestingly, the name Alphonse Iacobelli was mentioned in GM’s lawsuit dozens of times in its 95 pages. As vice president of employee relations for FCA, Iacobelli was directly involved in carrying out Marchionne’s plan to keep UAW officials beholden to FCA, before he left the company and went to work for GM as executive director of labor relations for eighteen months. Iacobelli was terminated from GM after he was charged with multiple crimes during his FCA tenure, and he is now serving a 66-month sentence in federal prison in Morgantown, West Virginia.
After a few cryptic emails from him that were sent to our website, I met Iacobelli (at his request) twice in August 2018 at a Starbucks in Rochester, Michigan. I approached the meeting with no preconceived expectations; I knew what he was charged and convicted of – he was awaiting sentencing – but I was willing to listen to what he had to say. And having never met him before, he struck me as someone who had been humbled and humiliated. He didn’t offer any excuses for his conduct, instead he offered details of the circumstances, having brought a three-inch thick stack of documents that included emails and meeting notes, with a remarkable level of detail.
Why was I asked to meet him? He said that my series of columns about FCA and Marchionne “were so devastatingly accurate that the company virtually stopped to digest them whenever they came out.” And given my writings, he felt that "you are the only person who I can trust to tell the inside story of what really went on, preferably in a book." My columns were so pointedly accurate that, “they were convinced that you had insiders at the very top levels of the company secreting info to you.” (I didn’t.) And that, “Marchionne and his crew had a complete meltdown over your columns on a regular basis.” (I knew this to be true, as I had been told this multiple time over Marchionne’s reign.)
Over those two meetings, Iacobelli presented a devastating account of just how deep the payoffs to UAW officials actually were. The FCA-UAW training centers were a complete joke, with UAW members reporting to the centers to do nothing, if they bothered to show up at all. And the tales of payments for plane trips, vacations, binges in Las Vegas and myriad other gifts, cash and prizes were eye-opening, including a $2 million retirement party for an outgoing UAW executive that was staged in Las Vegas. Iacobelli said approximately $250,000 a month was spent keeping the UAW officials in line, in some months less, but in some months much more than that. And it was all designed to extract favorable considerations from the UAW, which translated into reduced labor costs to FCA.
And Iacobelli named names. In fact, every single UAW official revealed by the Feds so far as having been either indicted or under scrutiny was mentioned by Iacobelli. He said, “they were all on the take and were all going down,” and he was dead right. And make no mistake, Marchionne was up to his eyeballs in every bit of it, according to Iacobelli. In fact, given what he said – including Marchionne gifting expensive watches to key UAW officials with a carefully-worded note attached so they couldn’t be construed to having any value - I surmised that Marchionne would have been indicted if he hadn’t passed away, and Iacobelli didn’t disagree with my assessment. (I never spoke to Iacobelli again, but I still think it would make for a fascinating book that would probably destroy what passes for the UAW these days.)
So, GM is taking the extremely aggressive move of suing FCA for manipulating contracts and altering its competitive position to the tune of hundreds of millions of dollars over the years to gain advantages over its competition, specifically GM. Marchionne believed he could operate outside the bounds of the system and believed he could manipulate the playing field to his advantage with impunity. Accountability was never a working part of Marchionne’s vocabulary, because like an Emperor, he made up his own rules as he went along. But facts are stubborn things, and this time I believe accountability is going to finally catch up with FCA.
And given what I know, I wouldn’t bet against GM on this one and I applaud the company for going after the carpetbagging mercenaries at FCA. GM has the goods on FCA, and it’s going to get ugly.
Rants - Autoextremist.com ~ the bare-knuckled, unvarnished, high octane truth...
Detroit. The swirling maelstrom otherwise known as the AutoVerse was in full-throated roar this week, with a kaleidoscope of stories that captured everyone’s attention.
First up? The GM lawsuit against FCA, which accused the Italian-owned automaker of bribing UAW officials to gain advantages in their contracts over the years of Sergio Marchionne’s reign, which negatively affected GM’s competitive position, big-time. GM was accusing FCA of underhanded dealings from the moment Marchionne took control of the company. Was this a surprise? No. After all, from the moment Marchionne was gifted FCA by the U.S. government it was clear that he was willing to manipulate the system in any way possible, or that he could get away with. As I wrote in my column “An Unfortunate Denouement” (7/23/18):
“Make no mistake, Marchionne & Co. did not endear themselves to anyone in the trenches with the real nitty-gritty dealings of this business. Again, if it weren’t for the True Believers out in Auburn Hills, none of this latest Chrysler ‘miracle’ wouldn’t have gotten off the ground, something that some of the homers in the automotive media don’t even bother mentioning.
I was also interested to read the glowing comments from certain dealers over the weekend, who insisted that without Sergio they’d be out of business. That may be true, but what about the dealers who bought into Sergio’s promises of world domination, but first they had to spend money on new brick and mortar for Fiat stores? And if they did that, they would be first in line to get a glittering array of Alfa Romeo products, the brand that would be ‘the next Audi.’ I noticed that none of those dealers were asked for quotes, because there were countless numbers of them that lost their shirts because of Sergio’s calculated carnival barking.
