MILAN -- Fiat-GM Powertrain, the engine and platform joint venture between the two carmakers, has laid off 1,500 workers for the week beginning Jan. 24, a company source said on Monday.
The temporary layoffs coincide with layoffs at Fiat's southern Italian car plants of Termini Imerese and Cassino.
Under Italian law, workers can be laid off for up to 52 weeks in two years, during which time they are paid out of state and company funds.
Powertrain is also in the process of cutting 706 jobs at four Italian factories as it phases out an engine that will not meet new European emission regulations. That engine will now be made in Argentina for the Latin American market.
Powertrain, set up as part of a broad alliance between Fiat and General Motors in 2000, employs about 22,000 people and is a key money saver for both companies in Europe and Latin America, providing engines for Fiat and GM cars.
The alliance is now in question as the two groups argue over whether a put option allowing Fiat to sell its car unit to GM is still valid. The issue must be sorted out this month or the companies can go to court.