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Marchionne Tells Monti Fiat Wants to Boost Italian Exports

September 23, 2012

Marchionne Tells Monti Fiat Wants to Boost Italian Exports

Italy's Prime Minister Mario Monti, right, met with Fiat Chief Executive Officer Sergio Marchionne, left, in Rome for more than five hours Monti’s office said in a joint statement e-mailed Saturday. Photographer: Joshua Roberts/Bloomberg

Fiat SpA (F), the Italian automaker that controls Chrysler Group LLC, wants to strengthen its position in the export market as it commits to investing in Italy, Prime Minister Mario Monti’s office said.

Fiat wants to “re-orient its business model” within the country to help boost exports outside Europe, Monti’s office said in a joint statement e-mailed yesterday. The premier met with Fiat Chief Executive Officer Sergio Marchionne in Rome for more than five hours.

Fiat has suspended investments in Italy, reducing spending by 500 million euros ($650 million) in Europe in 2012 and delaying new models, as Marchionne has said he doesn’t expect sales to recover in the region before 2014 at the earliest. Turin-based Fiat, Italy’s biggest manufacturer, said Sept. 18 that it won’t give up on its home market, even as the carmaker is set to lose 700 million euros in Europe this year.

The government and Fiat agreed to keep talking to find “conditions to strengthen the company’s competitive capacity,” the statement said. The Italian industry ministry will set up a working group to help with the export push.

Fiat confirmed in the statement it will invest in Italy “at the right moment to develop new models to catch any recovery of the European market.”

Fiat didn’t ask for state aid, and the two sides didn’t talk about job cuts or plant closures during the meeting, said two people with knowledge of the discussions. Labor issues may be dealt with at meetings of the industry ministry’s working group, said one of people, who declined to be identified because the talks were private.

Registrations Drop

“In spite of the government’s efforts, it seems like Fiat’s problems remain unresolved,” said Pier Luigi Bersani, leader of the Democratic Party, which backs Monti in parliament. Workers and the state will be faced with “a new round of costly social buffers,” he said in an e-mailed statement.

With European car sales on pace to fall in 2012 for a fifth consecutive year because of the region’s sovereign-debt crisis, Fiat cut production in Italy last year to fewer than 500,000 cars from 650,000 in 2009, according to industry association Anfia. Marchionne reiterated on Sept. 13 that conditions no longer exist to carry out an investment plan which was targeted at boosting production in Italy to 1.4 million cars in 2014.

“Without any clear guarantee on the future of workers and plants in Italy, we are not satisfied” after the meeting, said Giovanni Centrella, head of the Ugl union, in an e-mailed statement.

Registrations in Europe fell 8.5 percent in August, according to the Brussels-based European Automobile Manufacturers’ Association, or ACEA. The market has shrunk for 11 consecutive months, and the ACEA is forecasting a 17-year low for full-year sales. In August, Fiat said it’s focused on temporary layoffs, as opposed to permanent job cuts, as a response to the contraction.

Trimming the Ranks

Marchionne, who has been spearheading an industrywide effort to cut excess assembly lines in Europe, said July 3 that Fiat would need to close a second Italian factory, after shuttering one last year, unless he finds a way to export cars to the U.S.

The carmaker is trimming European management ranks at its volume nameplates by 20 percent to reduce operating losses, a person familiar with the matter said last week. About 110 of 550 managerial positions will be eliminated at the division that includes the Fiat, Alfa Romeo and Lancia brands, said the person, who asked not to be identified discussing internal personnel decisions.

“Italy could continue to be a place where it makes sense to invest in auto production if it completes reforms aimed at boosting productivity,” Gianluca Spina, chairman of MIP Business School at Milan Polytechnic, said before Marchionne’s meeting with Monti. “Europe is still the place where innovations take place in the car industry.”

To contact the reporter on this story: Tommaso Ebhardt in Milan at tebhardt@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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