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Marchionne: Fiat better without Italy

by Bill Cawthon on
Marchionne from a labor viewpoint

Uncredited cartoon from Freedom Liberta di Parola, an Italian blog

Plain-spoken Fiat/Chrysler CEO Sergio Marchionne may have set off a firestorm when he said Fiat, which was formed in Turin more than 110 years ago, would be in better shape without Italy.

Marchionne appeared on the popular Italian TV program “Che Tempo Che Fa” on Sunday night. Commenting on Fiat’s most recent financials, Marchionne said, “We still have a loss. If we were to eliminate that Italian side from our results, Fiat would do more.”

“One cannot forever manage operations that are at a loss,” Marchionne told host Fabio Fazio. “The majority of our competitors would have found the way out.”

Fiat recently raised its 2010 forecasts, estimating revenues would surpass 55 billion euros, up five billion from earlier predictions. Marchionne said that trading profit would be at least two billion euros. But of that profit, he said, “not one euro … comes from Italy.”

Marchionne, who also had some choice, if unprintable, words for the United Auto Workers union during the Chrysler negotiations in 2009, says Fiat would be better off without Italy and its powerful labor unions. Marchionne said Italy’s government and poor labor efficiency has dragged it down for the past decade.

Fiat has been battling Italian unions over its plan to shut down its Termini Imerese factory in Sicily next year. The company has also said it wanted to move back production of the new Panda compact from Poland to Italy but would only do so in exchange for labor concessions that CGIL, Italy’s largest labor union, has opposed. FIOM, CGIL’s metalworkers’ branch, rejected the Fiat plan, saying the concessions eroded workers’ rights.

Marchionne wants significant changes in the way work is performed in Italian factories but he also wants to raise a Fiat worker’s average salary closer to parity with workers on other EU nations. Fiat workers make about $1,600 monthly.

Straight talk by a business leader in Italy is uncommon and union leaders were quick to condemn Marchionne’s remarks: CGIL’s Guglielmo Epifani today said that “Marchionne is very skeptical over the future of Fiat in Italy” and added “the truth is Marchionne wants to leave Italy.” Rocco Palombella of the metalworkers union UILM wanted Marchionne “to stop humiliating workers.”

Marchionne’s comments also ruffled some feathers in the Italian government. Officials wanted the Italian/Canadian CEO to remember the government incentives that propped up Fiat’s sales during the recession. Roberto Calderoli, a leading member of the Northern League political party, said “Marchionne has short memory when it comes to state aid.”

Marchionne says Fiat has repaid its debt, “I don’t want to be told ‘Thank You’ but I also don’t want to be constantly accused to be receiving state aid.”

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.

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