Fiat may shift Alfa Romeo output out of Italy

Article by Anita Panait, on July 12, 2013

Fiat may shift output of its Alfa Romeo models to outside of Italy if it cannot get clear labor rules in the country. Fiat chief executive Sergio Marchionne remarked that Italy should decide whether they want "it to happen in this environment or not" since Fiat and Chrysler have several alternatives. Marchionne said Fiat will freeze new investments in Italy until it gets a clearer idea of the impact of a court decision that says a part of the country's labor rules are unconstitutional.

Fiat has poured investments at some of its sites in Italy since 2010 in return for concessions from labor unions for more flexible work conditions. The metalworkers' union Fiom, however, did not support the new agreement, and commenced legal actions against Fiat. Italy's constitutional court eventually issued a ruling last week saying that a clause in the country's labor law from the 1970s that allows Fiat to prevent the Fiom from representing its workers violated the constitution.

Marchionne remarked that Fiat "needs clear and reliable rules" before investing in more projects in Italy. Fiat is increasing output of upscale models in Europe, including Alfa Romeos and new Maserati models, as part of its bid to end its losses in the region by 2016. Fiat posted over EUR700 million ($894 million) in losses in Europe in 2012.

Thanks to strong profits at its Chrysler unit, the Italian carmaker avoided losing over EUR1 billion in 2012. Marchionne remarked that he was open to talks with Fiom leader Maurizio Landini to discuss what measures could be taken. Marchionne has requested the Italian government to recommend a solution for the uncertainty caused by the court decision. He remarked that despite the shift, the re-launch of Alfa Romeo "will continue for sure."

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