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Fiat could boost production in U.S., Poland, Serbia if Italy plan fails

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Fiat could boost production in U.S., Poland, Serbia if Italy plan fails

Luca Ciferri

Automotive News Europe -- November 1, 2010 06:01 CET

TURIN – The United States, Poland and Serbia could benefit from expanding production volumes if Fiat S.p.A.'s plan to boost output in Italy is derailed by uncooperative unions.

Fiat CEO Sergio Marchionne has warned that if he can't negotiate more efficient work rules for the automaker's Italian assembly plants, he will consider other production locations.

“Certainly those vehicles that are required for western European consumption would have to find a production home, and we have other [facilities] that are available to take their place,” Marchionne told analysts on October 21.

Last April, Fiat unveiled a new plan to expand car production in Italy from 650,000 units in 2009 to 1.4 million units in 2014, but Marchionne wants union support for more efficient production, including an 18-shift workweek instead of the current 10-shift week.

Marchionne has not spelled out his options if his plan – called Fabbrica Italia (Italian factory) – fails to win complete union support. But sources say Fiat would consider the following:

• Expanding annual capacity of its assembly plant in Tychy, Poland, to 780,000 units, up from 606,000 units built last year

• Doubling the annual output of its Serbian joint venture to 400,000 units

• Relocating production of a future Lancia/Chrysler compact sedan plus the Alfa Romeo Giulia to Chrysler plants in the United States.

Fiat has already said it will build the replacements for the Idea and Multipla minivans in Serbia instead of in its plant in Turin. The carmaker also shifted production of the Chrysler 200 successor to the United States. Sources say Fiat had planned to build the redesigned 200 sedan in Turin alongside the Alfa Romeo Giulia starting in 2013.

A Fiat spokesman declined to comment on future production allocations.

Politicians slam Marchionne

In an attempt to ease public opposition to Fabbrica Italia, Marchionne described his plans on a popular Italian TV show last month. He said none of the company's five Italian plants can match the efficiency of Fiat's plant in Poland. “Fiat would do more if it took Italy out of its results,” Marchionne said during the TV program, adding, “We cannot continue to manage operations at a loss forever.”

Italian politicians reacted strongly to Marchionne's comments. “If Fiat is a giant, this is because for a very long time Italian taxpayers have prevented Fiat's collapse,” Gianfranco Fini, the speaker of Italy's Lower House, said.

After the television program, Fiat Chairman John Elkann said Marchionne did not mean that the automaker will abandon its Italian home. “Marchionne posed a competitiveness problem for Italy as a whole and it is on this that we have to act,” Elkann said.

Under the Fabbrica Italia plan, Fiat pledges to invest 20 billion euros ($28 billion) in Italy if the unions help make plants more efficient. Marchionne needs the support of all five Italian metalworker unions for his planned changes to working practices, but the left-leaning Fiom union has objected to many of the new rules.

Time running out

Some politicians and union leaders have raised doubts about Fiat's commitment to Italy, now that Fiat owns a 20 percent stake in Chrysler Group. Fiat also is expanding in emerging markets such as Brazil, Russia, India and is planning to re-enter China in 2012.

Marchionne's April plan called for Alfa Romeo, Fiat, Lancia/Chrysler and Jeep to launch 34 new and redesigned models in Europe over the next four years.

He says Fiat is running out of time to reach a deal with the unions. “It is my sincere hope and my expectation that all these issues will be resolved by the completion of this year,” he told analysts on October 21.

Reuters contributed to this report

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20101101/ANE/101029831/1198#ixzz1434Zie7v

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