Let us look at the global financial picture. Given your position as CEO of Fiat group, Italy's largest industrial conglomerate, and vice chairman of UBS, Switzerland's largest banking group, what is happening in the world?
All the interventions into the financial system that have been made globally, by the European countries, the US and others, have prevented a financial-world Armageddon. From a financial standpoint, I feel relatively comfortable that the world will not end in the next 12 months. The system will continue to function. What I totally underestimated was the inability of the financial system to do two things:
1. Convince the world the interventions are working.
In other words, I bandage the wound and the world sees the bandage and says the body is getting healthy again. That has not happened. There is no recognition the fix has been made. This has had a tremendous impact on business and consumer confidence.
2. Actually fix the financial system.
There was a large financial bubble and now that bubble is pretty much gone. We have taken the hits or most of them. Banks continue to call for capital or go bankrupt and they are capitalized or taken over by governments. The system has been regenerated by central bank interventions. Armageddon has been avoided. But if you talk to the banks today they are preoccupied with their own survival. They are much less interested in keeping the industrial- and consumer-system rolling.
Do you mean that banks, after being recapitalized, are not resuming normal operations, such as lending money, to keep the system working properly?
That's exactly what the problem is. The banks will continue to take money from you. But to reduce their risk exposure they severely tighten their lending practices.
The depositor may feel safer because the bank is not at risk and the bank is happy because it has reduced its risk.
But all this has triggered a severe credit crunch. Banks are going to be incredibly more selective in what they fund. They are not going to feel any obligation to try to keep Industrial Inc. in service, arguably because their own survival is at stake.
But what is making matters worse is that the capital markets are also closing. The ability to raise funding, either debt or equity, through a distribution process in the wider financial markets is severely diminished, and in some cases, non-existent.
What about private consumer finance?
Private consumer finance is based on your ability to repay. After all that has happened, getting credit is going to become a lot more difficult. We're beginning to screw ourselves into a vicious circle. We're tightening up credit to the point where we are cutting off everybody at the end of the day. We're killing demand. If demand does not exist, I have no reason for being. Whatever I make is not going to be sold.
You went through a huge consolidation phase when you worked in the aluminum sector. What lessons from that experience are useful today at Fiat?
I was the most profitable player in the aluminum industry at the time that I did the merger [between Alusuisse and Alcan, and eventually Pechiney]. I went into this knowing that if I had stayed alone, I would have paid the price for being a marginal player.
Fiat is looking at [this new] world and saying it is going to be a marginal player unless it acts.
The obligation for all industry players is to take a very hard look and say, 'How do I deal with the next 20 years? How do I position my business in an industry that needs to be cleaned up? How do I do that?' I am in that mode now.
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Die Aussagen von Marchionne sollten auch dem letzten 'Träumer' die Augen öffnen. Die Realität sieht böse aus.
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