January 24, 2013 / 5:05 PM / in 5 years

Fiat gets union nod for lay-off scheme at Melfi plant

MILAN, Jan 24 (Reuters) - Italian carmaker Fiat has received trade unions’ go-ahead for a special lay-off scheme at its Melfi plant in southern Italy that will allow it restructure the plant before producing new models.

The unions’ approval, announced by union UGL in a statement, allows Fiat to press ahead with its plan to halt two production lines at the plant, starting from Feb. 11.

The temporary lay-off scheme can run until the end of 2014, but Fiat can restart production as soon as new lines are ready.

“Fiat said production could likely start at the end of 2013, early 2014,” UGL’s metalworkers regional secretary Giuseppe Giordano told Reuters after attending a meeting with Fiat.

Fiat is awaiting an approval by the government for the plan.

Fiat, which controls U.S. carmaker Chrysler, is one of several carmakers hit hard by the euro zone debt crisis. In 2012 car sales in Italy plunged to their lowest level since 1979.

Melfi, one of Fiat’s most important facilities in Italy, makes the Punto model.

Last December Fiat said it would invest 1 billion euros ($1.3 billion) to produce a new Jeep and a new Fiat 500X in Melfi from 2014.

The move is part of a strategy by Fiat to use its Italian factories to produce Jeeps and other group brands for export and offset flagging demand in recession-hit Italy.

On Jan. 15 Fiat said it wanted to continue producing the Punto at Melfi depending on market demand while investing in building two new models.

A car industry source said production of prototypes at Melfi could start early in 2014.

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