Unions urge Fiat not to delay Italian investments

MILAN, Sept 25 (Reuters) - Italian carmaker Fiat should not freeze investments in its domestic factories if it wants to benefit from a recovery in the European car market expected in 2014, unions said on Tuesday.

Fiat, which also runs Chrysler in the United States, has effectively abandoned plans to pour 16 billion euros ($20.6 billion) into its loss-making Italian factories, putting investments on hold until it sees signs of a market rebound.

Fiat is also idling production lines in Italy and leaving workers at home on reduced pay to keep a lid on costs.

Fiat's chief executive Sergio Marchionne met Italian Prime Minister Mario Monti on Saturday following concerns that the group is planning to shift manufacturing outside Italy, where car sales have plunged to their lowest level in 40 years.

After five hours of talks, a joint statement said the company would not shut domestic plants but would instead refocus its domestic business model towards exporting cars to the United States - where the market is growing and Chrylser plants are running at full capacity.

But unions, which will hold talks with the government later on Tuesday, said Fiat risked being caught out in an eventual market recovery if it delayed investments and product launches for too long.

"The right moment to invest is now, if you want to be ready for 2014. The whole industrial process for a new car model takes around 16 months, so we shouldn't sit idle for too long," Ferdinando Uliano of the Cisl union told Reuters.

Marchionne said earlier this month he was pessimistic about the European outlook for this year and next. "I think we will not see the recovery of these markets until 2013," he said. "I think we will have to get used to these numbers being at low levels for the next 18 months."

Uliano said unions had asked Fiat to bring forward a meeting with labour groups initially slated for October 31 because they wanted a firm commitment from Marchionne on his plans in Italy, where Fiat is the biggest industrial group and employs more than 20,000 people.

Unions are particularly worried about Mirafiori, Fiat's flagship Turin plant, where they say a promised 1 billion euro investment is on hold despite plans to build a small Fiat-branded sports utility vehicle (SUV) at the end of 2013 and a small Jeep SUV in the second quarter of 2014.

"We will ask (Marchionne) to get started with the new models, that's the choice that Fiat has to make," Luigi Angeletti, leader of the UIL union, told local radio on Tuesday.

The government has agreed to study possible incentives that would help Fiat sell its cars abroad, but there are no details on any specific measures.

Fiat started running Chrysler under a 2009 bailout agreement with the U.S. government and now has 61.8 percent of the U.S. group. The combined Fiat-Chrysler group makes more than two-thirds of its profits in the United States, while Marchionne has said Fiat will lose 700 million euros in Europe this year.

Marchionne was due to speak to managers and workers in Italy on Tuesday. A source familiar with the situation said he would not disclose new financial data but would seek to rally staff behind him. ($1 = 0.7743 euros) (Reporting By Silvia Aloisi and Jennifer Clark; Editing by Pravin Char)