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Fiat: We'd Be Better Off Without Italy's Unions

Mon, 10/25/2010 - 5:16am
Alessandra Rizzo, Associated Press Writer

ROME (AP) — Fiat CEO Sergio Marchionne says the tradition-laden Italian automaker would be better off without Italy and its balky unions, provoking an angry reaction Monday from some labor and government officials.

Fiat has been in tense negotiations with unions over its plan to shut down a factory in Sicily next year. The company has also said it wanted to move back production of one of its models from Poland to Italy, but in exchange for labor concessions that one union rejected.

Fiat, which controls U.S.-based Chrysler LLC, has recently raised its 2010 forecasts, and Marchionne said that trading profit would be at least €2 billion. But of that profit, he said, "not one euro ... comes from Italy."

"We still have a loss," Marchionne said on a RAI state TV show Sunday night. "If we were to eliminate that Italian side from our results, Fiat would do more."

"One cannot forever manage operations that are at a loss," Marchionne said. "The majority of our competitors would have found the way out."

Marchionne cited poor labor efficiency but also blamed a system that he said had lost competitiveness over the years. He said Italy had been lagging behind in the past decade.

However, he also said one of his goals is to raise a worker's average salary — about €1,200 ($1,600) monthly — and bring it closer to that of European counterparts.

Some unions reacted angrily, saying Marchionne's real intention was to abandon Italy and outsource production.

Rocco Palombella of the metalworkers union Uilm urged Marchionne "to stop humiliating workers."

Guglielmo Epifani of the CGIL, Italy's largest union, was quoted as saying Monday that "Marchionne is very skeptical over the future of Fiat in Italy" and that "the truth is Marchionne wants to leave Italy."

CGIL has been the toughest in its opposition to Fiat. Its metalworkers' branch, FIOM, has rejected Fiat's plan to move production of its new Panda compact from Poland to a plant near Naples, saying that the labor concessions Fiat wanted amounted to eroding workers' rights.

Fiat said it would go ahead with the plan, which envisages a €700 million ($903 million) investment, despite the unresolved dispute with the union. But Marchionne has also said recently that the resistance to Fiat's plans has forced the automaker to slow its planned investments in Italy.

Marchionne's straight talk is unusual for a public figure in Italy, and has drawn him both praise and criticism. Moderate union leaders and some politicians credited him for speaking about the country's real problems, such as the lack of productivity.

But his comments Sunday night also angered some government officials, who were quick to remind Fiat of the government incentives to scrap old cars and buy new ones, a program that supported Fiat sales during the recession.

Roberto Calderoli, Cabinet minister without portfolio and leading member of the Northern League political party, said "Marchionne has short memory when it comes to state aid."

Maurizio Sacconi, the labor minister, said Marchionne was right in seeking better productivity, but insisted "Italy is the country where the group has been historically based."

Marchionne insisted that it had repaid its debt, both financially and through the creation of a significant industrial group.

"I don't want to be told 'Thank You' but I also don't want to be constantly accused to be receiving state aid," he said.

Marchionne, who was born in Italy and moved to Canada with his family as a teenager, has turned aroundFiat's sagging fortunes. Earlier this month, the company raised its 2010 targets, saying revenues would top €55 billion — €5 billion more than previously stated.

Fiat also said it expects to raise its stake in Chrysler to 35 percent by the end of 2011, but that hurdles remain.Fiat took the initial 20 percent share in mid-2009.

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