FIAT Goes it Alone: the Italian Car Industry, the Government and the Crisis of the 2000s

Abstract

After decades of public aid, FIAT went into the 2000s without help from the state. While this initially threatened to lead to bankruptcy, it subsequently proved a key factor in the company's transformation from a national into a global player. Its ties with the state, formerly viewed as a means of survival and development, have gradually loosened, and FIAT has begun an autonomous process of expansion which has given it a new structural power to shift investment and production from Italy towards countries offering better conditions and favourable enterprise policies. The present article analyses this process, FIAT's change in strategy with regard to the government, and the possible consequences of a downsizing in Italy of what is now the nation's only multinational manufacturing company.

Keywords:

• FIAT
• Italian Government
• Economic Crisis
• Car Industry, Sergio Marchionne

Acknowledgements

The author thanks Anna Bosco, and the anonymous reviewers for comments on previous versions of this work. The author also thanks Jeremy Carden for his precious linguistic advice.

Notes

 [1] The European framework on special intervention strategies in the automobile industry (Commission of European Communities 2009a) was only adopted on 25 February 2009, with the aim of legitimising plans already introduced by the majority of national governments.

 [2] In 2010 the Italian debt was 119 per cent of GDP, compared with 84 per cent in France, 77 in Germany and 78 in the UK.

 [3] The coalition of the Popolo della libertà (Freedom People, PDL) and the Northern League (Lega Nord, LN) won the 2008 general elections (Newell 2009).

 [4] The CEO of FIAT at the time, Cesare Romiti, was involved in the Tangentopoli scandals, and was convicted of false accounting, illegal funding of political parties, and fiscal fraud.

 [5] In this period the FIAT Group had already undergone substantial transformation, and consisted of four sectors, each formed in turn by individual companies: the car division (FIAT Auto SpA – named FIAT Group Automobiles [FGA] as of 2007 – Ferrari and Maserati); the industrial vehicles division (IVECO); the agricultural and construction machinery division (Case New Holland); and the components and production systems division (FPT Powertrain Technologies, Magneti Marelli, Teksid and Comau).

 [6] In the first eight months of 2011 the domestic market share of the FIAT Group fell by 16 per cent with respect to the same period of 2010. This decline was offset by an increase (+22 per cent over the same period of 2010) of the US market share of the Chrysler Group, which had recorded 18 consecutive months of sales growth in the US and 22 in Canada. In addition, the FIAT Group's greatest profits are in the Brazilian market, where it has been the main seller for over nine years (data from ANFIA, European Automobiles Manufacturers Association (ACEA), FIAT).

 [7] Further details are available at: http://www.whitehouse.gov/the_press_office/Obama-Administration-Auto-Restructuring-Initiative/

 [8] By the end of 2011 the stake will rise to 58.5 per cent.

 [9] FIAT's five plants in Italy produce 650,000 cars a year overall, employing about 22,000 workers, while in Poland a single factory produces a similar number with a third fewer employees. In Brazil a single plant can make up to 730,000 vehicles a year with 9,400 employees (FIAT 2009). Over the last two years, FIAT's Italian plants have been operating at just 55 per cent of their capacity, compared with 93 per cent in the Polish plant.

[10] At the Grugliasco plant, which produces Maserati models and where FIAT plans to invest €500 million, a referendum among workers in May 2011 resulted in an overwhelming vote (87.6 per cent) in favour of the new contractual model.

[11] The merger was conditional on the repayment of the US government's loan; this happened well before the deadline, allowing FIAT to increase its stake in Chrysler to 52 per cent. According to the agreement, the shareholding will rise to 57 per cent by the end of 2011, and the merger could happen as early as 2012. At this point the management can decide whether to establish its registered office in Detroit or leave it in Turin.

[12] In 2011 Italy was ranked 43. The main factors undermining the faith of foreign investors were: the inefficient labour market, the backwardness of the financial market, a slow judicial system and a complex bureaucracy.