And what about the constant shenanigans that FCA pulled with their sales reporting? Marchionne was so hell-bent on showing an uninterrupted monthly sales increase that the company misreported sales figures for six years, all the way back to 2011. It was another reminder of Marchionne’s almost unlimited hubris, that if he said it enough and pounded the table enough, the automotive media would believe it and dutifully spread the word accordingly. And he was right, until FCA got caught, and then Marchionne was strangely silent.
I have just barely touched upon all of Marchionne’s misdeeds at the helm of Chrysler. He was an absolute tyrant behind the scenes and easily in the Hall of Fame for Horrible Bosses. His egomaniacal insistence that only he knew what was best and only he knew what needed to be done lead to a withering 30+ direct reports, taking micromanaging to unheard of heights.
Oh well, enough. I only wish the serial offenders in the automotive media would have deigned to expose ‘the other Sergio’ because there are at least two of him. And the less appealing one is petty, belligerent, egomaniacal and forever ungrateful.”
But of all the sins Marchionne perpetrated on this business, his calculated manipulation of the UAW was most egregious. Interestingly, the name Alphonse Iacobelli was mentioned in GM’s lawsuit dozens of times in its 95 pages. As vice president of employee relations for FCA, Iacobelli was directly involved in carrying out Marchionne’s plan to keep UAW officials beholden to FCA, before he left the company and went to work for GM as executive director of labor relations for eighteen months. Iacobelli was terminated from GM after he was charged with multiple crimes during his FCA tenure, and he is now serving a 66-month sentence in federal prison in Morgantown, West Virginia.
After a few cryptic emails from him that were sent to our website, I met Iacobelli (at his request) twice in August 2018 at a Starbucks in Rochester, Michigan. I approached the meeting with no preconceived expectations; I knew what he was charged and convicted of – he was awaiting sentencing – but I was willing to listen to what he had to say. And having never met him before, he struck me as someone who had been humbled and humiliated. He didn’t offer any excuses for his conduct, instead he offered details of the circumstances, having brought a three-inch thick stack of documents that included emails and meeting notes, with a remarkable level of detail.
Why was I asked to meet him? He said that my series of columns about FCA and Marchionne “were so devastatingly accurate that the company virtually stopped to digest them whenever they came out.” And given my writings, he felt that "you are the only person who I can trust to tell the inside story of what really went on, preferably in a book." My columns were so pointedly accurate that, “they were convinced that you had insiders at the very top levels of the company secreting info to you.” (I didn’t.) And that, “Marchionne and his crew had a complete meltdown over your columns on a regular basis.” (I knew this to be true, as I had been told this multiple time over Marchionne’s reign.)
Over those two meetings, Iacobelli presented a devastating account of just how deep the payoffs to UAW officials actually were. The FCA-UAW training centers were a complete joke, with UAW members reporting to the centers to do nothing, if they bothered to show up at all. And the tales of payments for plane trips, vacations, binges in Las Vegas and myriad other gifts, cash and prizes were eye-opening, including a $2 million retirement party for an outgoing UAW executive that was staged in Las Vegas. Iacobelli said approximately $250,000 a month was spent keeping the UAW officials in line, in some months less, but in some months much more than that. And it was all designed to extract favorable considerations from the UAW, which translated into reduced labor costs to FCA.
And Iacobelli named names. In fact, every single UAW official revealed by the Feds so far as having been either indicted or under scrutiny was mentioned by Iacobelli. He said, “they were all on the take and were all going down,” and he was dead right. And make no mistake, Marchionne was up to his eyeballs in every bit of it, according to Iacobelli. In fact, given what he said – including Marchionne gifting expensive watches to key UAW officials with a carefully-worded note attached so they couldn’t be construed to having any value - I surmised that Marchionne would have been indicted if he hadn’t passed away, and Iacobelli didn’t disagree with my assessment. (I never spoke to Iacobelli again, but I still think it would make for a fascinating book that would probably destroy what passes for the UAW these days.)
So, GM is taking the extremely aggressive move of suing FCA for manipulating contracts and altering its competitive position to the tune of hundreds of millions of dollars over the years to gain advantages over its competition, specifically GM. Marchionne believed he could operate outside the bounds of the system and believed he could manipulate the playing field to his advantage with impunity. Accountability was never a working part of Marchionne’s vocabulary, because like an Emperor, he made up his own rules as he went along. But facts are stubborn things, and this time I believe accountability is going to finally catch up with FCA.
And given what I know, I wouldn’t bet against GM on this one and I applaud the company for going after the carpetbagging mercenaries at FCA. GM has the goods on FCA, and it’s going to get ugly.
Rants - Autoextremist.com ~ the bare-knuckled, unvarnished, high octane truth...
