Fiat: restructuring of auto industry necessary

ROME -- Fiat, which has recently taken a controlling stake in Chrysler, called Thursday for a "serious restructuring" of the auto industry, saying the global crisis has worsened the problem of production overcapacity.

Chief Executive Sergio Marchionne also laid out plans for car production in Italy, confirming no plants will be closed but that from 2011 one facility will switch from making autos to other types of production.

Marchionne held a meeting with the Italian government and unions at the premier's office in Rome to illustrate the group's mid-term program. Premier Silvio Berlusconi attended the talks.

Earlier in June Fiat took on most of Chrysler's assets in exchange for technology and management know-how. The alliance created the 6th largest automaker worldwide, according to Fiat.

"The global crisis has further aggravated the problem of production overcapacity that has been plaguing the automotive industry for years," said a statement released by Fiat after the talks. "A serious restructuring of the automotive industry is now absolutely necessary if it is to be economically viable."

Fiat officials said the restructuring would include measures to cut costs and increase efficiency. Fiat also said that "far-reaching strategic measures are necessary to achieve an adequate level of critical mass, increase volumes produced for each platform and expand geographic presence." It said the deal with Chrysler was part of that strategic approach.

Marchionne said ecological incentives to stimulate demand and temporary layoff schemes were important tools.

During the talks, Fiat said that at the Termini Imerese plant in southern Italy production of the Ypsilon car would continue until 2011. After that the plant would be devoted to "non-automotive production activities" -- leading some union leaders to worry that the switch might result in job cuts.

The statement also said the Pomigliano plant would be assigned a new platform for one or more models after 2010.

Marchionne called for a concerted effort, saying that "maintaining equilibrium in employment levels in the face of these extremely difficult market conditions is no easy task." He confirmed that no plants would be closed in Italy and that no workers would be fired, although some would be put on temporary layoffs, Industry Minister Claudio Scajola told reporters. Marchionne also said that production would not be moved abroad.

Guglielmo Epifani of the CGIL union said he was ready to cooperate and called for ongoing consultations.