Fiat is aiming to avoid closing factories in its Italian home market by placing its plants on short-time working through the autumn, Reuters cited union sources in its report. Fiat and other volume carmakers in Europe are currently struggling to sell vehicles as consumers refrain from making purchases due to recession and austerity budgets.
Car makers in Europe are trying hard to cope with weak demand for vehicles and excess production capacity. To make up for its weakness in Europe, Europe is shifting its investment in more profitable markets like the United States and Brazil, leading to speculations that the Italian carmaker may announce a plant closure this autumn.
In early July 2012, Fiat chief executive Sergio Marchionne remarked that the carmaker would close a plant in Italy unless it could come up with an economically viable plan to use excess capacity in its home country to produce cars for North America.
Sources said that Marchionne believes such plan is unlikely to happen. During an August 1, 2012 meeting with trade unions, Marchionne revealed that the carmaker already shut down the Termini Imerese plant in Italy and challenged other countries in Europe to make a similar move, a union source told Reuters. Other countries in Europe need not to be told so, as carmakers in their respective jurisdictions are already planning to do this.
French carmaker is planning to close one of its local factories and cut over 10,000 jobs in France. General Motors, meanwhile, is expected to close the Opel plant at Bochum, Germany, in 2017. Another trade union source told Reuters that Marchionne plans to avert a plant closure by stopping production at the its five plants off and on throughout the autumn and by cutting white collar workers when Italy's economy recovers. Temporary layoffs at Fiat are expected to cut some expenses while car sales have yet to recover.