Mixed reaction to creation of Fiat Chrysler Automobiles

Italian car-making giant Fiat has undergone a major corporate reorganisation. On 29 January 2014, the Fiat Group governing board approved changes which create the new group, Fiat Chrysler Automobiles, FCA. The group will have its legal head office in the Netherlands and its tax domicile in the United Kingdom. Some union leaders welcomed the ‘potential employment and economic opportunities’ for workers, but Fiom-Cgil said it was further evidence of Fiat moving away from Italy.

Background

An alliance between the Fiat Group and the Chrysler Group dates back to 2009. The two groups announced they had signed a preliminary agreement for the creation of a strategic global alliance on 20 January 2009. On 10 June 2009 they signed another agreement, which meant Fiat would acquire 20% of the American group. The aim was for Fiat to increase this share, subject to the conditions and to the achievement of the objectives included in the agreement (IT0902019I, IT0905019I).

Since then both the industrial strategy and industrial relations at the Fiat Group have changed significantly. In particular, a multi-employer industry-wide metalworking collective agreement governing working conditions and pay was replaced by a group first-level and single-employer agreement (IT1102019I, IT1007029I, IT1111029I).

This was despite opposition from metalworkers’ federation Fiom-Cgil, which refused to sign any of the new agreements. The current Fiat Group collective agreement has been in effect since 1 January 2012 and was renewed on 8 March 2013 after seven months of negotiations (IT1309019I).

Since 2009, a key issue in the debate over developments at the car giant – especially in connection with the takeover of Chrysler – has been the location of a Fiat headquarters in Italy. There have also been concerns that Fiat had failed to make enough of a commitment to retaining its Italian production sites. Trade unions have always said this is a crucial component of a consensual reorganisation process.

Creation of a new group

On 29 January 2014, Fiat’s governing board approved the corporate reorganisation plan and the consequent creation of the new Fiat Chrysler Automobiles N.V. (FCA), which will become the holding company of the group.

The management says that the creation of a large, global auto group through the union of Fiat and Chrysler responds to business and organisational necessities. According to a company press release (104 KB PDF), it will bring new opportunities, establishing ‘a true peer to the major global automotive groups, in both scale and capital market appeal’.

FCA will base its legal head office in the Netherlands and its common shares will be quoted on the New York and Milan stock exchanges. The reorganisation will also see FCA resident for fiscal purposes in the United Kingdom. However, the company says: ‘This is not expected to affect the taxes payable by group companies in the jurisdictions in which their activities are carried out.’

FCA management and operations will be based in the ‘existing four operating regions’, according to the press release, which adds: ‘All activities of FCA will continue with the same mission, including manufacturing plants in Italy and elsewhere around the globe.’

The company also pledged that the creation of FCA would have no impact on employment levels.

Union reaction

John Elkann, Chair of Fiat, said the new FCA ‘allows us to face the future with a renewed sense of purpose and vigour’.

Sergio Marchionne, CEO of Fiat and Chairman/CEO of Chrysler Group, said on 29 January 2104 that the company had ‘succeeded in creating solid foundations for a global automaker with a mix of experience and knowhow on a level with the best of our competitors’.

Fim and Uilm, the metalworking federations affiliated to Cisl and Uil which signed the group-level agreement, reacted positively. However, both have discussed the potential employment and economic impact on workers following the news that Fiat’s corporate headquarters was leaving Italy.

In a statement on the Cisl website, Ferdinando Uliano, National Secretary of Fim, said the creation of FCA ‘opens up encouraging perspectives for employment and plants in Italy’. This, he said, could be taken as a positive when taking into account the challenges facing the automotive sector in Italy and across Europe.

But leaders from Fiom, the metalworking federation affiliated to Cgil, criticised the creation of FCA. Michele De Palma, Fiom’s National Coordinator for the Fiat Group, said it was ‘another step towards the group’s disengagement in Italy’. De Palma called on the Government of Italy to intervene, saying the company ‘will not work, or invest, or pay taxes in Italy’.

Lisa Rustico, Università degli Studi di Milano

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