February 24, 2012 / 8:59 AM / 7 years ago

Fiat may shut two Italian plants if U.S. plans fail

MILAN (Reuters) - Italian carmaker Fiat FIA.MI may have to close two of its loss-making five domestic plants if plans to export to the growing U.S. market don’t materialize, its Chief Executive Sergio Marchionne said on Friday.

An employee of Fiat performs a quality control check on the new Panda car at the Fiat plant in Pomigliano D'Arco, near Naples, December 14, 2011. REUTERS/Alessandro Bianchi

It was the first time that Marchionne, who is also head of Fiat-owned U.S. car group Chrysler, raised the prospect of shutting down more Italian plants after the closure of the Termini Imerese factory in Sicily last year.

Marchionne, who resuscitated Chrysler from bankruptcy and turned it into the main profit generator for the combined group, said Chrysler factories in the U.S. were already working to full capacity. Plants in Mexico, Canada or Europe were needed to fill a third of the U.S. demand.

With car demand in Europe set to remain weak at least until 2014, Fiat’s Italian sites therefore had the opportunity to export to the United States, he said in a newspaper interview.

“All the plants will remain where they are. We have everything we need to seize the opportunity of working in a competitive fashion for the United States too. But if this were not to happen we would have to withdraw from two of the five operative sites,” he told Corriere della Sera daily.

Marchionne’s plan has been met with skepticism from the company’s main union and seems to be based on the relaunch of the Alfa Romeo in the U.S., something that has not worked in the past.

Italy’s biggest metalworkers union, Fiom, said the plan to use Italian plants to export to the United States appeared weak, overambitious and adventurous.

“It seems worrying to me. He’s telling us that there are two Italian plants at risk if the recession continues and if his plans do not materialize,” Giorgio Airaudo, Fiom’s national secretary for the car sector, told Reuters.

Marchionne’s hopes of exporting cars to the United States appear to be pinned mostly on Alfa Romeo — a brand the Italian group has so far failed to relaunch but which Marchionne plans to bring back to the U.S. market next year.

“We need Alfa in the States,” Marchionne said, reiterating he had no intention of selling it to Volkswagen (VOWG_p.DE).

A new Alfa sport utility vehicle (SUV) is slated to go into production next year. Two other Alfa models — a new Giulia and a sportscar called 4C — branded “the most awaited car” by car magazine Top Gear — will probably be launched in 2014.

Fiat, which Marchionne has run since 2004, could not confirm whether these models would be produced in Italy. It has said it will make a Jeep at its Turin hub in 2013 and a Fiat in 2014 with targeted annual volumes of 280,000. Both are meant for international markets, including the United States.

“Marchionne has tried to revive Alfa ever since he arrived and failed twice. The idea that it could work this time around seems ambitious and adventurous. The government should shout up,” said Airaudo.


Marchionne said U.S. union trust VEBA, which has 41.5 percent of Chrysler, would not remain a shareholder for long.

“Either we buy those shares ... or we will find a way together to place them,” he said.

He said an IPO was the “least likely option” for Chrysler, adding Fiat could either buy 100 percent of Chrysler or merge the two companies and list Chrysler — diluting both VEBA and the Exor holding company (EXOR.MI) controlled by the Agnelli family.

Fiat has managed Chrysler since a 2009 bailout deal with the U.S. government and has a 58.5 percent stake in the group.

Marchionne, who ruled out a capital increase at Fiat, noted the group had liquidity to the tune of 20 billion euros ($26.6 billion).

“This liquidity is our (insurance) policy against a credit crunch,” he said, adding he planned to invest 7 billion euros in 2012 without raising the group’s debt.

Chrysler contributed 84 percent of the group’s operating profit in the fourth quarter of 2011, while Fiat Group Automobiles — home to the Fiat, Lancia and Alfa Romeo brands — fell to an operating loss of 15 million euros. ($1 = 0.7511 euros)

Additional reporting by Jennifer Clark; Editing by Hans-Juergen Peters

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below