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Tue 1/17/2011 
Mirafiori: Fiat's Oldest, Biggest Factory Gets New Life 

A union vote, giving Fiat concessions, will have Fiat committing 1-billion in the Mirafiori plant, and avoid shifting production to lower-cost Fiat and Chrysler factories in Poland, Serbia and North America.

Fiat SpA's Mirafiori factory in Turin in 1939 became the symbol of Italy's new industrial might and automotive creativity. At one point after the Second World War, Fiat was Europe's largest car maker and Mirafiori seemed an unstoppable juggernaut. Today Fiat's oldest and biggest factory is more like a massive echo chamber, but the favorable union vote, could  restore Mirafiori's old glory and, at the same time, boost the fortunes of its transatlantic partner, Chrysler.


Fiat's Oldest, Biggest Factory Gets New Life 
Globe and Mail; Eric Reguly; Monday, Jan. 17, 2011

When it was inaugurated in 1939 by dictator Benito Mussolini, Fiat SpA?s Mirafiori factory in Turin became the symbol of Italy?s new industrial might and automotive creativity. At one point after the Second World War, Fiat was Europe?s largest car maker and Mirafiori seemed an unstoppable juggernaut.

Today Fiat?s oldest and biggest factory is more like a massive echo chamber. It pumped out only 178,000 cars last year ? 40 per cent of its 1997 peak. But a union vote that went in Fiat?s favour late Friday could restore Mirafiori?s old glory and, at the same time, boost the fortunes of its transatlantic partner, Chrysler.

Fiat, led by Italian-Canadian CEO Sergio Marchionne, who is also CEO of Chrysler, had been promoting the union vote as a crucial event for both Italian auto production and Fiat?s partnership with Chrysler. If Fiat had lost the vote, Mr. Marchionne would have shifted production to lower-cost Fiat and Chrysler factories in Poland, Serbia and North America.

As it turned out, Mirafiori?s 5,500 workers voted 54 per cent in favour of the new contract. While the proportion was smaller than Mr. Marchionne had hoped, it was enough for Fiat to make good on its commitment to invest ?1-billion ($1.3-billion Canadian) in Mirafiori and make it the European centrepiece of its partnership with Chrysler.

?This project is the first tangible example of the benefits brought by the Chrysler alliance to Italian operations and it is significant that it should take place at Mirafiori, the symbol of this nation?s industrial and automotive culture,? Fiat said in late November, when most of the Mirafiori unions signalled they would support Mr. Marchionne?s factory overhaul plan.

On Friday night, Mr. Marchionne said the vote "represents a desire to achieve rather than being resigned to decline" even though the workers from Fiat?s steelworkers? union, Fiom, which represents 10,000 of Fiat?s 83,000 workers, rejected the plan and called a strike for Jan. 28.

Mirafiori?s fate has dominated the business news in Italy in recent weeks. Italian industrial and employee groups and many politicians supported Mr. Marchionne?s plan to break with national contracts and seek a new labour deal at Mirafiori to crunch costs, add worker flexibility and serve as a template for future labour deals to help restore Italy?s reputation as a manufacturing powerhouse.

Even Italian Prime Minister Silvio Berlusconi supported the labour plan, saying earlier this month that "Fiat will be justified in pulling out" of Italy if the vote were to go against Fiat. Thousands of Fiat workers fought the cost-reduction effort. Some took part in candle-lit vigils outside of Mirafiori and more than 60,000 people, including Italian Nobel Prize winner Dario Fo, signed a petition against the plan.

Mirafiori and Fiat?s four other Italian factories, one of which is closing this year, are notoriously inefficient. Bernstein Research analyst Max Warburton has estimated that Fiat?s European operations lost ?800-million in 2010, in good part because of the ailing Italian plants (Fiat?s profit driver is the Brazilian operations, which earned ?1.4-billion).

The investment in Mirafiori, part of a broader Fiat plan to invest ?20-billion to double Fiat?s domestic production by 2014, will come in exchange for the imposition of night shifts, shorter work breaks, restrictions on strikes, greater mandatory overtime and a clampdown on rampant absenteeism.

Mirafiori will ramp up production to as many as 280,000 vehicles a year, up almost 60 per cent from current levels, after the factory is refurbished. While Mirafiori will continue to make a range of Fiat passenger cars, it will also produce cars based on Fiat?s new Alfa Romeo Giulietta platform.

The platform is highly flexible and will make the replacement for the Jeep Compass, a compact crossover SUV produced by Chrysler, as well as an Alfa Romeo luxury SUV. Both vehicles are aimed at the export market. The Fiat-Chrysler partnership will also see Fiat re-brand several Chrysler products, such as the new Chrysler 300, as Lancias in Europe.

Fiat raised its stake in Chrysler to 25 per cent from 20 per cent earlier this month. A series of call options, related to trigger invents such as the production of fuel-efficient car engines, will allow it to raise its ownership to 35 per cent. Chrysler?s other shareholders are the United Auto Workers? health care trust (63.5 per cent), the U.S. Treasury (9.2 per cent) and the Canadian and Ontario governments (2.3 per cent).

Mr. Marchionne is planning to take Chrysler public in late 2011, after the company repays its government bailout loans.

http://www.theglobeandmail.com/report-on-business/
fiats-oldest-biggest-factory-gets-new-life/article1872527/
 

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