Auto giant Fiat's future plans put Italy on edge

Italian auto giant Fiat's future plans, amid a collapse in sales, have put Italy on edge with trade unions warning that the country's biggest private sector employer is set to announce factory closures. Social Welfare Minister Elsa Fornero said she had requested "urgent talks" with Sergio Marchionne, the chief executive of the industrial powerhouse that was founded in 1899 and came to symbolise Italy's post-war economic boom. Marchionne over the past few years has forged a partnership with once-troubled US giant Chrysler, which is now propping up Fiat's results. But the chief executive's orientation towards the United States and his repeated barbs against Italy have sparked anger in Fiat's heartland. Fornero told La Repubblica daily that Fiat had "a duty" to explain itself, adding that Marchionne "owes this not so much to the government or the shareholders but to Fiat workers and to the thousands of families that depend on it." Fiat employs a total of 197,000 people, including around 80,000 in Italy. "Fiat has done so much for Italy but it also has responsibilities towards this country. We would like it to bear that in mind," Fornero said. But she cautioned that "the government cannot impose its choices on a private company" -- a different approach from the French government which has raised its hackles at Peugeot's plan to close a landmark plant and shed 8,000 jobs. Fiat has said it plans to announce a new strategic plan on October 30. Fiat's previous plan, announced in 2010, forecast a total of 20 billion euros ($26.3 billion) in investment and production of 1.4 million vehicles in Italy by 2014. But the crisis in the country's auto market has proved worse than expected. Car sales in Italy plummeted 20.2 percent in August on a 12-month comparison, with sales falling by 19.9 percent so far this year. Trade union leaders are already warning that Fiat could be preparing to announce the closure of one or more of its five plants in Italy, which are currently only producing at 50 percent capacity due to the slump in demand. Fiat's history has reflected the downs as well as the ups of Italian industry and it became an important hub of trade union militancy and violent protests in the 1970s and 1980s -- a period that some fear could be returning. The company is most closely associated internationally with its late veteran chairman Gianni Agnelli -- an Italian playboy and shrewd tycoon who engineered a massive reform of the company's management and international expansions. Marchionne became chief executive in 2004 and has impressed executives, managing to reverse the sharp losses in the years before he took over. But he has increasingly been on a collision course with trade unions. He has also come in for heavy criticism from his peers, with fashion billionaire Diego Della Valle on Friday criticising his "bad decisions" which goes against "the interests and the needs of the country." Italy "has given a lot to Fiat -- maybe too much," Della Valle said. Antonio Di Pietro, head of the Italy of Values party and a former prosecutor, said he was saddened that "people like Marchionne take money and resources from the country and do what they want with them." "Italy needs industrial giants like the Fiat of yesteryear and not financial speculation like the one by Marchionne," Di Pietro said. Giorgio Squinzi, the head of the Italian employers' federation, also chimed in, saying Italy could not afford to lose its auto industry. "We should not forget that behind the auto industry there is a huge business for many companies that keeps the sector competitive," he said. Gaetan Toulemonde, an analyst at Germany's Deutsche bank, said Fiat was definitely in a "fragile" situation in Europe as it was losing market share. He said the company was also not helped by the fact that it has "no new product to put forward" because it has lowered its investments.