Marchionne Wants The Unions To Show Some Respect
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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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.....
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.