Fiat plans layoffs to ready Melfi plant for new models
TURIN (Reuters) -- Fiat has asked the government to approve a special layoff scheme at its Melfi plant in central Italy for two years to restructure the factory before production of new models begins, the carmaker said on Tuesday.
The scheme will kick off on Feb. 11 and last until the end of 2014. It will allow the company to stop one line at a time out of two at the plant, Fiat said.
Melfi, one of Fiat's most important facilities in Italy, currently manufactures the Punto subcompact.
Back in December, Fiat said it will invest more than 1 billion euros ($1.3 billion) to produce a new Jeep, known internally as the B-SUV, and the new Fiat 500X, in Melfi starting in 2014.
The move is key to the automaker's bid to boost capacity usage and end losses in Europe by focusing on high-margin cars. Fiat intends to introduce 19 Italy-produced models through 2016, including nine Alfa Romeo-badged vehicles and six Maseratis. The carmaker plans to increase production of Fiat and Chrysler cars in Europe to 2 million cars a year in 2016 from 1.25 million this year.
Fiat-Chrysler CEO Sergio Marchionne believes that by using Fiat's Italian factories to export cars around the world the automaker's European operations will return to an operating breakeven by 2015-2106. Troubles in Europe led the manufacturer to cut its 2014 trading-profit goal by 31 percent to 5.2 billion euros.
Like other carmakers, Fiat, which controls U.S. carmaker Chrysler, has been hard hit by Europe's debt crisis. Last year car sales in Italy slumped to their lowest level since 1979.
Government spending cuts and high unemployment have hit consumer budgets and sent demand for cars plunging in an industry that suffers from overcapacity.
Automotive News Europe contributed to this reportContact Automotive News