The Italian government on Thursday moved to protect the country's interests in regard to Fiat's global expansion plans and the possibility of plant closings in Italy.
Industry Minister Caludio Scajola sent a letter to Fiat Chairman Luca Cordero di Montezemolo and CEO Sergio Marchionne in which he praised the automaker's success in striking allainces abroad, but also said its expansion plans needed to be examined in a three-way meeting between the government and Fiat's management and unions.
In his letter, the minister stressed that it was ''fundamental that Fiat's factories in Italy remain central to the automaker even if it joins forces in the future with Chrysler and Opel''.
Scajola defined the accord Fiat reached to create a global partnership with Chrysler as ''a major success for our nation's economy. Opening up a new development prospective, at a time when the whole sector is in a deep crisis, demonstrates the value of Italian industry in a way which has been seen few times in the past,'' he added.
He then recalled the support the government has given the automotive sector, through incentives aimed at boosting sales, and observed that ''in order to continue to benefit from public support and incentives, it is essential that domestic production remain central in the overall project''.
''Being convinced that the excellence of Italian factories will always be guaranteed, also in a framework of globalised production, I propose holding a meeting, with the participation of trade unions, to examine what contributions the government can continue to offer,'' Scajola said.
The ministry's letter comes amid a flurry of speculation over plant closings and layoffs in Italy and Germany should Fiat take over General Motors' European arm, which includes Opel and Saab.
The German daily Handelsblatt reported on Thursday that a plan Fiat illustrated to the German government on Monday for the acquisition of Opel, which would involve state funding, foresaw the shutting down of two plants in Italy, one in the north and one in the south.
Handelsblatt also said Fiat's global ambitions included not only GM's European arm but also its divisions in Latin America and South Africa.
In a related development, Opel board member and GM Europe consultant Roland Berger told the Financial Times Deutschland on Thursday that Fiat's plan for Opel also involved the shutting down of a plant in Britain, where the cars are produced under the Vauxhall marque, and one in Poland.
UNIONS UP IN ARMS.
While Fiat has so far refused to comment on the reports in the German press, the possibility of factory closings sparked protests among Italy's trade unions and parties on the far left.
''The hypothesis of any plants closing in Italy would open the door to a period of major social conflict. The government must call all parties together, as we have already requested,'' said Gianni Rinaldini, secretary general of the FIOM autoworkers union.
''Continued speculation on the possibility that Fiat intends to close plants in Italy has made such a meeting imperative. For us shutting down plants in Italy would be unacceptable,'' he added.
''As was easily foreseeable, Marchionne's uncontrolled raids abroad risk having serious consequences for our industry and employment at home. He (Marchionne) can just forget about closing any plant in Italy,'' observed another FIOM official, Giorgio Cremaschi.
''It's time the country woke up and told the new CEO at Chrysler (Marchionne) to come back to Earth and guarantee employment and jobs. Otherwise, he's going to have big problems, not in Germany but right here in Italy,'' he added.
Fiat confirmed on Wednesday that once a partnership has been completed Marchionne will be CEO of both Fiat and Chrysler.
According to Gianni Pagliarini, the Italian Communists' Party's chief candidate for the upcoming European elections, ''rumors of factories being closed down or downsized throughout Europe, including two in Italy, in the event Fiat buys Opel, are very serious indeed and confirm our fears from the start''.
''Let Fiat be warned: no factory or workers must be sacrificed in its acquisition campaign,'' he added.
Meanwhile, the New York Times reported on Thursday that GM wants a 30% stake in Fiat Auto, once it has been spun off from the main group, in exchange for its overseas operations, while Marchionne has offered less than 10%.
The NYT said GM felt it had a strong bargaining chip because its production in Latin America, which Fiat is very interested in, is based on Opel models and it would be difficult to separate the two. GM's demand comes four years after it paid $2 billion to get out of a put option, agreed to when it bought a 20% in the Italian automaker, which would have obliged it to buy Fiat should Fiat decide to sell.
The payment gave Marchionne the capital he needed to orchestrate Fiat's remarkable turnaround while, at the same time, worsened GM's financial position which today sees it on the verge of bankruptcy.
GM reported on Thursday first quarter losses of $5.98 billion with sales plunging 47%.
