ROME -- Italian carmaker Fiat unveiled a new industrial plan on Wednesday, reversing years of underinvestment which dragged it into crisis and instead promising a slew of new cars and better use of its factories.
Presenting the plan to unions and the Italian government, Chief Executive Sergio Marchionne said Fiat would launch 20 new cars in 2005-08 and invest 9.6 billion euros ($11.8 billion) in its car arm, 3.6 billion of it in research and development.
Unions have been highly critical of Fiat in the past as Italy's largest private employer slashed jobs to stay on the road. But on Wednesday they welcomed Marchionne's plan.
"There is a totally different climate now," said Giovanni Contento, the head of the UILM metalworkers union.
"This is obviously a transition phase because there are still temporary layoffs but now we're talking about working factories at 100 percent capacity in the future," he added.
Marchionne's presentation slides showed that most of its factories should be working at full capacity by 2008, with the biggest change being its huge Mirafiori plant in Turin which currently works at 71 percent.
Mirafiori will take on some production of the new Punto in January and will get another new car in the next 4 years.
The biggest worry was the politically-sensitive Termini Imerese plant on Sicily which is at 54 percent capacity now and will only reach 80 percent in 2008. Unions said they would focus on that plant when they discuss the plan with Fiat in September.
Fiat said Termini Imerese plant may start working at full capacity if sales of Lancia Ypsilon luxury car hits 80,000 units per year thanks to a planned restyling. Fiat currently sees Ypsilon sales falling to 67,000 cars in 2008 from 95,000 now.
Union leaders said the surprise in Fiat's plan was its speed -- a watchword for Marchionne since he took over last year. Union leader Contento quoted Marchionne as saying Fiat would make 1.35 million cars in 2008, up from 1 million this year.
RETURN OF THE 500
The plan sees models restyled every 3 years -- for a total of 23 facelifts by 2008 -- and new cars of all sizes due to be launched across its Fiat, Lancia and Alfa Romeo marques, including a remake of its classic "Cinquecento."
The new version of the tiny bubble car will be made in Fiat's Polish plant, where labor is cheaper, allowing the company to make a decent profit margin even on its smallest car.
Marchionne has focused his plan for Fiat Auto on cutting away less-profitable sales to rental companies and dealers. The strategy paid off in the second quarter when the 106-year-old unit slashed its losses much more aggressively than expected.
He hopes the plan will pull Fiat Auto back to a trading profit in 2006 after posting its worst ever loss in 2002, despite a slow-growing market and cut-throat competition.
Marchionne said he expected Fiat's core Western European market to shrink 1.5 percent this year and then grow about 0.4 percent annually. The Italian market should drop 5 percent this year and then rise 1.5 percent a year, he said.
Part of Fiat's plan depends on it continuing to use a government-backed system of temporary layoffs to keep production in line with demand until it reached full capacity. But Marchionne reiterated that no Italian plants would be closed.
As well as the new models, Fiat planned to make 3 new engines in the next 4 years, including a 1.6-liter diesel motor, and would look at making a 2- or 3-cylinder engine with very low environmental impact.