[Allpar News System]

A showdown is brewing in the wake of an Italian court's ruling that certain portions of a 1970-era Italian labor law were unconstitutional. The court's decision means that Fiat SpA cannot bar Fiom, one of Italy's most militant labor unions, from representing workers in Fiat plants. Fiom was the only major union that refused to sign new labor contracts that Fiat/Chrysler CEO Sergio Marchionne had demanded in return for a major investment program in Italy that would secure thousands of jobs. As reported on Allpar yesterday, Marchionne spoke during the announcement of a five-year, $900 million joint investment by Fiat SpA and PSA Peugeot Citroen in the SevelSud plant in Atessa Val Di Sangro, in the Chieti province of eastern Italy, for the development of a new commercial van to replace the current Ducato which is also sold as the Peugeot Boxer and Citroen Jumper. "We at Fiat are..

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[MoparNorm]

Welcome to Illinois, home of the Alfa Giulietta...

 

[Stratuscaster]

We'll gladly take that work.

 

[Lampredi]

Marchionne may appear to be playing hardball, but the problem with moving production abroad is that Fiat will then be stuck with overcapacity issues in Italy, and as we know it's politically difficult and very expensive to close plants there (hence the current plan to produce and export premium cars built in Italian plants).

So how much of a choice does Fiat really have?

 

[TripleT]

Marchionne may appear to be playing hardball, but the problem with moving production abroad is that Fiat will then be stuck with overcapacity issues in Italy, and as we know it's politically difficult and very expensive to close plants there (hence the current plan to produce and export premium cars built in Italian plants).

So how much of a choice does Fiat really have?

The Eastern block nations will take the business with flexible work rules

 

[Erik Latranyi]

Marchionne may appear to be playing hardball, but the problem with moving production abroad is that Fiat will then be stuck with overcapacity issues in Italy, and as we know it's politically difficult and very expensive to close plants there (hence the current plan to produce and export premium cars built in Italian plants).

So how much of a choice does Fiat really have?

As the news article said, Fiat has already invested in several plants where they are stuck. Plants that have not had an investment are subject to closure and should be closed if Fiom is a disruptor.

But right now, the political apparatus in Italy is aligned with Fiom (scared of them) and Marchionne might have to do what nobody wants.

 

[Dave Z]

It is politically difficult to close plants but possible especially when you can say "I'd rather keep the HQ here in Italy but..."

It is expensive but a one time expense.

I think the work rules are the big problem. The pay, not as big a deal in the overall scheme of things. It adds up to a lot but on a per car basis, not as much as you'd think.

Their problem is similar to Chrysler's problem in the 1980s and early 1990s and again in the 2000s. WHen your workforce shrinks, it is very expensive especially with defined benefit pensions! which is why the VEBA was formed. When it grows, labor is much cheaper. More current people subsidizing the retirees, adn nobody on layoff.

 

[68RT]

If you look at the charts of units compared to workers, the Italian plants for the most part are manpower intensive. That is OK if you are producing a luxury product (I.E. Ferrari, Mazerati, Lambo, etc.) but not a mass market brand that can utilize robots or high volume methods. The need to be cost competitive even against the fairly high cost German/French manufacturers is a must. Work rules make a big difference as shown with the new UAW contracts.

 

[patfromigh]

The Scudo replacement doesn't have a home. While the current one is built in Sevel North just over the border in France, Fiat didn't renew the contract for the next one. I suspect that vehicle will become the build it anywhere but Italy poster child. It's not just the commercial van, the replacement will be on a platform for a family of vehicles.

 

[RVC]

If you look at the charts of units compared to workers, the Italian plants for the most part are manpower intensive. That is OK if you are producing a luxury product (I.E. Ferrari, Mazerati, Lambo, etc.) but not a mass market brand that can utilize robots or high volume methods. The need to be cost competitive even against the fairly high cost German/French manufacturers is a must. Work rules make a big difference as shown with the new UAW contracts.

That statistic is irrelevant. Look at the Polish Tychy plant: was the most productive plant two years ago, now it's below Pomigliano. The reason is simply that if the market is such that you aren't selling cars, plants won't be producing squat while having the same amount of workers. [removed] systems in Europe provide for a labor support mechanisms that allows a company to avoid having to fire people during economic slumps.
All plants are Robotized to an equal or greater extent than Chrysler's NA plants, and Italian wages for unionized worker are more competitive than American unionized worker's wages.

The issue is also not the government (which is in favor of FIAT as publicly declared no more than ten days ago), nor is it that the new Prime Minister is hostage to those scumbags at FIOM. The issue is that FIOM has the support of the judiciary, and in this particular case the constitutional court has decided to go against it's own rulings from the past decades and declare a specific law that was passed 40yrs ago as unconstitutional (apparently it wasn't for fourth years, but now their marxist brothers at FIOM and those capitalist pigs at FIAT are involved, it has magically become so).

The issue is that Marchionne is calling on the govt to pass new laws to remove any arbitrary interpretation, hence disarming the courts. However, whatever laws the gov't/parliament will try to pass (short of a change to the constitution), will likely be struck down by the constitutional court that will invariably find something to not like about it. It's time for the gov't (and even more so the Italian president, another "former" communist), to grow a pair and resolve this issue once and for all.

I've posted about these things a gazillion times, whatever.

 

[Lampredi]

The issue is that Marchionne is calling on the govt to pass new laws to remove any arbitrary interpretation, hence disarming the courts. However, whatever laws the gov't/parliament will try to pass (short of a change to the constitution), will likely be struck down by the constitutional court that will invariably find something to not like about it. It's time for the gov't (and even more so the Italian president, another "former" communist), to grow a pair and resolve this issue once and for all.

But do you think the government will in fact resolve the issue? And if not, is it likely that Marchionne will move production out of Italy as he's threatened to do?

 

[AlfaCuda]

But do you think the government will in fact resolve the issue? And if not, is it likely that Marchionne will move production out of Italy as he's threatened to do?

The government can't afford not to.

 

[RVC]

But do you think the government will in fact resolve the issue? And if not, is it likely that Marchionne will move production out of Italy as he's threatened to do?

I Sincerely hope (for them) that they do something, otherwise there's no doubt in my mind that Marchionne will be forced to set up his Alfa Romeo shop elsewhere (wont get into that, but he could call them "Alfa Romeo in exile" factories ,or something). You can't knowingly put your company's money in a place that doesn't offer the guarantees you need, if you have alternative options.

FIAT is an Italian institution, and has said many times that its allegiance to the country is strong; however, it's also a publicly traded global corporation, so you can't expect SM to act any differently if he's forced into that position.