* Carmaker to build new Jeep, new Fiat 500 in Melfi
* Fiat decision shows positive side of globalisation -Monti
By Jennifer Clark
MELFI, Italy, Dec 20 Fiat will invest 1 billion
euros ($1.3 billion) to produce a new Jeep and a new Fiat 500 in
Melfi, southern Italy, from 2014, giving a boost to a plant that
had been temporarily closed because of weak domestic demand.
Fiat, which controls U.S. carmaker Chrysler, plans
to use its idled Italian factories to produce Jeeps and other
group brands for export, as it relies increasingly on overseas
sales to offset flagging demand in recession-hit Italy.
With the new small Jeep, the company "enters a new segment
where the brand is not currently present," Chief Executive
Sergio Marchionne told workers at the Melfi plant on Thursday,
adding that the vehicle - which has not yet been named - would
be sold worldwide.
It will be built on the same platform as the 500X, a
"crossover" small sports utility vehicle that "will enable Fiat
to enter a market that's expanding in Europe," he said.
Marchionne's speech, attended by Prime Minister Mario Monti,
who is expected to resign as soon as this weekend, paving the
way for early elections, and Fiat chairman John Elkann, was
greeted with cheers from hundreds of uniformed workers clustered
around a makeshift podium near an assembly line in the factory.
The investment comes at a difficult time for Fiat, which
like other carmakers is suffering through the fifth consecutive
year of falling car sales in Europe.
The company, which is profitable because of revenue from
Chrysler, will lose about 700 million euros ($928 million) in
Europe this year, Marchionne said.
"It is clear that this situation is not sustainable in the
long term," he said.
Fiat has come under pressure from financial investors to
shut a factory to cut costs even as it faces political and union
pressure to protect jobs in Italy.
Marchionne said the company had chosen to invest in Italy
instead of cutting capacity.
"We used the financial security we gain from our business
outside Europe - especially in the United States and Brazil - to
support and protect our presence in Italy," he said.
Marchionne said Italy's next government should continue
Monti's reform programme, noting in remarks afterwards that
Fiat's financing costs rise whenever there is a spike in Italian
government bond spreads.
Monti said Fiat's decision to invest in new models to be
built in Italy for export was a "positive moment that showed
that sometimes globalization brings advantages instead of being
something to be afraid of."
"What happened here is not magic," Monti said in a speech.
"It is emblematic of the change that is taking place in Italy."
The Melfi investment is another step forward in Fiat and
Chrysler's plans to share plants and platforms, enabling the two
companies to compete in sectors too expensive to enter alone.
"These two new cars that we are presenting today show that
there is no longer one Fiat and one Chrysler: there is a single
group, healthy and united, that has an incredible capacity for
worldwide growth," said Elkann.
DAY OF HOPE
The Melfi plant has built 5.5 million Fiats since it opened
in 1993, but has been mostly shuttered in recent months as
demand for its Grande Punto has slumped.
Marchionne declined to discuss media reports that a
long-awaited new version of Fiat's Punto would be made in
"We are ready for the challenge and very proud to be the
first ones to make this new Jeep," said Michele Puccarelli, a
shift manager at the plant who listened to Marchionne's speech.
The temporary layoffs were expected to continue throughout
next year, however, since car demand is still weak, Fismic union
leader Roberto di Maulo said.
"The opportunity to have these two new cars made here is
very positive," he said. "We expect to have a healthy exchange
of know-how with our American counterparts."
The plant and the surrounding area about two hours south of
Naples by car provide work for 9,000 people, including 18 car
parts suppliers and four service companies, said plant manager
"This is a special day of hope for so many workers, and for
the entire area," Gianfranco Todisco, the Bishop of Melfi, told