Debt-laden Fiat needs a deep and definitive restructuring to survive, Italy’s industry minister said on Wednesday, as final negotiations over the company’s job and debt slashing plan kick off, Reuters reported.
Under intense pressure to reduce its debt pile and revive its troubled car arm, Fiat plans to lay off more than 8,000 staff for at least a year. Unions and the government want the loss-making group to look elsewhere for a return to profit, Reuters said.
“A restructuring plan is needed that will give the auto unit a competitive edge, not transitory but definitive,” minister Antonio Marzano told Reuters as he arrived at the talks which bring unions, the government and Fiat management to the same negotiation table.
“But the plan also needs to find a way to limit the social impact,” he added, according to Reuters.
According to Reuters, Fiat is trying to slash net debt to 3.6 billion euros by early 2003 from 5.8 billion at the end of September, as agreed with its creditors as part of a deep restructuring which includes cutting inventories and unprofitable sales, and therefore output and jobs.
The news agency said the first wave of planned layoffs has been delayed for two weeks while Fiat negotiates with the unions, which have kept up the pressure on the former industrial icon by holding regular strikes across Italy.
Fiat, the unions and the government have to meet on December 5 to approve the industrial plan or else break off talks, Reuters said.
According to Reuters, Fiat’s director general Alessandro Barberis said on Wednesday that loss-making Fiat Auto, whose slumping sales are at the heart of Fiat’s problems, had the resources to pull itself out of its crisis.
“(But we must) carry through all the points that are written in our plan,” Barberis told Reuters on the sidelines of a conference.
Reuters said the layoff impact has already been lessened slightly with Fiat saying it will reopen a politically sensitive plant in Sicily – which was due to close but will now make a new version of the Punto city car – before the one-year layoffs have ended.
Reuters said that Fiat reportedly was ready to sell its profitable Toro insurance arm though a spokesman denied denied the company was in talks to sell Toro.
Reuters said most analysts expect Fiat to put the regular crises at its car-making arm behind it by selling its 80% stake in Fiat Auto to partner General Motors under a put option that starts in 2004.