Fiat Group may have to announce more layoffs. The embattled industrial group still can’t see a solution in sight and may be forced to increase its job-cutting efforts still further. This is the latest move in the long running battle to turn Fiat Group around, but not only is the cost cutting strategy not enough, it will also damage industrial relations still further. A document issued after Italian industrial group Fiat met with unions on the company’s existing proposed job cuts says 550 more jobs could go at its powertrain joint venture with General Motors, according to Reuters. The head of Italy’s biggest metalworkers union, Fiom-Cgil, refused to sign the job reduction plan, saying he lacked any evidence Fiat’s restructuring would do any more than cut costs.
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Fiat has announced several temporary layoffs at its car division over the past year and has already axed 2,887 mainly blue-collar full-time jobs. Fiat Auto already announced last week a new round of temporary redundancies in Italy that will reach 21,700 workers, nearly its entire assembly line workforce for the last week of August. These temporary layoffs are expected to allow Fiat to reduce production by 40,000 vehicles between August 19 and September 22.
Fiat has been in talks with its creditor banks over reducing its heavy debt load, but in the long term, the largest industrial group in Italy is facing the grim reality of a possible break up. Although many banks are stating that Fiat is not facing a liquidity crisis, its situation is anything but perfect. Senior management is attempting to avoid a further downgrade by credit rating agencies, as it faces massive losses and its workers are now in the process of striking against job losses and temporary redundancies.
This puts the Fiat Group in a very complicated situation, as it has up to now been determined to hold on to its car division. No decision will be entirely satisfactory, but one thing is for certain, the group needs to begin to refocus its strategy towards its car division if it wants to stay afloat.
SOURCE: DATAMONITOR COMMENTWIRE
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