Fiat reshuffle deprives Switzerland of top manager

Marchionne is moving from Switzerland's SGS to Italy's biggest industrial group Keystone

Sergio Marchionne, one of Switzerland’s top managers, has been poached from his job as CEO of inspection and testing group SGS to run Fiat.

Analysts have warned that his move to Italy’s largest industrial group is likely to be a significant loss for SGS.

While at SGS, Marchionne succeeded in restructuring the company and turning it around after a period of crisis.

Confirmation of his appointment at Fiat sent the SGS share price tumbling at the stock exchange. At the end of trading on Tuesday it had fallen by more than eight per cent to SFr662 ($530.92), down on the previous close of SFr720.

The Italian company, based in Milan, announced Marchionne’s appointment after the weekend resignation of Fiat chief executive Giuseppe Morchio, who was angry at not being made company chairman.

That post was handed to Luca Cordero di Montezemolo, a long-standing ally of the company’s founding family and the current head of Fiat’s subsidiary, Ferrari.

The changes at Fiat follow the death on Friday of company chairman and family patriarch Umberto Agnelli.

Marchionne, who is also chairman of the Basel-based Swiss specialty chemicals company Lonza, has had a long association with Fiat and serves on its board of directors.

“Bad surprise”

“This is a very bad surprise [for SGS investors],” said Bank Leu analyst Ronald Wildmann. “I don’t see anyone in pole position to take over. I am sure there are people there, but they are not known to the public,” he added.

However, SGS wasted no time in appointing executive vice president Werner Pluss as its new chief executive.

Pluss is currently responsible for SGS’s global Oil, Gas and Chemicals Services.

Shares in SGS were suspended on Tuesday until the early afternoon, ahead of the official announcement of Marchionne’s departure.

The dual Italian/Canadian citizen is credited with helping to turn SGS into one of the best performing Swiss companies in recent years.

During his time at the helm, the company’s share price has almost trebled, although it remains down by about seven per cent this year.

After several years as CEO at Lonza, he took control at SGS in 2002 and is regarded by analysts as a trustworthy executive.

Mutual praise

SGS chairman Georges Muller expressed his gratitude to Marchionne for helping to turn the company around.

“We are all happy and proud of Sergio’s new assignment and thank him for his tremendous contribution to the remaking of SGS in the last two and a half years,” he said in a statement.

“We wish him all the best in his new challenge,” Muller added.

For his part, Marchionne praised the management capabilities of his successor at SGS.

“Pluss is the keenest and strongest proponent of our new management style which views accountability as the cornerstone of leadership,” he said in the SGS statement.

“I am convinced that he will maintain and strengthen the current operating strategy of the group and that he will deliver on the 2005 objectives which we set out last year,” he added.

Turnaround manager

Marchionne has built a strong reputation as a turnaround manager throughout his career in Switzerland and will need to turn this into action again at Fiat.

The Italian company was almost wiped out two years ago after it reported nearly €3 billion (SFr4.6 billion) in losses at its car-making division.

Then chief executive Paolo Cantarella was replaced by Morchio, who is credited with putting Fiat back on solid footing and easing tensions with the unions after the company slashed some 8,000 jobs.

Marchionne’s appointment saw shares in Fiat rise by 4.6 per cent on Tuesday to reach €6 (SFr9.16)

swissinfo with agencies

Key facts

SGS, or Société Générale de Surveillance, is one of the oldest companies trading on the benchmark Swiss Market Index.
The Geneva-based company is the world’s largest testing and inspection group.
Sergio Marchionne is an Italian-Canadian who has headed SGS since 2002.
Before that he was CEO of Lonza and previously Alusuisse-Lonza.
His appointment follows the resignation of Fiat chief executive Giuseppe Morchio.
Morchio quit after missing out on the Fiat chairmanship, which became vacant following the death of company patriarch Umberto Agnelli on Friday.