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Fiat set to make big job cuts
ROME, Italy -- Italian automaker Fiat is considering cutting thousands of jobs at its loss-making car business in a bid to restore profitability. Luigi Angeletti, one of Italy's top union leaders, said on Tuesday that 8,000 layoffs at Fiat "were close to reality." Fiat executives meet with union leaders on Wednesday to talk about the possible impact of their latest restructuring drive. Fiat is expected to make a loss of 1 billion euros ($980 million) this year but executives are hoping to return the business back to profit by 2004. The company has already cut 3,000 job and has signalled deeper cost reductions to deal with difficult market conditions. But Italian Industry Minister Antonio Marzano, who met Fiat CEO Gabriele di Genola on Tuesday, urged Fiat's management to "weigh up very carefully the impact on jobs and the subsequent problems.'' "The government sees the situation as serious and proposes following developments attentively,'' he said. Fiat Auto Chief Executive Giancarlo Boschetti has said the company will spend up to 2.5 billion euros annually to develop new cars. The company had hoped the new Stilo would boost sales but it has failed to galvanise European consumers. Fiat Auto posted an operating loss of 823 million euros in the first half this year. Boschetti said last month the company was struggling because it was producing 20 to 30 percent more cars than was needed. Fiat saw its sales in Italy slump for the ninth straight month to record lows in September. Sales of its Alfa Romeo, Fiat and Lanica models fell 7.5 percent in September to 47,460 vehicles. Fiat's market share slipped to 28.73 percent, down from 32.12 percent a year earlier. The company's stock, which has fallen by more than 50 percent this year, slid almost 7 percent to 8.78 euros, having earlier hit their lowest levels in over 20 years at 8.64 euros. Fiat's troubles come at a sensitive time for Prime Minister Silvio Berlusconi, who was elected last year on promises to increase employment. He has come under fire from unions and business leaders in recent weeks for presenting a budget for 2003 that does not do enough to boost growth. But the sluggish economy has dented job prospects and mass layoffs by Fiat would be an additional blow. Debt rating agency's have said the only way Fiat may avoid a credit rating cut to junk status would be to sell its car business to General Motors (GM). Moody's Investors Service said on Tuesday that Fiat's debt reduction measures so far were "only just supportive'' of the automaker's current Baa3 debt rating, one notch above a "junk'' rating. GM paid $2.4 billion to buy 20 percent of Fiat in 2000 and has an option to acquire the remainder of the automaker in 2004. But GM is struggling to contain losses at its European operations and taking on Fiat now would complicate efforts. Fiat will hold meetings with union leaders in Rome at 3 p.m. (Central European Time) on Wednesday to discuss possible job losses.
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