di Stefano Rebaudo e Jennifer Clark
MILAN, Sept 12 Italian carmaker Fiat
aims to avoid plant closures in its home market by putting
factories on short-time working through the autumn as Europe's
auto industry struggles with weak demand and excess production,
according to union sources.
Fiat, like other mass-market automakers in Europe, is
feeling the squeeze as recession and austerity budgets force
consumers to delay new car purchases.
As a result, it is focusing its investment elsewhere, like
in the United States and Brazil, raising concerns it might be
planning to announce a plant shutdown this autumn.
But those fears are unfounded, said people who have spoken
with Fiat chief executive Sergio Marchionne this summer.
"At the meeting with trade unions on Aug. 1, Marchionne said
Fiat already closed the Termini Imerese plant in Italy, so now
it's up to other European countries to make a move", a first
trade unions source said. "I think he won't do anything."
Other countries are indeed moving. Peugeot plans
to cut more than 10,000 French jobs and close its first car
plant in two decades, while General Motors is expected to
shut the Opel plant at Bochum, Germany, in 2017.
In Italy, Marchionne intends to avoid a closure by halting
production at the carmaker's five plants off and on throughout
the autumn, said another trade unions source, and plans to lay
off white collar workers when Italy's economy recovers.
The temporary layoffs will help keep a lid on costs at a
time of slack demand. But the decision not to close a plant is
based on more than just cost calculations.
Factory investments made up until now , a possible change in
economic conditions in Europe, and hopes of tax breaks on labour
costs in Italy also suggest Marchionne will delay any major
changes in investment plans in Italy.
"It's not true that the company just looks at the cost
issue, as many commentators have recently suggested," an
industry source said. "In Italy we have skills we cannot lose.
Cassino, Melfi and Pomigliano are world class manufacturing
Fiat declined to comment.
Fiat spent around 1 billion euros to update its plant at
Pomigliano and signed a hard-won new contract with unions
allowing for its factories to be used 24 hours a day. That's
something which could interest possible partners.
Marchionne recently said Fiat is open to sharing its plants
with other automakers, citing a possible deal with Mazda
, its partner for an Alfa Romeo sports-car model.
Overcapacity in Italy will remain the biggest headache for
the group. It is currently estimated at around 800,000 cars -
not far from the 947,000 vehicles Fiat sold in the whole of
Europe in 2011. The Italian car market is expected to close 2012
with sales at 1.37 million, the lowest level since 1979.
Plant-sharing with Mazda or Suzuki would not solve the
problem, because Mazda sold around 137,000 cars in Europe in
2011, and Fiat's other Asian partner Suzuki, 180,000 vehicles.
Trade unions think Mirafiori, Fiat's flagship factory in its
hometown of Turin, could be the most a t risk, since contruction
work to update the plant to host new small SUV (sport utility
vehicle) models has been on hold since the end of May.
But they point out that one billion euros of planned
investment at Mirafiori has been frozen, not cancelled.
"At the Mirafiori plant Fiat is still in time to start
production by 2013 as it promised," the industry source said.
"It will take around 12 months to set up the new lines and start
(Editing by Mark Potter)