MILAN, Jan 5 (Reuters) - Fiat has given Rome guarantees that the automaker will invest in plants in Italy and keep a strong presence in the country where it was founded 115 years ago, Industry Minister Flavio Zanonato was quoted on Sunday as saying.
Fiat’s recent $4.35 billion deal to gain full control of No. 3 U.S. automaker Chrysler has raised worries the merger could further diminish Fiat’s presence in recession-hit Italy and lead to job cuts.
In an interview with financial daily Il Sole 24 Ore, Zanonato, who in the past intervened by asking Fiat “to stay in Italy”, said he would meet with Fiat CEO Sergio Marchionne this month to discuss the merger.
“In a phone conversation on Thursday, (Marchionne) expressed his intention to keep strong roots in Italy,” the minister said. “He confirmed he has in mind a strengthening in our country. Fiat already has a plan to increase the effort put into new models produced in Italian factories.”
Zanonato dismissed concerns expressed by unions, saying the merger, which will combine the technology, dealer networks and cash of the two companies, could only be positive for Italy.
“How can a country not be satisfied by a deal ... which opens new perspectives (prospects) in foreign markets? The development of the foreign network is a smart choice,” he said.
Fiat has said it plans to build Jeeps and a new line of Alfa Romeos in Italy for export to markets in Asia, Latin America and the United States to offset flagging demand in crisis-hit Italy.
An industrial plan outlining Fiat’s spending strategy and models is due for release in April.
Some are sceptical after Fiat scrapped a 2010 plan to invest up to 20 billion euros ($27.23 billion) to more than double output in Italy after market conditions deteriorated.
Despite Fiat’s plants running at well below capacity, the carmaker has repeatedly reassured politicians and unions it does not intend to close factories, unlike mass-market competitors Ford Motor Co, General Motors Co and Peugeot SA , which have said they will close plants.
Zanonato said that his ministry would meet with representatives from the automotive sector supply chain on Jan. 10 to discuss moves that could help revive Italy’s car market, which has shrunk to levels last seen in the 1970s.
“We are considering a series of measures, including possible incentives for alternative-fuel vehicles,” he said. “The resources available are unfortunately scarce, but maybe we can do something to support the sales of models in two directions: methane and electric-hybrid.”
The minister added that the government was looking at fiscal measures to boost exports, but did not give details.
In a separate story, the newspaper said Fiat was considering the issue of a mandatory convertible bond of 1-2 billion euros to boost its capital base after the merger. The company declined to comment.