Fiat-Chrysler to Build Jeeps in Italy for Sale in U.S.

Workers at Fiat S.p.A.’s Mirafiori production facility in Turin, Italy have voted in favor of a new contract that will allow it to build Jeep models that will be sold in the North American market alongside Alfa Romeos. The labor contract, which was accepted in a 54 percent majority vote by the plant’s workers, limits absenteeism and strikes in exchange for millions of euros in investment funds from Fiat and Chrysler Group.

Fiat and Chrysler’s CEO, Sergio Marchionne, had threatened to move production from the Mirafiori plant if the new contract was rejected.

Fiat executives said they were pleased by the worker’s acceptance of the new contract and hope it will mark the start of a new era of cooperation between labor and management.

In a statement released today, Fiat Chairman John Elkann said, “Now we need to put controversies and contrasting positions behind us and face the challenges that we have before us in a constructive manner.”

A new joint-venture company will now take control of the Mirafiori plant and receive upwards of 1 billion euros from Fiat and Chrysler.  Fiat will invest about 600 million euros with Chrysler adding about another 400 million euros.

The Mirafiori plant currently produces the Fiat Punto Classic, Multipla and Idea models along with the Lancia Musa and Alfa Romeo MiTo. It also employs about 5,400 workers; more than 96 percent of whom cast their votes in last week’s referendum.

The vehicles slated for production at the plant include the Giulia sedan and station wagon and mid-sized Alfa and Jeep SUVs, including the next generation Jeep Compass and Patriot models which are scheduled to launch in 2013. Annual production capacity for the factory will be about 150,000 Alfa models and 100,000 Jeeps with the first vehicles rolling off the assembly lines in the third or fourth quarter of next year.

About half of the vehicles will be sold in Europe with the remainder to be exported to North America and other overseas markets.

Workers at Fiat’s Pomigliano factory had previously agreed to the new contract which reduces the number of breaks workers take during an eight-hour shift from four to three, and the number of shifts per week from 15 to 18. It will also allow Fiat to receive up to 120 hours of overtime per worker, per year, without seeking approval from the union.

The new contract deal is part of the much broader “Fabbrica Italia” plan which seeks to double Fiat’s domestic production over the next three years.

Marchionni’s threat to move production abroad if the contract was not approved has captured headlines throughout Italy in recent weeks.  The dean of Politecnico di Milan’s school of business Gianluca Spina said the Mirafiori vote “represents a turning point for the country as Marchionne is trying to break an industrial scheme which needs to be reformed.”

In 2010, Fiat’s European sales fell 17 percent, and its market share dropped to 7.6 percent from 8.7 percent the previous year.

Posted in In the News

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