Fiat Group announces two-year industrial plan for Italy

In December 2009, the Fiat Group management presented its 2010–2011 industrial plan for Italy to the government, the regional administrations and the trade unions. The plan provides for the closure of Fiat’s Sicilian plant at Termini Imerese, as well as investments amounting to €5 billion and an increase in annual car production to 900,000 units. Trade unions have criticised the decision to close the Sicilian factory; the announcement provoked immediate protests by workers.

Closure of car plant in Sicily

After completion of the alliance with the automobile manufacturer Chrysler in May 2009 (IT0902019I, IT0905019I) and the failed attempt to acquire the car manufacturer Opel, in December 2009 the Fiat Group presented the 2010–2011 industrial plan for Italy to the government, the regional administrations and the trade unions. The plan provides for the cessation of car manufacturing in the town of Termini Imerese on the northern coast of Sicily in 2012. Fiat’s Chief Executive Officer (CEO), Sergio Marchionne, emphasised that Fiat’s industrial presence at Termini Imerese had always been negatively affected by competitive disadvantages which increase the cost of producing a car by up to €1,000. The principal causes of the plant’s economic problems are the lack of related activities in the area and high logistical costs.

According to Mr Marchionne, the conditions that in the past had made it possible to offset the Sicilian factory’s extra costs had disappeared due to the profound difficulties affecting the economy and markets; in his opinion, ‘the social problems of Termini were not Fiat’s responsibility. They were not before, and they are not now’. The Fiat Group has declared its willingness to assist and support proposals for the plant conversion put forward by the Sicilian regional government, other institutions and/or private groups. Mr Marchionne declared that ‘We are even ready to make the plant available’.

Trade unions have criticised the decision to close the plant and workers have protested against the plan. The factory is located in a region with particularly severe economic and social difficulties, with an employment rate of just 43% in the third quarter of 2009 – according to results of the labour force survey (in Italian, 233Kb PDF) of the National Institute for Statistics (Istituto Nazionale di Statistica, Istat) – and beset by powerful organised crime. The plant employs 1,350 people directly, while another 600 workers are involved in related activities.

Restructuring necessary for company survival

According to Mr Marchionne, the industrial plan for Italy presented to the social partners will lay the basis for defining the company’s global future. In this regard, the CEO emphasised the importance of the alliance with Chrysler, arguing that the restructuring plan for the American automotive company, presented to the financial community in November 2009, is also decisive for the survival of the Fiat Automobile Group. The agreement, according to Mr Marchionne, will produce the critical mass necessary for Fiat to obtain large economies of scale and become the sixth global producer in an international scenario dominated by a few leading players.

Mr Marchionne highlighted the effects of the international economic crisis on the branches of industry in which the Fiat Group operates: demand is still at very low levels, with some notable collapses – in light commercial vehicles, industrial vehicles and construction machinery – while there is little sign of an upturn. In 2009, sales in the western European automobile industry stayed at substantially the same levels as in 2008, due largely to the eco-incentives launched in many countries. Nevertheless, the most credible forecast for 2010 is about 12 million new car registrations, a million and a half fewer than in 2009.

The Fiat CEO declared that he wanted to tackle this ‘epochal crisis’ by ‘seeking the right balance between industrial logic and social responsibility’. The agreement with Chrysler will enable substantial restructuring and remove longstanding structural weaknesses, in particular by dealing with the problem of productive over-capacity. According to Mr Marchionne, the United States, unlike Europe, had addressed the problem with a ‘structural and courageous change’ through ‘real and significant action to rationalise plants. This is a wholesale rethinking of the system in ecological terms’. In his opinion, in Italy, ‘the number of cars produced per worker is entirely disproportionate’ because of a ‘level of saturation and use of plants that does not respond to any industrial logic’. For these reasons, the Fiat Group decided to close the Termini Imerese factory, to invest new resources in reorganising the group’s other Italian plants, and to increase annual car production in Italy.

Social partner reactions to closure announcement

On 29 January 2010, the Minister of Economic Development, Claudio Scajola, convened a meeting with Fiat, the Sicily Region and the trade unions to discuss the industrial future of Termini Imerese and to protect employment. Minister Scajola declared his conviction that Termini Imerese must remain an industrial centre and that it could continue to operate in automotive activities. The minister announced:

We are working with Fiat and with the other subjects possibly interested in guaranteeing a future for an area that has skilled human resources available and that can count on the support already expressed by the government and the Sicily Region to increase infrastructure and to supervise possible restructuring.

