Fiat gives go-ahead to move production of new Panda to Italy from Poland

Fiat confirms new Panda will be produced in Italy

MILAN — Italy’s Fiat, which controls Chrysler Group LCC, will proceed with a euro700 million ($886 million) investment to move production of its new Panda compact from Poland to a plant near Naples despite an unresolved dispute with an Italian union, the automaker announced Friday.

Fiat’s project to repatriate production during a crippling crisis in the automotive industry risked failure due to resistance from one union that opposed conditions set by the automaker, including more flexible work hours and new mechanisms for resolving labor disputes at a plant plagued by absenteeism and low production.

Even an endorsement of the plan by 62 percent of the plant’s 5,200-strong work force in a referendum was not enough to guarantee a deal, due to the threat of disruption posed by dissenting workers.

But Fiat SpA confirmed it was going ahead after CEO Sergio Marchionne met with the consenting unions on Friday. Those unions representing 83 percent of Pomigliano workers signed a deal in June backing Fiat’s plans, with only the FIOM union holding out.

Among the concessions sought by Fiat was the possibility to operate three shifts, six days a week.

“The plan goes ahead, and we will be working with the unions who signed up for the deal to ensure we don’t have any disruptions from those FIOM workers,” a Fiat spokesman said on condition of anonymity because he was not authorized to discuss labor matters.

The alternative would have been to close the plant, a politically difficult choice given Fiat’s decision to close Sicily’s Termini Imeresi plant next year and the ongoing economic crisis.

But FIOM maintained its defiance, saying Fiat was tending toward unilateral and authoritarian action that threatens to destroy industrial relations.

“This does not seem a useful way to confront problems created by the serious crisis we are facing,” FIOM said in a statement.

Marchionne and Fiat Chairman John Elkann each issued statements calling for cooperation of all workers to ensure Fiat emerges from the crisis as a strong global competitor.

“This is a challenge between us and the rest of the world,” Marchionne said in a letter to Fiat’s workers. “What we need now is a great collective effort, a sort of social compact to share the commitments, the responsabilities and sacrifices in view of a goal that is beyond a narrow personal vision.”

Elkann, the Agnelli family heir and recently appointed chairman, said the success of the project would depend on the cooperation of all parties. “Many things are changing around us, and today can be the start of a completely new phase,” Elkann said in a statement. “It’s success will depend on how much each one of us will be a protagonist in this change.”

A deal was needed this summer as production of the new Panda hatchback is scheduled to begin in the second half of 2011 and a new assembly line must be installed. The new Panda is expected to help boost production at Pomigliano from 30,000 cars in last year’s contracted market to 300,000.

Pomigliano has traditionally built sporty Alfa Romeos, a brand that has been hit particularly hard by the crisis.

The current version of the low-priced Panda, Fiat’s second-best selling car, is produced at its plant in Tychy, Poland, which also makes the 500 as well as the Ford Ka.

Boosting production at Pomigliano is part of Fiat’s plan to increase production in Italy, presented to the government last year amid concerns that its management control of Chrysler would divert its attentions away from its home country. Fiat took an initial 20-percent controlling stake in Chrysler more than a year ago.

In the four-page letter to employees, Marchionne affirmed Fiat’s commitment to grow in Italy, where it is already the nation’s largest employer.

“The contents of the plan that you know well foresees concentrating large investments in the country, to increase the number of cars produced in Italy and to see exports grow,” Marchionne wrote.

The Italian-born CEO, who moved to Canada as a youth and launched his career in Switzerland, denied that Fiat aimed to erode workers’ rights, and said the goal was to make Italy competitive in the global market to guarantee jobs.