Sun, Nov 28, 2010 - Page 11 News List

Fiat-Chrysler joint venture proposed

AP, MILAN, ITALY

Fiat SpA and Chrysler Group LLC CEO Sergio Marchionne on Friday proposed a joint venture with Chrysler to build Alfa Romeo and Jeep brand vehicles at Turin’s Mirafiori auto plant.

However, he said he needed union cooperation to make the factory more competitive.

The proposal marks the first significant step toward integration in Europe between the Italian and US automakers since Fiat took control of Chrysler with a 20 percent stake in June last year.

In the US, Fiat has launched the iconic, subcompact 500 and has started to build engines with Fiat technology at US plants.

Marchionne made the proposal during ongoing talks with Mirafiori unions seeking more flexible work rules, as Fiat is doing at all its Italian plants as a condition for a 20 billion euros (US$26.64 billion) investment to increase production at the underutilized factories.

Under the proposal, Fiat and Chrysler would invest a total 1 billion euros in the Mirafiori plant, proportional to the volumes produced by each brand. Mirafiori would produce up to 280,000 cars — including Jeep and Alfa Romeo brands — a year by 2012, more than half for export, especially to North America, Fiat said. That compares with 178,000 last year.

“The consensus of the unions and workers is indispensable to assure the necessary level of competitiveness,” Fiat said at a statement.

Fiat is seeking more flexibility in production and work rules.

Marchionne pointed out in a talk show appearance last month that Italy ranks 118th in competitiveness out of 139 countries.

Fiat already has won more flexibility at the Pomigliano plant near Naples, including 18 shifts a week and greater autonomy when dealing with labor issues. As a result, it agreed this summer to go ahead with a 700 million euros investment to repatriate the new Panda from a plant in Poland.

Fiat is seeking deals at the other plants in the coming weeks, but Mirafiori would be an important breakthrough.

The Mirafiori plan would help Fiat reach a milestone to raise its share of Chrysler by providing a way to improve Chrysler sales internationally.

Mirafiori produces Fiat branded Punto, Idea and Multipla vehicles, the Lanca Musa and the Alfa Romeo Mito.

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