Chrysler 2002 Annual Report Download - page 7

5Report on Operations Overview
The current year will be one of transition for Fiat, as
it bridges the gap between the disappointments of 2002
and the renewed growth that it expects to enjoy in 2004.
The Group will have to work toward its goals in a very
difficult and complex economic environment.
As the repeated interest rate cuts put into effect by the
monetary authorities on both continents demonstrate, there
are significant threats to prospects for growth, both in Europe
and the United States. The current conflict in the Middle East
has produced even more uncertainty. A further weakening of
consumer and business confidence would have a negative
impact on the global economic recovery.
The strategic goal that we are pursuing in this environment
is to heal Fiat and restore its strength as an industrial group
that is focused on its automotive businesses.
The divestiture of Toro Assicurazioni, while consistent with
these goals, clearly represents a great sacrifice. Nevertheless,
it is an indispensable step that must be taken not only to pay
down debt, but also to allow for the Group’s future growth.
The capital increases that Fiat Auto and CNH carried out
to fund their industrial plans are in line with the same strategy.
Moreover, the increasingly close cooperation with
General Motors is yielding a further increase in the substantial
synergies that have already been realized. Additional benefits
will be achieved through the sharing of components and the
development of common platforms, which will help lower
manufacturing costs.
Naturally, all Sectors will devote great attention to
technological innovation and product development, which
must include a steady effort to improve the Group’s
environmental performance. During the second half of 2003,
Fiat Auto will start marketing the new models that it unveiled
recently at the International Geneva Motor Show. They mark
the beginning of a complete renewal of the model lineup.
Meanwhile, Iveco is working on major additions to its product
line, and CNH is about to launch a new generation of
agricultural machines.
Fiat’s success in increasing its competitiveness will also
require major contributions from its industrial and commercial
partners. The Sectors will have to develop increasingly close
collaborative relationships with their suppliers, if they are to
achieve ever more ambitious goals in the areas of cost control,
innovation and quality, while at the same time reorganizing
their sales networks, making customer satisfaction part of
everyday practice and a reference point for the development
of our products.
The commitment to bring lasting strength to our balance
sheet and provide fresh momentum to our industrial operations,
making them again a reliable source of financial resources, will
remain at the center of our efforts.
As we pursue this goal, we can count on the trust and
active collaboration we have developed with the lending
banks. The sale of Fidis, with the resulting decrease in gross
indebtedness, is just the most recent example of the support
that these credit institutions are providing to the Group at this
delicate juncture.
For our part, we will continue to work tirelessly to comply
with the objectives set forth in the agreements we signed with
the lending banks in 2002. All Sectors will be required to keep
their costs under rigorous control and make every effort to
improve their operating results and cash flow.
The most important contribution to building a new Fiat
will come from its employees. The Group can rely on the great
store of knowledge possessed by its people, on their ability to
innovate and on their sense of belonging. It intends to maximize
these assets and help its employees express their full potential.
Managers throughout the organization will strive to rebuild their
staff’s confidence and motivation.
We will continue to make every effort to minimize the social
impact of the current restructuring process, in accordance with
the Framework Agreement signed with the Italian Government.
To that end, we will use all available tools. Staff downsizing is a
painful necessity that must be undertaken to enable the Group
to cope with changing market conditions and help it meet its
all-important profitability goals as quickly as possible.
We are faced with another difficult year, but we are aware
that the task of reengineering Fiat and restoring its health can
be accomplished only over the medium to long term.
We must be realistic and acknowledge that the structural
components of our problems have not yet been completely
eliminated. We are still faced with a long uphill battle.
We will address the challenges of the coming months
with maximum determination, confident in the strength
of our employees and our partners and the support of the
entire Italian economy.
Turin, March 27, 2003
Umberto Agnelli
Chairman
Giuseppe Morchio
Chief Executive Officer