Fiat would perform better without Italy: CEO



Carmaker Fiat would perform better without its loss-making Italian plants, Chief Executive Officer Fiat, Sergio Marchionne said on Sunday, stressing that Italy must boost efficiency to stay competitive.

Marchionne, at the helm of Italy's biggest industrial group since 2004, has clashed with domestic unions after engaging in an unprecedented battle to improve productivity at Fiat that may have repercussions for Italy's whole rigid industrial system.

The resolute CEO has pledged to invest 20 billions euros ($27.83 billion) in Italy if it gets more labour flexibility at five Italian car factories, which all together cannot match the productivity of Fiat's single Polish plant.

"Not a single euro of (Fiat's) planned 2-billion-euro profit margin comes from Italy," the outspoken Marchionne said in a rare TV appearance on Italian show "Che tempo che fa."

"Fiat would do more if it took Italy out from its results. We cannot continue to manage operations at a loss forever," he added.

Europe's number 6 carmaker, which owns 20 per cent of US-based Chrysler, surprised analysts on Friday as it upgraded its 2010 guidance for trading profit to at least 2 billion euros, well above forecasts.

Yet, Italy will not contribute to Fiat's expected profit.


Marchionne, who has said he will close down Sicily's Termini Imerese plant, has won backing from a majority of workers at Fiat's Pomigliano D'Arco plant to introduce some landmark changes to the national labour contract.

But he is facing resistance from Fiom, a key, left-leaning union which opposes the plans.

Marchionne speaks "as if Fiat were a foreign multinational that has to decide if wants to invest in Italy," Giorgio Airaudo, in charge of the car sector for Fiom, said in reaction to the CEO's comments on Sunday.

If the new working agreement is implemented, Fiat will manufacture its new Panda car at the Pomigliano D'Arco plant.

As he tried to introduce more labour flexibility, Marchionne has also proposed to reduce the time allotted for breaks at Italy's Melfi car plant, in exchange for financial compensation.

All of these proposed changes are part of the so-called Fabbrica Italia (Factory Italy) project, Marchionne's vision to put Fiat's industrial system at par with European peers.

"The real problem is not the reduction of the time allowed for breaks, the real problem is competitiveness," Marchionne said in the TV interview.

"Our proposal aims to give Italy, and Fiat, the ability to compete with neighbouring countries," he added, promising workers' salaries would rise along with efficiency.