Dispatches Do Brasil: FCA Finds Its Feet

Marcelo de Vasconcellos
by Marcelo de Vasconcellos
dispatches do brasil fca finds its feet

It’s pretty amazing how the world spins and moves forward yet people refuse to budge. Fiat consistently scores in or near the top of Euro reliability rankings, besting most if not all of the mainstream Euro makers as well as other competitors from other continents who, somehow, are given a pass in this area. It does likewise in South America. In terms of “fix-ability” it is among the most appreciated, being its corporate policy to share information with mechanics quite openly about its cars’ needs and selling every small bit as a separate part so that people need only change what needs changing, saving its customers money .

I go to the factory in Betim, Brazil, every so often and the place is always filled with Japanese consultants on the factory floor, not just in conference rooms and secluded offices, teaching and implementing more and more quality control techniques. Brazilian engineers I know personally go north and tell me of all the changes they are seeing at Chrysler Group, with leaner, more exact engineering being implemented, inefficiencies controlled, paint shops and water handling completely overhauled.

The place is a brute, the second largest in capacity in the world, being beaten only by a Russian AvtoVAZ unit. Receiving investments of almost 6 billion reais in improvements, it’s being expanded from a capacity of 800,000 cars a year to 950,000. While the expansion and renovation is happening, it will pump out over 700 thousand cars this year in a bewildering, complex environment. A total of 16 different models are produced there, from passenger cars to light commercial vehicles. The closest factory in terms of complexity in Brazil is a GM unit in São Caetano do Sul making a total of 5 models.

It is also a research and development facility, with the capacity to design cars from the ground up. When I go to that specific place, I see future Fiat products, engines and systems, Chryslers of all stripes and also competitors’ cars being stripped down and rebuilt. The R&D facility received a portion of that investment money and is putting it to good use. Suppliers are often there, trying to fulfill Fiat’s ever-increasing demands on quality, all the while complaining that it’s impossible within the given budgets.

I also recognize the problems. Some of them are cultural others structural. I know the pressure is there to push the product out when sales are high, leading people to overlook some things they know should be addressed before sticking the quality control stickers on. It is not an easy place to work in if you are a supplier as Fiat is a notorious penny-pincher and will and does sit on suppliers demanding more from them at ever lower prices.

There also seems to be a problem with follow through and repetition. Italian and Brazilian culture mesh well in this regard. Improvisation does and can happen and I have seen condemned bits and pieces being stripped from cars while the same parts are taken from half-built cars. It is easy to see the havoc created upstream in the production, while at the same time the possibility for errors is ripe. Some of the initially condemned pieces are sometimes reworked, deemed good, and installed in other cars.

Brazilian workers and engineers are also notorious for not adhering strictly to a given procedure. While a Japanese worker has the reputation of repeating the same procedure for 40 years without question, workers and professionals in Brazil will often improvise, turning step 2 and 4 into just one, or doing what was supposed to be step 6 before step 5 and so on.

Meanwhile, in North America, perhaps surprisingly, Italian and American culture and business practices have also congealed nicely and even Wall Street likes what it sees. There are no rampant manifestations of dissatisfaction and major suits have had their fears of German-style merger of (un)equals allayed, being that American voices are heard and American butts are promoted and given positions of power. Further down in the corporate hierarchy, at the engineering levels, experiences and information are freely shared among engineers of all nationalities. The Italians hear the Americans and vice-versa and the result are cars improved by cross-pollination.

Southern Europe is slowly coming back, at a time Fiat’s plans are slowly bearing fruition. Key to its future, there are now Jeep products, like the Renegade and Cherokee, not to mention the 500X, confirming the event horizon of our own Derek Kreindler (henceforth nominated auto industry sage extraordinaire) and the “final” victory of the CUV over other car shapes as they seem to give people what they want. The Panda and 500 continue raising the flag in northern Europe for those who wish to go against the norm and don’t conform to the notion of German engineering superiority and overbearing market presence. In light of all of this, FCA head honcho Sergio Marchionne may be confirmed as the savviest auto exec in the business.

