Bloomberg News

Fiat, Going Ahead With Termini Closure, Offers Early Retirement

February 05, 2010

Fiat SpA (F) said today that it will offer early retirement to half the workers at its Termini Imerese plant in Sicily and go ahead with a plan to close the facility, after telling Prime Minister Silvio Berlusconi that it doesn’t need government car incentives.

Ernesto Auci, Fiat’s head of institutional relations, told labor unions at the Industry Ministry in Rome today that the company won’t budge from a plan to stop car production at Termini Imerese after 2011. A second meeting is scheduled for March 5. Separately, Fiat Chairman Luca Cordero di Montezemolo said the carmaker has “never received a euro from the state.”

Italy has held off on a decision on new “cash-for-clunkers” incentives, as Industry Minister Claudio Scajola says Fiat must maintain current production and job levels. While the Turin-based automaker expects a “significant” drop in sales, Chief Executive Officer Sergio Marchionne said yesterday that new incentives would only put off dealing with fundamental issues in the industry, and that Fiat would agree with a decision not to renew them.

Termini Imerese, Fiat’s smallest plant, has become a sticking point for a government battling unemployment in the depressed South. Even Pope Benedict has asked the government “to do everything possible” to save jobs at the plant.

The site employs 1,658 full-time employees, of whom 806 may be eligible for early retirement, according to Fiat’s latest proposals, presented to unions today. Fiat says it loses 1,000 euros ($1,500) on every car produced at Termini, due to a lack of infrastructure in the area and the cost of shipping parts to the island.

Seven Proposals

Fiat has rebuffed government attempts to link renewed incentives to the future of Termini, noting that while an end to the program will hurt earnings, the plant closure is not negotiable. Italian car sales will likely fall 20 percent this year to 2.1 million units in the absence of incentives, auto industry researcher Promotor said Feb. 4.

Berlusconi yesterday said it “looks like Fiat doesn’t really want” incentives.

The government said Jan. 29 it’s received as many as seven proposals to buy Termini and put the site to other uses. It hasn’t disclosed names of any possible buyers.

“I’ve heard all sorts of proposals, from the Chinese buying the plant, to turning Termini into an Ikea store,” Raffaele Lombardo, head of the regional government in Sicily, said after today’s talks in Rome. “We’re not giving up on Fiat continuing to make cars in Sicily. We hope the company changes its mind.”

To contact the reporter on this story: Flavia Krause-Jackson in Rome at fjackson@bloomberg.net

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net; Kenneth Wong in Berlin at kwong11@bloomberg.net


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