Italy's Fiat to cut 3,000 jobs

Fiat fails to win market share with launch of new Stilo

ROME, Italy -- Fiat, Italy's struggling industrial company, plans to cut about 3,000 jobs as it reduces costs and attempts to return to a profit.

About 2,440 jobs are to go at its loss-making auto business and 455 at two other Italian units, the company revealed on Thursday.

The 103-year-old company made a loss of 529 million euros in the first quarter of this year, dragged down by losses at Fiat Auto, the world's sixth-biggest car maker. Fiat Auto pulled the group into the red in 2001 for the first time since 1993.

Fiat Auto is not expected to make a profit until 2004 and there was more bad news for the company on Thursday. The latest sales figures for Western Europe showed Fiat dropped 20 percent in April, leaving it with a market share of 7.9 percent compared with 10 percent a year ago.

The company, which is struggling to bring under control its ballooning debt of 6.6 billion euros and revive its flagging share price, had been hoping the launch of the new Stilo car would halt the decline in its home market.

Earlier this week, the company announced plans to float its sports car and racing business Ferrari. In December, the company said it would cut 6,000 jobs outside Italy.

Italy's rigid labour laws make it difficult for companies to lay off workers outright, so Fiat said employees would be put on "mobility" -- in which they stop working and receive a reduced salary while they wait for retirement.

Union leaders said they would decide in the next few days when to stage two-hours stoppages in response the Fiat's plans.

"We have called a two-hour strike... We are not happy about the meeting held today," the transport sector arms of Italy's top three unions -- CGIL, CISL and UIL -- said in a statement.

Fiat said the heaviest job losses will fall in its home town of Turin, where 1,655 jobs would go.