Alfa Romeo remains a work in progress, while Maserati sales show that FCA can still credibly build and sell a luxury car. With the upcoming Alfa and Maserati CUVs, Italian vehicles will grace in higher numbers exclusive country clubs the world over.

In the US, Fiat will remain a niche player with the 500 satisfying non-conformists, while the 500X could prove more adapted to local conditions. Fiats will also continue donning RAM horns and underlying and motivating Dodge and Chrysler cars and Jeep CUVs. FCA, in spite of the naysayers and doom-and-gloom merchants, keeps growing in the US. Chrysler Group has passed Toyota becoming the third largest OEM in that important and expanding market.

It is so easy to laugh and point at FCA products and buyers. It is also intellectually easy to step on them while they are down, ignoring all the evidence to the opposite. Taken in scope, the improvements and ongoing investments point only in one direction: Up.

Improving on already good reliability, working closely with the aftermarket to keep mechanics informed and up-to-date of the sometimes different engineering seen in their cars, keeping fingers crossed that nothing bombastic happens, FCA could be on its way to an event horizon of its own, selling cars on their merits and not just pricing, becoming a full-line maker capable of attracting and poaching customers from other makes, providing shareholders with nice returns, and creating wealth and employment the world over.

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  • Zykotec Zykotec on Oct 31, 2014

    If nr. 15 on the list is the average, then 14 is harldy 'the top of the list' Fiat barely gets out of the 'cars to avoid' (onlike Chrysler) here in Europe, and I think that is mainly because their commercial vehicles have very good engines, and are regularly serviced and get better maintenance in general than an average passenger car. I can admit that Fiat (as Chrysler) does build a lot more interesting vehicles, both in design and engines, than the 'average' boring Volkswagens, but no one ever buys a Fiat passenger car because of their reliability. It is fair to mention that they do better than most french brands, even comnsidering how many french cars are really rebadged Nissans and Mitsubishis, but they are still not even close to the German cars or the 'pure' (mostly british built) Japanese cars.

  • Bobman Bobman on Oct 31, 2014

    Hey Marcelo, great article as always. I look up the locations you mention in your posts. I have to get down there sometime too. Was hoping to do that for the world cup but couldn’t make it happen. I find some of the folks here to be very misinformed. I’m not an expert in how the CR ratings work, however, I do know that they have very little to do with the quality of the manufacturing process. All FCA plants fall under the WCM (World Class Manufacturing) introduced in 2004(?). When Fiat took control of Chrysler in 2009, it implemented those methodologies there too. Several plant have attained the Gold level certification (Tychy, Poland, Tofas in Turkey, Pomigiano and the engine plant also in Turkey). Additionally, they have 7 silver and 26 bronze certified plants. The rest of their 121 plants are in various stages of achieving their bronze certifications. Quality will keep getting better as continuous improvement in every aspect of the methodology is constantly monitored. But you know all this. In an interview about the CR ratings, Sergio said. "I am not taking issue with the survey itself, other than it is clear that we have focused on the wrong things in dealings with some parts of the customer base," Marchionne said. "We need to go back in and fix that perception because I know that from an engagement standpoint the whole house has been driven in a completely different direction that those surveys are indicating. So we have an absolute mismatch of internal evaluation and commitment." Sounds to me that he’s expecting this to be fixed. No excuses accepted. Again, sorry to see Betts take the hit for this, but, the message has to get out.

    • Marcelo de Vasconcellos Marcelo de Vasconcellos on Oct 31, 2014

      Thanks for the kind words! As to misinformed folks, well that first paragraph was for them. Both you and I know how much of a mess Chrysler plants were before Fiat took over and the amount of work needed to bring them up to standards. I know it surprised a lot of people in the company. As a result Chrysler vehicles are improving and will continue to do so as the changes bear effect. The customer will eventually notice it, too. As to Marchionne's comments, well it seems we both know people in the company are aware of the perception problem. I hope they stay the course as these things take time.

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