Fiat to outline a restructuring of production in Italy

Article by Christian Andrei, on August 26, 2010

As Italy's government-funded incentives to buy less-polluting cars are ending soon, a restructuring plan by Fiat S.p.A. and Chrysler Group will be revealed next week by CEO Sergio Marchionne. However, Marchionne has not stopped from asking the government to continue the tax breaks on new cars.

Tensions with trade unions are likely to rise since the proposals include job cuts and the halting of car production at the Sicilian plant.

Fiat has five auto plants in Italy that exclusively produces its marques (Fiat, Lancia, and Alfa Romeo). These plants employ about 26,000 workers.

In addition, it has a joint venture site with France's PSA/Peugeot-Citroen. Last June, Fiat said that production at its Termini Imerese plant will be stopped by 2011. The factory produces the Lancia Ypsilon.

Fiat said that it has other plans for the plant but to date, nothing has been announced. Marchionne has been vocal about the need for Europe's car industry to cut production to cope with the drop in demand.

While sales in Europe have benefited from various government incentives, they will soon end. In Italy, the subsidies will cease after Dec. 31.

The Transport Ministry has revealed that car sales in Italy dropped by 3.87% in the first 10 months of the year. Instead of a sudden halt, Marchionne prefers a gradual phase-out of the tax breaks over two years that he calls a "foam-on-the-runway" scenario.

Topics: fiat, italy, production

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