UPDATE: Fiat Outlines Strategy To Cut Costs Amid Recession
June 18 2009 - 6:54AM
Dow Jones News
Fiat SpA (F.MI) Thursday outlined plans to retool its Italian
plants and lay off workers as the car maker seeks to cut costs and
expand abroad to better cope with the economic crisis.
The Turin-based company, which last week took control of U.S.
car maker Chrysler LLC, said it plans to keep production of cars at
its Termini Imerese plant in Sicily only until 2011.
Fiat Chief Executive Sergio Marchionne told a meeting with the
government and the company's labor unions that the Termini Imerese
plant, which employs about 1,700 people, would be retooled from
2012. He didn't elaborate.
Fiat said it would define a redundancy plan at its agricultural
and construction equipment unit CNH. Marchionne told a meeting
attended by Italian Premier Silvio Berlusconi and union officials
that it was hard to maintain employment levels due to the
recession.
"The global crisis has further aggravated the problem of
production overcapacity that has been plaguing the automotive
industry for years. A serious restructuring of the automotive
industry is now absolutely necessary if it is to be economically
viable," Fiat said in a statement.
Hit by the global economic downturn, the Italian economy is
expected to contract by more than 5% this year, after shrinking by
1% in 2008, marking the worst recession since World War II.
Workers at the Termini Imerese facility went on strike last
month, fearing the closure of their plant. Further protests are
likely, according to analysts.
At its Pomigliano plant near Naples, Fiat said it would continue
to make its Alfa Romeo cars until at least 2010, with a new car
production platform planned afterwards.
The Italian government and Fiat could agree to a EUR900 million
financing plan to help keep its plants running near full capacity,
daily la Repubblica said Thursday.
Marchionne urged the government to give Fiat continued access to
a temporary lay-off plan, allowing it to use funds set aside to pay
workers a reduced salary for working fewer hours.
The government last month said it would continue to help Fiat
only if it kept open its five Italian plants as it seeks to expand
to create one of the world's largest automakers.
Fiat last week took a stake and management control of Chrysler
after the U.S. car maker emerged from bankruptcy protection.
The alliance with Chrysler, which has created the world's
sixth-largest car maker, is a step in the process to increase
volumes produced on each platform and expand internationally, Fiat
said Thursday.
After a failed bid for General Motors Corp.'s (GMGMQ) Opel unit,
Marchionne plans to focus his attention on restructuring Chrysler.
Behind the scenes, however, Fiat is expected to keep hunting for
another partner that can give it scale in an industry dominated by
bigger rivals.
Six months ago, Marchionne set out to double Fiat's production
to around 5.5 million cars, compared with the two million it made
last year.
"Maintaining equilibrium in employment levels in the face of
these extremely difficult market conditions is no easy task,"
Marchionne said.
-By Giada Zampano and Luca Di Leo, Dow Jones Newswires; +39 06
697 66921; luca.dileo@dowjones.com