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.