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Fiat confirms shutdown of Sicilian plant

Cheaper to pay workers not to produce, CEO says

28 January, 12:44
Fiat confirms shutdown of Sicilian plant (ANSA) - Rome, January 28 - Fiat's chief executive officer Sergio Marchionne has confirmed that the automaker intends to leave its plant in Sicily and denied that he was seeking to 'blackmail' the government and unions by suspending production at all Italian plants for two weeks later this winter.

In an interview published by the Rome daily La Repubblica, Marchionne said that "in the future Fiat does not intend to use the Sicilian plant for any of its activities".

Fiat announced in its latest restructuring plan that it intended to stop production at Termini Imerese and boost output at its other four plants in Italy.

Workers and unions have been protesting against the decision and the factory is currently at a standstill because employees will not allow supply trucks to enter the facility.

Fiat is shutting down the plant because of its excessive costs, said to add an additional 1,200 euros per vehicle, and Marchionne observed that "were we to pay our employees their full salaries until they reached retirement age and not produce a single car, we would come out ahead in the end. It's a ridiculous situation".

In regard to Fiat's decision to suspend production in all its Italian plants the last week in February and first week in March, temporarily laying off some 30,000 workers, Marchionne said that "there should be no surprise about this. We have been saying for some time that without (government) incentives there would be consequences at the factories".

When Fait announced the suspension on Tuesday, it added that should the government delay extending last year's green 'cash-for-clunkers' trade-in initiatives, ''production levels will continue to be adjusted to demand''. The automaker added that the suspension was needed because ''after a positive period in the latter part of 2009, orders were drastically down in January, lower even than in the same month last year when the market crisis was acute''.

Unions, which are engaged in government-sponsored talks with Fiat on its restructuring plan, accused the automaker of trying to blackmail them, while the government said Fiat was "not helping matters" by taking such action.

Industry Minister Claudio Scajola said on Wednesday that the incentives the government was considering for the automobile sector would be reduced in terms of value and limited in regard to time, compared to those granted in 2009. Incentives, Scajola explained, "are a drug and in the long-term destabilise the market. This why we intend to offer less and for a shorter period of time. Their aim should be not just to renew the fleet of vehicles in the country but also to encourage safer and more fuel-efficient cars''. The minister also said that the government wanted to extend the incentive system to other sectors of the economy other than automobiles ''which continue to suffer from the economic downturn''. According to Marchionne, without adequate incentives Fiat sales in Italy would fall from two million last year to 1.7 million in 2010.

The government has hinged its support for Fiat's restructuring plan on the automaker's pledge to boost domestic production from some 650,00 vehicles last year to upwards of 900,000.

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