Big Fiat job cuts in Italy are inevitable

A report that Fiat will cut 5,000 of the 22,000 assembly line jobs at its Italian car factories has been strongly denied by the automaker. But the company's own data shows that Fiat's manufacturing footprint in its home market is hugely oversized.

The data shows that 6,100 workers in Poland built about 600,000 cars in one plant last year. A factory in Brazil built about 730,000 units with 9,400 workers. Fiat's five Italian plants built 661,000 units with 22,000 workers.

Fiat has said Italian production will grow to 900,000 units in 2012 with only four plants after the Termini Imerese, Sicily, factory shuts at the end of 2011 with the loss of 1,400 jobs when production of the replacement for its sole model, the Lancia Ypsilon, starts in Tychy, Poland.

Fiat is also negotiating with unions for 500 jobs to go through early retirement packages in its Cassino factory in central Italy and another 500 at Pomigliano D'Arco plant in southern Italy. This means that in 2014 Fiat will build in Italy 900,000 units annually with about 19,500 people. That's twice as many workers – or half the productivity – of its Brazilian and Polish plants.

“Such an industrial footprint is destined to lose,” Fiat CEO Sergio Marchionne told the Italian government and unions in December as he tried to convince them of the need for job cuts. “No-one could think that such a reality could be sustainable long-term,” he added.

Fiat either needs to lift its domestic production to 1.5 million units a year, as unions are demanding, or it must aggressively reduce its headcount.

Don't be surprised if you hear a Fiat announcement this summer that thousands more jobs will go on top of the 2,400 already announced by the company. To minimize a political and union outcry, the news could come in August when most Italians are on vacation.

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