Fiat Group presents rationalisation plan for Italian plants

In June 2009, the chief executive officer of the Fiat Group presented to the government, regions and trade unions a plan to reorganise the company’s Italian plants. The plan pledged that none of these plants would be closed; rather, changes would be made to the production platforms at Fiat’s two plants in southern Italy. The announcement immediately raised concerns among the trade unions and in the regions where the plants are located.

On 18 June 2009, talks were held between the government, social partners and regional administrations regarding the future prospects of the Fiat Group in Italy. The talks gave the company an opportunity to illustrate its intentions regarding the future of its Italian plants. They follow months of negotiations in which the Fiat management had been engaged in foreign talks on an alliance with Chrysler in the United States (US) (IT0902019I), on the one hand, and on a bid to purchase Opel in Germany, on the other. The talks took place at a time when the global automotive sector was facing significant difficulties owing to the economic crisis (IT0812029I; see also the Eurofound report Recent restructuring trends and policies in the automotive sector). The representative trade union confederations – namely, the General Confederation of Italian Labour (Confederazione Generale Italiana del Lavoro, Cgil), the Italian Confederation of Workers’ Unions (Confederazione Italiana Sindacati Lavoratori, Cisl) and the Union of Italian Workers (Unione Italiana del Lavoro, Uil) – had requested the meeting with the company and the government as early as the beginning of 2009, amid concerns that Fiat’s active involvement in foreign purchases would lead to a retrenchment of its Italian plants (see table below).

Source: Il Sole 24 Ore newspaper

Deal with Chrysler and Opel negotiations

Since the appointment of Sergio Marchionne as Chief Executive Officer (CEO) of Fiat in 2005 (IT0509101N), the company’s competitive strategy has shifted markedly towards internationalisation and the acquisition of new assets. Mr Marchionne has argued that, in the future, the automotive sector will consist of a small group of global players and that if Fiat is to compete, it must join that group. This vision of the future has led to Fiat’s difficult alliance with Chrysler, finalised at the end of May 2009, after the US bankruptcy court approved the transfer of Chrysler’s strategic assets to a new company controlled by the trade unions, Fiat, and the US and Canadian governments.

The aim of the alliance is to share 10 production platforms, thus enabling Fiat to penetrate the American market with small, low-consumption models. To this end, Fiat has already announced the names of the managers, headed by Mr Marchionne, who will sit on the board of the new company. However, the trade unions are not so much concerned by the alliance with Chrysler as they are by the offer made by Fiat, in May 2009, to the German government to purchase the troubled Opel car company. The main worry concerns the fact that, unlike Chrysler, Opel produces cars similar in capacity and consumption to those manufactured by Fiat at its Italian plants. In June, nevertheless, the trade unions and German government seemed to prefer the offer made by another company, namely the Canada-based auto components manufacturer Magna International, rather than Fiat’s offer; the latter envisaged 10,000 redundancies in Germany and Italy. However, a definitive decision on Opel’s fate has not yet been taken and a third highly competitive bidder, the industrial holding company RHJ International, has made an offer.

Plans for Italian plants

As regards Fiat’s Italian plants, the CEO Mr Marchionne confirmed the group’s ‘Italian roots’ during a meeting on 18 June 2009, assuring those present that none of the Italian plants would be closed. For the two southern plants at Termini Imerese in Sicily and Pomigliano in Naples, however, the company anticipated a change of production, starting from 2010–2011. The future of these two plants is of particular concern to the trade unions and local administrators of the regions involved. Indeed, strikes and road blocks were organised at the Termini Imerese plant.

The production plans for the 2009–2010 period at each site envisage the following measures:

• production of the Alfa Romeo Mito model will continue at the Mirafiori plant near Turin in northwestern Italy, with the introduction of the MultiAir version in September 2009. Production of the Punto Classic, Multipla, Musa and Idea models will also continue;
• production of the new Punto Evo model will begin at the Melfi plant in southern Italy, while the continued production of the Grand Punto is confirmed;
• production will continue at the western Cassino plant of the Bravo, Delta and Croma models. Moreover, production of the new Alfa Romeo I segment C will be launched in 2010;
• production of Ypsilon models (with Euro 5 engines) will continue at Termini Imerese until 2011. Thereafter, the company pledges to maintain an industrial presence with other products, for which it will be necessary to revise the framework agreement on the basis of the new project;
• at Pomigliano, production of the Alfa Romeo 159 saloon and sport wagon (with Euro 5 engines) will continue beyond 2010. Moreover, production of the Alfa Romeo 147 and GT will continue until 2010, after which a new platform for one or more models is planned;
• continued production of the Ducato model is assured at the Sevel Val di Sangro plant in eastern Italy;
• as regards Iveco, current production plans will continue at three plants in Brescia, northern Italy (a new Eurocargo model), Suzzara, northern Italy (a new Daily model) and Avellino in the southwest (new Citelis and Domino buses).

Fiat’s production plans have been accompanied by large-scale recourse to the wages guarantee fund (CIG), which currently involves all of the group’s Italian plants. In addition, after the June meeting, it was announced to the trade unions that the CNH plant at Imola in northern Italy will close within two years. CNH is an associate company, which produces machinery for the construction industry and agriculture, employing more than 500 workers.

Social partner reactions

The trade unions had repeatedly pressed for a meeting between the company, government and social partners since the signing of the preliminary agreement with Chrysler. They were therefore pleased that the talks had begun. However, the trade unions expressed doubts about the plan, albeit with different criticisms.

The harshest judgment was passed by the Cgil-affiliated Italian Federation of White-collar and Blue-collar Metalworkers (Federazione Italiana Operai Metalmeccanici, Fiom-Cgil). The General Secretary of Fiom-Cgil, Gianni Rinaldini, immediately underlined the union’s ‘firm opposition to cutbacks in car production in Italy’, arguing that ‘Italy already produces fewer cars than all the other European countries. The government’s industrial policy and Fiat’s strategy should therefore be centred on development, innovation, and the defence of employment and production sites’.

Elsewhere, the main concern highlighted by the General Secretary of Cisl, Raffaele Bonanni, was to avert ‘the risk of downsizing at the plants in the south’ – that is, at Termini Imeresi in Sicily and Pomigliano in Naples. Meanwhile, the General Secretary of Uil, Luigi Angeletti, called for ‘incentives for car production to be offered to Fiat but compatible with the European Union’s rules on competition’.

Government pledge

For its part, the government, through the Minister for Industry, Claudio Scajola, pledged to continue the talks between the social partners in three distinct committees, as follows:

• the first committee would monitor trends in the labour market, employment and investments, together with the regional administrations and the trade unions;
• the second committee would deal with support for research and innovation;
• the third committee would discuss support and credit access measures for small companies supplying components to Fiat.

Regional investment plan for automotive sector

As regards the regional administrations, those with Fiat plants on their territory – that is, Abruzzo, Basilicata, Campania, Lazio, Puglia and Sicily – presented an investment plan of about €900 million, distributed among the central, regional and company levels. The investment plan seeks to relaunch the automotive sector through incentives for the production of cars with low environmental impact and the promotion of combined research in the engineering, electronic and information technology (IT) sectors. The plan is based on regional resources that constitute an additional investment to the plan launched by the central government in November 2008.

In particular, the Governor of the Sicily region, Raffaele Lombardo, has expressed serious concerns regarding the planned change in the production platform of the Termini Imerese plant: the trade unions and local administration fear that the decision is in fact a prelude to divestment by Fiat in Sicily.

Cristina Tajani, Fondazione Seveso