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Painful cost of FIAT's world vision

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Painful cost of FIAT's world vision


Fiat and General Motors are manouevring into position to become the world’s second largest carmaker. Those are the signals emerging from ongoing talks between the Italian and American companies, who are seeking to merge their European operations.

The plan is being championed by Fiat chief executive Sergio Marchionne, who has been credited with turning the Turin firm’s fortunes around with projects like the new 500 model. He has already sealed a partnership deal with the ailing Chrysler last week. Once Chrysler’s bankruptcy issues are resolved Fiat would start with a 20 percent stake in the US automaker, which would grow quickly to 35 percent. Chrysler would build and distribute small Fiat cars in America, while Marchionne would run the merged operations. But as the GM talks show Marchionne has bigger ambitions. His vision is to create a European-led car giant producing up to 6 million vehicles, the level of production he says is needed to be competitive. He believes there are too many players in the world market and supply is far outstripping demand. That would appear to mean cutbacks and some European compenents of GM — namely, Opel, Saab and Vauxhall — face an uncertain future. German media reports, based on allegedly leaked documents, say 10 European factories are targeted under in an operaton dubbed “Project Phoenix.” It is reported the Opel plant Kaiserslautern is facing closure. Four factories in Italy, Britain and Austria are under threat. And five in Sweden, Germany, Spain and Belgium will be scaled down. It is also claimed up 18,000 jobs in Europe could be lost. Some 16 percent of the 108,000 combined workforce of Opel, GMEurope and Fiat. Fiat denies the reports. But the claims have sent alarm bells ringing among workers in all the countries concerned and unions are galvanising for action. Marchionne, it seems will have a fight on his hands, particularly in Germany, where Opel employs 25,000 people and where political parties are gearing up for an election later this year.

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