Tuesday, December 15, 2009

Fiat Warns Of Likely Car Plant Conversion

Italian carmaker Fiat SpA (F.MI) Friday said it is sticking to plans to convert a plant in Sicily, despite protests from workers.

Union workers at the Termini Imerese plant have been protesting all week, demanding that Fiat provide more certainty on the future of the plant, which the firm has said is the most costly to operate of all of its plants.

After the workers occupied the town hall, politicians vowed to raise their concerns with Fiat in the coming weeks.

But Fiat Chief Executive Sergio Marchionne said Fiat is sticking to plans to convert the plant by 2012.

"Keeping all of the plants open and doing all these necessary things are... demands that are no longer feasible in a world that has drastically changed," he told reporters at an event at Fiat's research centre in this town near Turin in the country's northwest. "We can't turn back to a reality that no longer exists."

Marchionne said a single Fiat plant in Brazil made more cars than its six plants in Italy combined over the year. He has yet to say what he wants Termini Imerese to do if not cars.

He and other Fiat officials are to hold meetings with union and government officials in the coming weeks to discuss their plans for Fiat in Italy. Their plans are a likely extension of the one presented in Detroit Nov. 4 to revive Chrysler Group LLC, its U.S. partner.

Marchionne is also expected to discuss the possible extension of Italy's car scrappage scheme when he meets with the government next month.

With several of these schemes expiring across Europe, analysts fear that demand will fall once more, making 2010 a difficult year for carmakers already struggling to survive the industry's worst crisis in decades.

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