Chrysler 2000 Annual Report Download - page 9

THE PROCESS OF FOCUSING ON THE GROUP’S CORE
BUSINESSES IS AT AN ADVANCED STAGE
In 2000, the Group completed most of the programs
that were launched to focus the organization on its core
businesses, which are those operations that have achieved
or can achieve positions of competitive excellence in the
world markets.
A key step in this process was the industrial alliance with
General Motors, which created a unique business model in
the international automobile industry.
This agreement enables Fiat Auto to benefit from economies of
scale made possible by a twofold increase in the manufacturing
base, while at the same time gaining access to the global
resources — especially R&D — of the world’s largest car
maker and maximizing its distinctive competencies. This new
relationship with General Motors also opens interesting
prospects for the reentry of Alfa Romeo into the North
American market.
Another transaction of fundamental importance in the
focusing process was the merger of New Holland and Case,
which created CNH Global. Once the reorganization and
restructuring phase is complete, CNH will benefit fully from
its positions as co-leader of the global agricultural equipment
market and one of the world’s top producers of construction
equipment, with a leadership position in the light equipment
segment.
The goal of successful integration has already been
achieved with Fraikin, whose expertise in long-term leasing
of commercial vehicles will allow Iveco to quickly expand
its service operations in all European markets.
By acquiring Pico, Comau has become the world’s leading
producer of bodywork systems.
At the same time, the Group continued to divest itself of those
operations that, while offering a wealth of professional and
technological competencies and an attractive customer base,
could not achieve a leadership position in world markets and
thus could not qualify as core businesses.
Divestitures carried out in 2000 included the sale of a 51%
interest in Fiat Ferroviaria to Alstom and the disposal of
Magneti Marelli’s Lubricants and Rearview Mirror divisions,
followed by an agreement to sell its Climate Control Division.
In addition, under a preliminary agreement signed in March
2001, ThyssenKrupp Automotive, a German company that
ranks among the world’s top producers of automotive
components and systems, will buy Magneti Marelli’s
Suspension Systems and Shock Absorbers operations.
SYNERGIES ARE BEING REALIZED AND THE PROCESS
IS GAINING MOMENTUM
The strategic programs carried out in 1999 and 2000 to
help the Group focus on its core businesses should produce
synergies worth almost two billion euros by 2005, with about
500 million euros expected in 2001.
The alliance with General Motors is off to a flying start. In the
closing months of 2000, Fiat Auto’s bottom line had already
benefited from a reduction of 20 million euros in purchasing
costs. Additional synergies from this alliance should produce
savings of about 200 million euros in 2001, increasing to
one billion euros by 2005.
At CNH, synergies generated savings of about $155 million
in 2000, helping to improve the Sector’s operating result,
which suffered due to a shift in North American demand
toward the premium segment of the agricultural equipment
market and a temporary erosion in market share caused by
divestitures that were ordered by the antitrust authorities.
The Sector recovered its market position during the fourth
quarter. CNH’s integration and industrial restructuring plan
was strengthened, increasing the savings expected from
synergies to about $600 million over three years. This plan,
which entails extraordinary expenses that were charged to
income in the 2000 consolidated financial statements of the
Group, calls for a reduction in the number of Case and New
Holland product platforms from more than 100 to about 60
and a drastic streamlining of CNH’s global manufacturing
organization.
Turin, March 13, 2000. Press conference announcing the Fiat-General Motors
agreement.