Fiat workers back plan to save plant, future open

Fiat workers back plan to save plant, future open

Rome: Backing for Fiat’s groundbreaking plan to boost labour flexibility at a factory near Naples was less than the company expected, a source close to the matter said, keeping the plant’s survival in the balance.

Some 62% of 4,642 workers who voted on Tuesday at the Pomigliano plant backed Fiat chief executive Sergio Marchionne’s proposal to raise productivity by making shifts more flexible, restricting strikes and limiting benefits such as sick days.

Marchionne had demanded unanimous backing from the five unions at the plant. Fiat has yet to comment on the result but a source told Reuters on Wednesday “the number of votes against seems higher than the company expected".

Acceptance levels must be emphatic enough to convince the tough-talking Marchionne to press ahead with his plan to pump €700 million euros ($939 million) into upgrading the plant and moving production of Fiat’s next Panda model from Poland.

Labour Minister Maurizio Sacconi said Fiat should be satisfied with the unequivocal result of the ballot and Marchionne would certainly respect a deal to invest in Pomigliano.

Four out of five unions at the plant have expressed support for Fiat’s proposal, with only the Fiom union saying the proposal broke rules on rights to strike and sick leave.

Fiom leaders said Tuesday’s ‘no’ vote was big enough to oblige Fiat to renegotiate, but other unions urged the car maker to push on with plans to modernise the Pomigliano plant.

“About two-thirds of workers voted yes. What is in store now for Pomigliano? You must ask Marchionne but it would be a funny if he made an agreement, won and then acted as if he lost," said Bruno Vitale, secretary of the Fim Cisl metal workers union.

At 1027 GMT shares in Fiat were down 0.4% at €9.475, while the STOXX Europe 600 auto index was 0.3% higher.

Some Milan analysts doubted the referendum result was enough for Fiat to go ahead with its investment plans..

Higher Percentage

Banca Akros said the result of the vote was disappointing. “We would have expected a much higher%age of positive votes (in the range of at least 83%)," it said in a note.

Another Milan-based analyst agreed 62% was not enough. “The Panda today is a cash cow because it is a good model and because it is made in Poland. To move (production) to Pomigliano you need rock-solid guarantees," he said.

Fiat aims to boost employment at the plant to 15,000 and produce as many as 300,000 Pandas a year at Pomigliano. Two-thirds of the €8 billion to be invested under its 2010-2011 strategic plan have been earmarked for Italy.

Pomigliano, in Italy’s underdeveloped and crime-plagued south, has a history of labour unrest and the worst productivity of all five of the company’s domestic plants, even taking into account slow demand for its Alfa Romeo models.

With Italy’s economy struggling to emerge from its worst post-war recession, unemployment in the region is already running far above the national average of nearly 9%.

“This could be the start of a new phase," said the governor of the Campania region, Stefano Caldoro. “The relaunch of Fiat’s Pomigliano plant is an enormous opportunity for Campania and all of southern Italy."

Fiat is Italy’s biggest manufacturer and a major player in its car industry, which accounts for 11.4% of the €1.5 trillion economy.

Economists say the proposed deal could set an important precedent for labour relations nationwide, moving Italy into line with more productive European nations such as Germany.

Italy’s inflexible labour market and generous welfare provisions have long proved a drain on productivity in the euro zone’s third-largest economy, analysts say.

By the end of last year, productivity had fallen 2%age points below its 2000 level, compared with increases of 8.7 points in Germany and 10.4 in France, its two main EU export markets, according to Italy’s statistics agency.