Will Fiat-Chrysler Become An American Firm?

CEO Sergio Marchionne certainly suggested as much in a speech at the NADA convention over the weekend, in which he said

Who knows? In the next two or three years, we could be looking at one entity. It could be based here

From the perspective of the American taxpayer, this would certainly be the favorable outcome. After all, Fiat didn’t put a single Euro into the restructured Chrysler, and national bailouts don’t usually result in the expatriation of the bailed-out firm. But the US Treasury department isn’t the only master Fiat has to serve, and Marchionne’s suggestion that the Fiat-Chrysler alliance has touched off something of a “firestorm.” The Financial Times reports that

Pierluigi Bersani, leader of the [Italian] opposition Democratic party, demanding an explanation from Mr Marchionne said it was unacceptable for “Turin and the country to become a suburb of Detroit”.

Industry Minister Paolo Romani adds [via the Montreal Gazette]

The head of the carmaker must remain in Turin

And with Italian backlash against a possible Detroit headquartering of the Fiat-Chrysler alliance building, Marchionne is backpedaling furiously.

Italy, after all, has a much stronger traition of government involvement in industry. Most of Italy’s largest multinationals are at least partly owned by the government, as indeed Fiat once was. Fiat-Chrysler’s response: to tell Italian politicians that the Alliance is actually looking at

regional headquarters in Turin, Detroit, Brazil and possibly Asia.

And that approach seems to have softened at least some of the opposition in Italy, as Labor Minister Maurizio Sacconi tells the WSJ

If there is a merger between Fiat and Chrysler, I think the group will inevitably have one headquarters in the U.S. and one in Ital. What matters insofar as Fiat’s roots in this country, is that it carries out its planned investments, because these represent choices that can’t be reversed for a long time

Practically speaking, Chrysler’s stakeholders have some time to hash all of these disputes out: Marchionne says a full alliance could be several years away. Still, as Fiat and Chrysler move closer together, Marchionne will have his hands full trying to balance the competing interests of his government partners and national constituents. After all, as much as Americans want to see Chrysler become part of a US-based alliance, Italians have only one national mass-market automaker… and they won’t be happy if Fiat is no longer an explicitly Italian automaker. We’ll be watching closely as Sergio Marchionne takes on those concerns when he addresses the Italian parliament on the 15th of this month.