The President of the Sicily Region, Raffaele Lombardo, strongly criticised Fiat’s decision to close the plant at Termini Imerese and declared that the region was ready to invest a total of €400 million: €200 million in infrastructure and €200 million in technological innovation. The Sicilian Regional Assembly (Assemblea Regionale Siciliana) unanimously requested that Mr Lombardo should be permitted to attend a meeting of the national Council of Ministers (Consiglio dei Ministri) to discuss the problem of the Sicilian plant.

Leaders of the three trade union confederations – the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil), the Italian Confederation of Workers’ Unions (Confederazione Italiana Sindacato Lavoratori, Cisl), and the Union of Italian Workers (Unione Italiana del Lavoro, Uil) – expressed their dismay at the planned closure of the Sicilian factory. The trade union leaders declared that ‘the announcement concerning Termini Imerese makes our judgement on the entire plan negative’. The trade union federations representing metalworkers – the Federation of White-collar and Blue-collar Metalworkers (Federazione Impiegati Operai Metallurgici, Fiom), the Italian Metalworkers’ Federation (Federazione Italiana Metalmeccanici, Fim) and the Union of Italian Workers (Unione Italiana Lavoratori Metalmeccanici, Uilm) – announced a strike during the presentation of the industrial plan, and workers held a protest demonstration outside the meeting venue. Moreover, an eight-hour strike was held at the Termini Imerese plant after the Christmas period. According to Fiom, the turnout for the strike was 100%. Fiom, Fim, Uilm and the Autonomous Metalworking and Allied Industries Union (Sindacato autonomo metalmeccanici e industrie collegate, Fismic) announced another four-hour strike for the entire Fiat Group in February 2010.

The federal trade unions have demanded that production be maintained at Termini Imerese and that the jobs be protected. The Secretary of Fiom at Termini Imerese, Roberto Mastrosimone, asked Fiat to increase car production in Italy, emphasising that Italy occupied bottom place in Europe in the ratio between the production and consumption of cars: 400,000 fewer cars are produced than are sold. According to Mr Mastrosimone, ‘Fiat should respect its pledge made one year ago to the trade unions: to produce the new Lancia Ypsilon model at Termini Imerese’. The General Secretary of Cgil, Guglielmo Epifani, emphasised the serious consequences that would ensue from the closure of a manufacturing plant in the south of Italy because of the difficulties of replacing it with new production. Mr Epifani stated that the future of Termini Imerese must remain in the car industry, ‘because no other activity can give employment to workers in an area where there is nothing else’.

The General Secretary of Cisl, Raffaele Bonanni, declared that the Termini Imerese plant must continue to manufacture, changing products if the high additional costs of car production made it necessary. Mr Bonanni added:

when a company does not refer to the rules of the market and asks for money from the public, it is clear that the public’s interest is to demand the rescue of an entire industrial site.

A similar position was taken by the General Secretary of Uil, Luigi Angeletti, who asked Fiat to propose a new plan for Termini Imerese, ‘such as, for example, expanding components production, which would have much lower transport costs and would solve the problem of the quality and quantity of employment’.

Main components of plan

Apart from the planned closure of the Sicilian plant, the 2010–2011 Fiat industrial plan includes the following elements.

• Investment – the plan allocates €8 billion, two thirds of which will be spent in Italy, over the next two years to investment and research and development.

• New vehicle models – the production of 17 new car models and the relaunch of the 13 existing models are planned. The most important presentation of 2010 will be the new Alfa Romeo Giulietta model.

• Production growth – the aim is to increase levels of automobile production in Italy from 650,000 units in 2009 to between 800,000 and one million within three years, with a target of 900,000 cars a year, returning to the 2006–2007 level. Added to these volumes is the production of light commercial vehicles, which may reach about 220,000 units, compared with the 150,000 units in 2009.

The 2010–2011 production schedules intend to optimise the workflow at Fiat’s Italian plants. The main changes involve the following factories.

• At the plant in the Mirafiori district of the northern city of Turin, the introduction of two versions of compact monospace cars is planned for 2011. The factory will be turned into a World Class Plant and will be completely reorganised to install a new assembly line for flexible production, with large-scale training for all employees.

• At the plant in the town of Cassino in the central province of Frosinone, current production will continue in 2010, with the addition of the Alfa Romeo Giulietta. Investments in innovation are scheduled for all production departments.

• The plant in Pomigliano d’Arco, a town northeast of the southern city of Naples, will be assigned a new platform – probably that of the new Panda model, currently being produced in Poland. However, converting the plant to the new project will require a major three-year restructuring programme which will involve further inactivity periods for workers and a €40 million retraining plan.

Marianna Epicoco, Fondazione Seveso