Chrysler Launches External Review of Safety Practices

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IHS Global Insight

May 22, 2014

Fiat Chrysler Automobiles (FCA) chief executive officer Sergio Marchionne has asked outside consultants to review how Chrysler approaches safety recalls and to benchmark industry practices. Marchionne commented on the issues following a Brookings Institute panel appearance, according to Detroit News and Bloomberg reports.

He said: "We're going to benchmark... We're going to try and take a look to see whether we're doing all the right things." Chrysler's recall committee and safety review process is "world class. If we can improve it, we will," he added.

On recalls, Marchionne said: "It can't be that all of a sudden we woke up and we realized we had these issues, so there must be a change in attitude. We're beginning to see people getting truly, truly cautious."

He suggested the next labor talks with the United Auto Workers' (UAW) union begin immediately, and he opposed the two-tier wage system. "We've got to get rid of this dichotomy. It's the wrong answer. I don't have two classes of citizens in my shops." He recommended a variable pay agreement that allows workers to be paid more when the company prospers but share the pain when times are tough, and supported allowing veteran workers to retain their $28-an-hour wage to keep their packages. Marchionne suggested the union should be cautious about seeking entitlements "without having the proper understanding of what's earned." On the timing of the talks, he said: "We are going to start discussions right now," as the UAW will have a new president in June.

Marchionne's request for a proactive review of FCA safety processes is a visible and direct industry reaction to the issues raised by the ongoing General Motors (GM) recall situation. The UAW agreed to unprecedented concessions in 2009, as GM and Chrysler were working their way out of bankruptcy and the economy was in full recession. As the companies have largely returned to profitability, many expect the UAW to push for an end to the two-tier system.

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