Carabinieri police officers stand outside 
the Fiat factory before the start of a rally 

in Turin May 16, 2009. Italian car maker 
Fiat SpA gave assurances it would not 
cut jobs nor close plants when the 
government approved incentives 
to buy cars, Italy's Industry Minister 
Claudio Scajola was quoted as saying on 
Saturday. (Reuters Photo
 / Alessandro Garofalo)

Fiat called on Italy's government and unions to back its efforts to maintain jobs while cutting output in the country and secured a commitment from Rome on Thursday for investment near two plants that could face cuts.

Maintaining job levels in the face of the crisis we are enduring on the markets is not easy, Fiat Chief Executive Sergio Marchionne said in a statement issued after the three-way meeting.

The production steps ... can guarantee this in part ... (but) there are other equally important elements.

Marchionne is trying to steer Fiat through the crisis hitting carmakers worldwide as demand slumps, and has also taken on the task of steering Chrysler back to health after taking a 20 percent stake in the U.S. carmaker.

In the statement, Fiat said it planned to halt car output at a plant in Sicily in 2011 while also planning changes to production, including a new platform, at a site near Naples.

The government in turn said there would be investment to revive industry in areas around the two plants.

In the areas of greatest crisis ... (there could be investment) with resources partly from the state and partly from private players to help the reconstruction process, Industry Minister Claudio Scajola said after the meeting.

The CGIL union, one of Italy's biggest, said it was ready to cooperate with Fiat but still wanted job guarantees. Fiat said temporary layoffs, part paid by the state, could not be avoided while continued incentives for its environmentally-friendly cars were indispensible.

It's the moment for all forces to unite: government, unions and the company, Marchionne said in the statement.


One analyst who declined to be named said European carmakers faced a grim couple of years with sales likely to fall around 10 percent this year and next. He added the government could take action to avoid politically unpalatable job cuts.

The prospect of job losses in this environment is the last thing governments want, the analyst said.

Italy could lose 1 million jobs by 2010, industry association Confindustria said on Thursday, a day after the Organisation for Economic Cooperation and Development (OECD) said gross domestic product would plunge 5.3 percent in 2009 and manage only marginal growth next year. [ID:nLH830260]

Analysts said that, even with Chrysler, the carmaker still needs to find another partner to give it the size needed to survive a worldwide slump in demand as credit to potential consumers remains clogged.

The real issue remains what Fiat does next to address its lack of scale, Credit Suisse said. Fiat's auto business is not viable in its current state in our view.

Marchionne has said Fiat needs to grow but so far has failed to seal a deal which will give him the minimum 5.5 million unit sales per year he has targeted for survival.

Fiat and Chrysler together only reach about 4.2 million.

The Fiat CEO's bid for Opel, the European arm of General Motors, would have spurred Fiat into the number 2 slot worldwide behind Toyota, but he lost out to Canadian auto parts maker Magna.

The cuts at the Sicily plant announced on Thursday formed part of Fiat's plans for Opel.

Marchionne is throwing down the gauntlet and saying I need help or there will be real closures, said one analyst who asked not to be named.