It was a very close margin but Fiat S.p.A. Chief Executive Officer Sergio Marchionne won the most votes for a labor deal to proceed, paving the way for the production of Jeep models for the U.S. market together with the Alfa Romeos in Italy.
The workers at Fiat's Mirafiori factory in Turin voted 54 percent in favor of the contract that puts a limit to strikes and absenteeism in exchange for investment. Marchionne warned the workers that if the workers refused the changes then he will send the cash overseas.
Marchionne, who successfully turned around Fiat from its financial troubles, had engineered the Italian carmaker's 25 percent stake in Chrysler Group, which includes the Jeep brand. Most of the plant unions approved the deal but the left-wing Fiom had rejected it.
According to union spokesmen, the deciding factor had been the support from white-collar workers. As part of a new joint-venture company that will take control of the Mirafiori plant, Fiat and Chrysler plan to invest over EUR1 billion ($1.32 billion) to build Alfa Romeo cars and SUVs and Jeep models for the European and North American markets.
The Mirafiori plant will produce the mid-sized Giulia sedan and station wagon (which replaces Alfa's 159 range), and medium SUVs for the Alfa and Jeep brands. These vehicles are expected to start rolling out in the third or fourth quarter of 2012.
Half of the production is intended for Europe while the other half is to be exported mainly to North America. The Alfa models are considered to be a critical part of the brand's relaunch in North America.
Fiat has pledged to invest EUR20 billion ($27 billion) in its car plants in Italy to enhance production as well as raise efficiency in exchange for more labor flexibility. Fiat’s Mirafiori plant has a workforce of around 5,500 workers and is considered as one of the biggest -- along with the Melfi plant in southern Italy – in the country.
Fiat’s Mirafiori plant is where these models are being produced: the Fiat Multipla, the Fiat Punto Classic, the Fiat Idea, the Lancia Musa and the Alfa Romeo Mito. Fiat has been losing money at all of its manufacturing sites in the country. Analysts have said that if Fiat wanted to be competitive once again, its Fabbrica Italia project would have to improve efficiency to levels comparable to rival European car plants.
The Fabbrica Italia is an investment plan by Fiat that entails injecting EUR20 billion ($28 billion) through 2014 in Italy to develop vehicles and improve its plants. But, its conditions include unions agreeing to cut strikes and add shifts. According to Marchionne, Fiat will only move forward with Fabbrica Italia if unions ink a deal to boost productivity in a new labor contract.