Fiat announces massive restructuring
In December 2001, the Italian-based Fiat group approved a restructuring plan aimed at addressing the difficult economic situation and the problems of its automobile division. The plan provides for an increase in share capital, the divestment of some activities and an industrial reorganisation programme, whereby Fiat will close or restructure 18 plants - two in Italy and 16 abroad. The plan foresees 6,000 redundancies.
The slowdown in the world economy, which worsened after the terrorist attacks on the USA on 11 September 2001, had negative effects on the 2001 financial performance of the Fiat group, one of Italy's largest companies, which recorded losses of about EUR 800 million. The severe problems in Fiat's automobile division, which represents 50% of its activities, has had severe effects on the situation of the entire group.
In order to address the even worse performance forecast for 2002, on 10 December 2001 the Fiat board of directors approved the largest restructuring exercise ever undertaken by a single company in Italy. The exercise involves measures worth a total of EUR 6 billion and the main points are as follows:
- increasing capital. The company will issue new shares worth EUR 1 billion in order to increase its capital. At the same time, it will launch a bond issue worth more than EUR 2.5 billion, which will be convertible into General Motors shares (Fiat and GM have an alliance arrangement - IT0004151F);
- industrial reorganisation. The Fiat group will close or restructure 18 plants, two in Italy and 16 abroad. This will entail a reduction in personnel of about 6,000 employees. Many workers abroad will be made redundant, while in Italy jobs will be safeguarded through all available measures. The company will have recourse to the wages guarantee fund (cassa integrazione guadagni, Cig) (IT9802319F) and will make less use of temporary agency workers and fixed-term contracts. The Fiat automobile operation will be divided into four business units which will enjoy a considerable management autonomy. Separate units will thus be responsible for the Alfa Romeo sports car brand, the Fiat and Lancia brands, all international activities, and services. This restructuring entails changes in senior management, and the new managing director of the automobile division is now Giancarlo Boschetti, former managing director of Iveco; and
- divestments. A divestment plan will involve the 'non-strategic' sectors of the group. It should bring, besides a reduction in debts, receipts of EUR 2 billion.
The metalworking trade unions are deeply concerned about the reorganisation and relaunch plan proposed by the Fiat group. The three main unions at the company are: the Italian Federation of Metalworkers (Federazione Impiegati Operai Metallurgici, Fiom) affiliated to the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil); the Italian Metal-Mechanical Federation (Federazione italiana metalmeccanici, Fim), affiliated to the Italian Confederation of Workers' Unions (Confederazione Italiana Sindacati Lavoratori, Cisl); and the Union of Italian Metal-Mechanical Workers (Unione Italiana Lavoratori Metalmeccanici, Uilm), affiliated to the Union of Italian Workers (Unione Italiana del Lavoro, Uil).
Giorgio Cremaschi, the general secretary of Fiom-Cgil's regional organisation in Piedmont (the region with the highest concentration of Fiat activities) is very pessimistic. 'This board of directors will just bring troubles for workers,' said Mr Cremaschi.
According to Antonio Regazzi, the general secretary of Uilm-Uil: 'the decisions adopted by the Fiat group are a signal of the serious economic and industrial problems of the group.'
Aldo D'Ottavio, the Piedmont regional secretary of Fim-Cisl and an expert on Fiat issues, highlighted the problems of Fiat in terms of both a fall in sales in Germany and the 'mediocre' efficiency of the group's industrial plans. The trade unions, said Mr D'Ottavio, demand negotiations to discuss the reorganisation of the group and assess the relationship with GM.