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June 17, 2003

ITALY: New Fiat turnaround plan unlikely to hit plants or their workers – report

Fiat's CEO promised on Monday to unveil a turnaround plan for the giant industrial group next week and a government minister said he did not think it would mean painful plant closures or mass layoffs, Reuters reported.

By bcusack

Fiat’s CEO promised on Monday to unveil a turnaround plan for the giant industrial group next week and a government minister said he did not think it would mean painful plant closures or mass layoffs, Reuters reported.

With investors waiting for news on whether Fiat would ask them to buy new shares, chief executive Giuseppe Morchio told reporters the plan would be announced on June 26, a few days earlier than previously expected, the report added.

Reuters noted that Morchio made his reputation as an industrial turnaround expert at tyres-to-cable group Pirelli before being named as Fiat’s fourth CEO in a year in February with a mission to tackle the group’s falling car sales and steep losses.

The news agency said newspapers have reported that his plan will include a rights issue worth between two and three billion euros. The plan also reportedly includes cost savings of 800 million euros which could mean job cuts in administrative departments.

Analysts at Citigroup told Reuters they did not expect the capital increase to be a big worry for shareholders now that stock markets have shown tentative signs of a recovery. Citigroup said it was raising its target price for Fiat shares to 8.00 euros from a previous 7.00 euros.

Reuters said that Fiat came up with a sweeping restructuring plan last year which included plans to shutter two of its factories in Italy but softened those plans after coming under intense pressure from the government to shed fewer workers.

Industry minister Antonio Marzano told Reuters on Monday the new plan was unlikely to lead to plant closures or major layoffs.

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