Italian Made Chryslers A Possible Solution For Fiat's Overcapacity Problem

Derek Kreindler
by Derek Kreindler
italian made chryslers a possible solution for fiat s overcapacity problem

Sergio Marchionne has been one of the most prolific alarmists regarding European overcapacity, and who can blame him? The economy is in the dumps in Fiat’s home market, as well as crucial export markets, and closing a plant would come with all kinds of blowback.

According to a report from Just-Auto, there may be a solution on the horizon, involving Chrysler products built in Italy and exported back to the United States. And it’s either that, or one of Fiat’s Italian plants will have to take the bullet. A Fiat spokesman told the publication

“Given the under-utilisation of our plants in Italy [and] in an effort to resolve that issue, the company has [been] talking with Chrysler to see if we in Italy could build Chrysler or build products for export back to the States…Chrysler is doing well and they are close to saturation point in the majority of sites we have in the US. In order to have that [US export] we have to have the unions on board – if we can’t make this work… then there is one plant too many [in] Italy.”

The FIOM, a prominent metalworkers union, refused to sign a deal with Fiat that promised increased compensation packages that were linked to enhanced flexibility at the plants – something which could seriously hamper the Fiat/Chrysler export plans. According to the Fiat spokesman, other labor unions are on board with the plan.

The U.S. export plan has been in discussion since the beginning of the year. A report by Reuters in February quoted FIOM’s National Secretary for the Auto Industry criticizing Marchionne’s plans. FIOM’s Giorgio Airaudo told the news service

“It seems worrying to me. He’s telling us that there are two Italian plants at risk if the recession continues and if his plans do not materialize…”

Marchionne wouldn’t get specific with what product would be exported, he told the Wall Street Journal that “ a lot of these [Italian] plants are going to be producing for the U.S.” While other automakers are lighting their hair on fire regarding over-capacity, Marchionne has a handy escape route; American exports. Even if they aren’t as profitable as American-built vehicles, the unions are kept busy (and happy), plants are fully utilized, and the appetite for Chryslers (and hopefully, an expanded Fiat/Alfa Romeo lineup) is satiated.

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4 of 11 comments
  • Robert Schwartz Robert Schwartz on Jul 10, 2012

    Quality designed by Chrysler. Quality built by Fiat. What could be bad?

  • Gcorley Gcorley on Jul 11, 2012

    I wish that Sergio Marchionne would get his story right!! Not long ago he was threatening to build Fiats, Alfa Romeos & Lancias in North America because of the European (particularly Italian) labor costs & conditions. OK the Euro to Dollar rate has dropped a bit since then, but not that much. One day he says one thing the next he says the opposite (not just on this subject!).

    • Marcelo de Vasconcellos Marcelo de Vasconcellos on Jul 11, 2012

      Welcome to management Italian style! Nothing, and I mean nothing, is ever written in stone. Abrupt changes, starts and stops are part of the game. At no point is a project or plan ever definite. Get used to it, as a poet once said, that's how they roll.

  • Inside Looking Out This is actually the answer to the question I asked not that long ago.
  • Inside Looking Out Regarding "narrow windows" - the trend is that windows will eventually be replaced by big OLED screens displaying some exotic place or may even other planet.
  • Robert I have had 4th gen 1996 model for many years and enjoy driving as much now as when I first purchased it - has 190 hp variant with just the right amount of power for most all driving situations!
  • ToolGuy Meanwhile in Germany...
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