By G. Chambers Williams III / The Tennessean
Would Fiat-Chrysler CEO Sergio Marchionne seriously consider moving the combined company's headquarters to Tennessee once the merger of the two automakers is completed?
Speculation that Marchionne would pull Fiat out of Italy or the firmly entrenched Chrysler out of its longtime Auburn Hills, Mich., home has been swirling in the auto industry and economic development circles since Marchionne made a comment on Sunday during an event in Pulaski, Tenn., about where people might like to see the combined company make its permanent headquarters.
During the dedication of Fiat subsidiary Magneti Morelli's expanded auto parts plant on Sunday afternoon, Tennessee Gov. Bill Haslam responded to Marchionne's rhetorical question about where the headquarters should be, saying, "I vote right here."
Fiat's headquarters is now in Turin, Italy, and there have been rumors that when the companies complete their merger, Marchionne could move Fiat to the U.S., creating a corporate home that would serve both arms of the new entity.
Detroit-area news media jumped on the idea quickly, wondering whether Marchionne might be serious or just making a not-so-funny joke. After all, Chrysler's headquarters has long been a big part of the Detroit automotive landscape. But Detroit's influence has waned over the past few years as the Big Three U.S. automakers have downsized.
Some industry experts suggest that Michigan would be the most likely spot, but they also aren't ruling out other options.
"Tennessee is a wonderful state," said David Cole, chairman emeritus of the Center for Automotive Research, a top industry think-tank in Ann Arbor, Mich. "It's more centrally located than Detroit, it has a great tax structure, and it's a nice place to do business."
But Cole, the son of former General Motors President Ed Cole, believes Michigan still has the advantage.
"The whole environment here is automotive," he said. "Companies benefit when they are in a place where the center of gravity is around their business. But you never know with Sergio. He's a tough one to predict."
The bigger question, though, might be whether Marchionne is serious about moving Fiat away from its home in Turin, said Jack Nerad, executive market analyst for Edmunds.com and, like Cole, a longtime acquaintance of Marchionne.
"I think he's more likely to move Chrysler out of Auburn Hills than Fiat out of Italy," Nerad said. "He wants to send a message to the folks in Europe that all is not right there. He has been pushing for rationalization of production over there, and he likes to stir the pot a little bit."
When Fiat took control of Chrysler as the U.S. automaker exited bankruptcy reorganization in 2009, Chrysler was the weaker of the two, Cole said.
"Now the tables have turned, and Chrysler is the stronger company," he said. "So I believe the headquarters is going to be in the U.S., not in Italy. My guess is that it will be in Michigan somewhere, because it's a real asset being close to the auto industry's center, with six major companies having activities here. I really think they have sufficient capacity at Chrysler's existing headquarters."
Marchionne's comment in Pulaski probably wasn't just an off-the-cuff thing, though, Cole said.
"I know Sergio, and he's not going to say they have to be in Michigan automatically. He's probably not going to commit without some gamesmanship going on first, to see what kind of a deal he can get on incentives. But my guess is that in the end, it's going to be in Michigan."
And Nerad said, "There's more bark than bite in what Sergio says. What he's telling folks in Detroit is 'It's nice we're here, but we don't have to be.' "
Tennessee's economic development officials apparently are taking the idea seriously, although they wouldn't discuss what steps they might be taking to woo Marchionne and Fiat / Chrysler to the state.
"We don't comment on economic-development projects that haven't been announced," the state Department of Economic and Community Development said in an emailed statement. "For general comment though, we believe Tennessee has the best business climate in the country, and any company looking to expand or relocate in the U.S. should look at Tennessee first."
Nerad said he believes Tennessee could have an edge over other areas outside Michigan because this has always been a right-to-work state, and also because Nissan moved its headquarters here from California.
"Nissan being in Tennessee is a positive thing," he said. "It sort of blazed the trail, and showed that there is another metro that can support a major national headquarters of a car company. No doubt Nashville qualifies."