Fiat’s headquarters will close for 8 days, 4 in June and 4 in July, saving the company $1 million euros per day. This means all staff members: Centro Stile, engineering and manufacturing operations, sales and marketing, purchasing and administrative functions. The people working in these fields will go home and get payed 80% of their salary to be funded by Cassa Integrazione, Italian temporary layoff program. The source says that these days will be June 14-15 and 20-21, and 4 more days in July, besides the regular vacations they all have during August. This move intends to reduce costs as car sales continue to drop in Italy and Europe, and consequently profits. Nevertheless overall results are being well supported by America’s operations (Chrysler Group) and Brazilian car market.
Meanwhile Marchionne is looking for help in European Commission to face the problem of overcapacitiy in production most of European car makers are dealing with. Marchionne, who is also president of ACEA, European auto lobby group, said this week that the EU should create an extraordinary plan for a common framwork for factory closures across countries, as he identifies serious overcapacity problems in Germany (Opel), France (Renault and PSA) and Italy (Fiat). According to IHS Automotive, the excess of production may be about 2 million cars in 2012 while sales fall with an estimated cost of $7.4 billion euros, according to UBS estimations. In the other hand there are VW, Daimler and BMW that oppose to this European intervention as they are using around 90% of the capacity of their factories selling their cars not only in Europe but in China also, while the rest of Europeans car makers are using 60-75% of capacity.
Source: Bloomberg and Automotive News