THE REVIVED RIVALRY BETWEEN GM AND FIAT CHRYSLER – AUTOMOTIVE

It’s unusual for companies to file lawsuits against other companies, and, particularly, their rivals – at least so publicly and with so much prominence.

But that’s what GM has done this week, accusing their prominent rival of “racketeering” in a collusion with the United Auto Workers union during collective bargaining in 2015.  GM is claiming that that act set the pattern that caused GM “massive monetary damage in the form of higher costs,” (ref WSJ).  Fiat Chrysler plans on defending “itself vigorously” and called the lawsuit an attempt by GM to “divert attention from its own challenges.”  Interestingly, that was the exact thought that crossed my mind when I heard about the lawsuit – for one, it’s so out of character for corporations to do something so outlandish; and for another, Barra has certainly had her difficulties since stepping into the CEO’s role, so fobbing some of the blame off probably sounded like a good idea (at the time).  Fueling the drama is the high competition between the two companies for the U.S market in pickup trucks and sport-utility vehicles.  Both companies appear to be doing well, at the time – GM made a third-quarter operating margin of 10.8%, the highest in more than 2 years; and Fiat came in with a record 10.6% for the same time period.  But the WSJ is making the assumption that the lawsuit is a symptom that things are “finally getting less rosy” at GM – and are sending the word out to investors that this might be the case, particularly because the timing for the lawsuit is so curious – more than two years old.  I’m inclined to agree with that assessment – and, as always, we’ll follow the action closely.  It’s also possible that, since Fiat will soon be dealing with UAW, GM would like to make things more complicated for them.

ALL THE MOVING PARTS – typically, all the moving parts need to work together for the good of the company – and good rarely comes from doing outright harm to others.

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