By on July 1, 2010

Sergio Marchionne’s turnaround of Fiat was a weird one. He turned around a company, which most people thought had died already. Sergio’s turnaround was helped by GM’s unwitting “re-capitalization” of Fiat, too. Recently, worker relations in Italy have been strained, to say the least. If you thought the situation with the UAW in the United States was bad enough, in Italy, things are spicier than Mamma’s Arrabbiata sauce. The Financial Times UK reports that Sergio Marchionne has finally lost patience with unionized Italian workers and has threatened them to change their mindsets or else be out of a job. The end of September is their deadline. Mr Marchionne wants Italy to help drag Fiat (and Chrysler) into one of the top five car companies in the world. But to do that, he needs concessions from his Italian workers. Big ones.

One of his main bugbears is the Pomigliano plant near Naples. He’s going to invest €700m into re-tooling it for the new Fiat Panda. In return for his largesse, he wants the unions there to achieve productivity on par with Fiat’s Polish plant (the Pomigliano plant only runs at 25 percent capacity at the moment), which will mean jobs cuts. The unions put it to a vote and came out 62 percent in favor of changing their ways. Great, eh? No. Fiat claims that 62 percent isn’t enough for the union to guarantee the changes that Fiat want in a sustainable fashion. If Fiat can’t get resolution on this deal, then this will severely hamper Marchionne’s 5 year plan, and as far as Marchionne is concerned, that isn’t happening! What makes this story interesting (as the Financial Times points out) is that this isn’t a game of poker where there are bluffs and counter bluffs. Fiat has stated quite clearly that if the unions don’t change their ways, production will move. There’s very little ambiguity. Now, if the unions don’t change their ways and Fiat does move production to a plant that will play ball, who will the Italian unions blame? Whatever the outcome, one thing is clear. Tony Soprano never had this trouble.

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11 Comments on “Marchionne Wants The Unions To Show Some Respect...”

  • avatar

    It’s amazing that FT reported yesterday something I read in Italy more than one week ago. I still have the newspapers at home.

    It was the main issue on the MSM for Sunday, Monday and until Wednesday last week (when the final results of the referendum were known), before Italy got out from the World Cup.

    He wanted 80%+ of approval to move Panda’s production over there.

  • avatar

    I’m sure Fiat’s Brazilian workers, or Fiat’s Polish workers, or Fiat Argentina’s plant, or the new plant in Brazil (long rumored) will be happy to pick up the slack.

    And that’s that. You know, the global economy.

    • 0 avatar

      If they don’t get an agreement at Pomigliano… the Panda will likely stay in Poland

    • 0 avatar

      Yes, I understand that. I’m just pointing out that in a globalized world the unions, for better or worse, are in a very precarious position.

      And in the end that’s what they’re facing, major concessions or oblivion (and not just Italian workers, either).

      Recently a small programming company from my hometown dispensed about 200 people and moved lock, stock and barrel to China or India after they couldn’t get concessions from the employees.

      Them’s the (rotten) apples.

    • 0 avatar

      I’m just pointing out that in a globalized world the unions, for better or worse, are in a very precarious position.

      The problem is there’s only so far you race to the bottom before you well and truly hit the bottom. We’re seeing the tip of this iceberg in the west today: consumer spending power and savings isn’t sustainable and, though GDP is going up, median wage is stuck and polarization is getting worse.

      Eventually there won’t be any middle class left to fuel the economy and what exists will be so over-extended as to be hideously vulnerable.

      Unions could take up the localist cause and work to keep well-paying jobs local. The problem is that localist movements are fractured, tricked into seeing everything as left-vs-right and/or just plain stupid and self-centered. I’m personally embarrassed by how adroitly the localist left (unions, anti-poverty advocates) and right (libertarians) have been manipulated when they actually have far more in common with each other than with their more autocratic peers.

    • 0 avatar

      Believe me, psharjinan, I get what you’re saying. Howeverm there’s a whole other side to this story. Like the fact that it’s creating a middle class here. And bringing more affluence here.

      Fiat workers in Brazil know they have the best job possible. They get to screw together cars with almost no educational skills. And get paid pretty well by local standards. Basically better than at other industrial companies (most anyway). Whenever I have been to the factory they were doing something for the workers. Dental care, check-ups, massages, popsicles, whatever. It sounds ridiculous to you northeners but the workers down here appreciate it as they don’t get that sort of thing elsewhere.

      Case in point, Fiat has never faced a strike down here. The local union has tried many a time, but the workers have always refused to go on strike. And of course, we’re not immune to the forces at play in the world. Even in the country companies are wary of investing in São Paulo. Why? Rotten quality of life for foreign executives, but also a more “combative” workforce that goes on strike every year or so. In a way its good ’cause they are helping to spread industrialization and wealth to other parts of the country.

      Fiat is also wary of investing more in Paraná. The workers there go on strike every year without fail. They are looking for a place to build their new factory. Their only one is running at 100%. They would like to incvest in my homestate, but said state is playuing a little hardball. Shame on them (I think). What would be of my home state had Fiat not come here 30+ years ago? A lot poorer that’s what.

    • 0 avatar

      Howeverm there’s a whole other side to this story. Like the fact that it’s creating a middle class here. And bringing more affluence here.

      And, as in China and India, that’s a temporary condition. BRIC nations (excepting, possibly, the “R”) are in a different part of the race to the bottom than the G8, but that doesn’t mean they won’t eventually get there.

      Brazilian unions would do well to not repeat the blunders of their American counterparts and start thinking strategically and holistically.

  • avatar

    “… Sergio Marchionne has finally lost patience with unionized Italian workers and has threatened them to change their mindsets or else be out of a job”.

    I’m liking Sergio more and more.

    • 0 avatar

      Having worked at the local Iveco branch I can tell you they’re brutal.

      They want results. Period.

      On the other hand, I think the Italians along with the Americans, will be able to turn around Chrysler. He must have seen something…

  • avatar

    That plant, near Naples was built by then government owned Alfa Romeo to build the Alfa Sud in the 1970’s. The location was chosen by the government to create employment in the south. Its been a disaster every since with poor quality and labor problems. They should probably shut it down. Government running companies…..

  • avatar
    Tricky Dicky

    There’s four different unions in the plant and three of them can see the benefit of Marchionne’s plans, even if they don’t smile at the same time. The difficulty is really with the far left FIOM union.
    Fiat don’t want to leave the Panda in Tychy because they’d love to expand their production of the 500, which shares a line with the Ford Ka. That’s running over 100% capacity.

    Interestingly, Fiat haven’t yet suggested what an alternative would be to not taking the Panda to Pomigliano. I think there will be more hard ball, union-baiting comments to come, before any decisions are made. It’s going to be a long, hot summer in Napoli.

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