BBDO, conceding that it has been unable to negotiate new contract terms with Chrysler, told staffers the agency would close its Detroit operations when the automaker’s contract ends on Jan. 26, 2010.
The action throws into doubt the future of 485 staffers in Troy, Mich., Windsor, Ontario, and at some Canadian field offices. BBDO said on July 30 Chrysler told the agency that while it wished to continue to work with the shop, it was not prepared to do so under current contract terms.
After emerging from bankruptcy in June, Chrysler has been run by Sergio Marchionne, the CEO of Fiat, which took a 20 percent stake in the American company post-bankruptcy. Marchionne, who has been reaching beyond roster shop BBDO in awarding Chrysler assignments, is known to have balked at the Omnicom shop’s compensation on the business.
BBDO CEO Andrew Robertson flew out to the agency’s Detroit offices to deliver the bad news today in person.
In an internal memo, he told staffers the agency has been unable to agree to revised scope and contract terms: “I am sorry to tell you that, despite our best attempts to do so, we have as yet not been able to reach such an agreement. We therefore need to plan for a life without Chrysler from February 2010. Whilst we will do our very best to reassign people to other accounts and agencies within BBDO Worldwide and across Omnicom, this will mean the closure of BBDO Detroit and its field offices, and staff reductions in several other markets. We are making this announcement now to give our people as long as possible to plan for their futures.”
Robertson also noted the challenging circumstances under which the agency has worked: “Over the past four years alone, we have had to deal with the inevitable pressures that come with a 60 percent contraction in sales volume, three different owners, four CEOs and five heads of marketing. . . . I know that between now and the end of January, the client can depend on us fulfilling our contractual obligations, and more, with the same commitment. Thereafter, we genuinely hope that the new Chrysler is successful. Our people have put too much of themselves into those brands to do otherwise.”
Chrysler has been a BBDO client since 1944 when the agency handled DeSoto. In 2000, Omnicom Group bested True North Communications in a global consolidation of Chrysler marketing duties, which were then valued at $1.8 billion. Through August of this year, Chrysler spent $270 million in measured media. At its peak, BBDO Detroit employed 2,000 people. (That latter figure did include Chrysler media operations, since shifted to PHD.)