A bold move could pay off for the legendary Italian car manufacturer if it convinces investors and ratings agencies that reform is under way and conveniently protected from union action. On Monday, Sergio Marchionne, CEO of FIAT (Ba2n, BBn, BB + *-) confirmed that on January 1, 2012, the company will cancel its membership with the Italian employers’ organisation Confindustria in order to free itself from all the possible obstacles that might arise by the imposition of any new labour regulations.
To this news should be added the fact that an Italian trade union is considering taking a second legal action against Fiat SpA’s efforts to introduce stricter labour conditions at its factories in Italy, further complicating its €20mn plan to double production in 2014.
Fiat has suspended work to update the Mirafiori plant in Turin as a result of a lawsuit first filed by FIOM earlier this year. This suspension has caused a delay in the launch of some new models, such as an SUV Jeep, necessary to revive a range of dated models. This delay was one of the reasons that led Moody’s to downgrade the rating for Fiat on September 21. Many of the factories are operating below capacity because Fiat is adjusting to a weak demand for cars in Europe and preparing to modernise its production lines.