Updated: March 26, 2010 1:40 PM | By Colleen Barry, THE ASSOCIATED PRESS, cp.org

Fiat CEO Marchionne defends Fiat against criticism it is abandoning its Italian roots



Fiat CEO Marchionne defends Fiat against criticism it is abandoning its Italian roots

From left, lawyer Franzo Grande Stevens, Fiat automaker Chairman Luca di Montezemolo, CEO Sergio Marchionne and vice president John Elkann atttend a FIAT shareholders annual meeting, in Turin, Italy, Friday, March 26, 2010. Marchionne strongly defended Italy's largest employer against criticism that it was abandoning its Italian roots through its alliances with Chrysler and other foreign partners. (THE ASSOCIATED PRESS/Alberto Ramella)

TURIN, Italy - Fiat CEO Sergio Marchionne on Friday strongly defended Italy's largest employer against criticism that it was abandoning its Italian roots through its alliances with Chrysler and other foreign partners.

"Fiat did not go abroad on a whim, and certainly did not go to forget Italy. We are there to make the company stronger," Marchionne told shareholders at their annual meeting. He said he found such criticism "unjust."

Marchionne's vision has been to make Fiat an international player strong enough to survive a shrinking market. Last year Fiat took a controlling 20-per cent share in Chrysler LCC in exchange for small car technology and management. Fiat also has signed strategic partnerships with automakers in China and Russia to give it access to growing markets.

Fiat's ambitions have created concerns in Italy that the automaker's real plan is to shift production away from Italy - something Marchionne strongly denied.

A newspaper reported this week that Fiat planned to cut 5,000 jobs in Italy, slash the number of car models produced - plans that Marchionne has said do not exist. The automaker will present its five-year business plan April 21, and Marchionne said executives are still working on it.

Marchionne told shareholders that the company has not laid off workers despite the crisis that forced it to severely reduce production, instead putting workers on temporary layoffs for a total of 30 million hours, paid from a government-industry fund to which Fiat contributes. Fiat intends to increase auto production in Italy from 650,000 produced last year to 900,000 in three years, he said.

Marchionne said the decision to abandon auto production at its Sicilian plant is more than necessary due to its poor logistics, which add euro1,000 to the cost of every car. He also noted that Fiat plans to move production of the Panda, Europe's top-selling auto, from Poland to its Naples plant, despite the hundreds of millions or euros that it will cost.

"We are doing it because, within the limits of possibility, and without endangering the solidity of our company, we maintain it is our duty to give priority to the country where Fiat has its roots," he said.

That Naples plant has been hit hard by the crisis, producing just 36,000 cars last year when it has the capacity to produce 240,000.

Marchionne also defended Fiat's decision to return to paying shareholders dividends this year, saying shareholders have been the major source of capital for Fiat in the last 17 years and but last year received no dividend.

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