Any suggestion of capacity constraints or workforce reductions would be a red flag to Italy's populist government and the nation's labor organizations. Attempts to close plants in France would run afoul of powerful unions there, too. President Emmanuel Macron's government has already been shaken by the violent Yellow Vest protests over social inequality.
As Renault's most powerful shareholder, France has made the preservation of jobs and local factories a condition for a merger. The companies must guarantee "industrial" jobs in France and pledge "zero" site closures, French Finance Minister Bruno Le Maire said Tuesday. Still, France's CFDT union said it saw jobs at risk.
The stakes are high in France, where unemployment is 8.7 percent and Renault is one of the biggest employers, with 48,600 staff. As well as guaranteeing jobs, a deal might call for Fiat models to be made at the Flins plant. The Nissan Micra is made there, but sales have been disappointing, according to a person familiar with the matter who declined to be identified because the information is not public.
In Italy, Deputy Premier Matteo Salvini has said he trusts the deal "will safeguard every job in this country."
That may be ambitious. According to Kelly of Frost & Sullivan, one carmaking facility in each country is likely to close, and potentially two in Italy.
Fiat's premium and luxury brands, such as Alfa Romeo and Maserati, are likely to benefit from Renault's strong commercial networks, said Roberto Di Maulo, head of the Fismic labor union. The Mirafiori plant in Turin could take on production of the fully electric 500 model with components provided by the French, he said.
"The combination of Fiat Chrysler and Renault is a good deal for Italy, even without expanding it to Nissan -- though with the Japanese on board, the benefits could increase further," Di Maulo said.
Fiat last year made 982,000 cars in European plants capable of producing more than double that number, according to LMC Automotive, a consultancy and research group. For Renault, including the Lada and Dacia brands, production was 2.63 million cars, compared with capacity of 3.76 million. As a rule of thumb, LMC reckons utilization rates of 70 percent to 75 percent are needed for profitable operation.
Job pledges to win over governments often do not withstand the test of time. General Electric this month said it plans to cut more than 1,000 positions at its beleaguered French power-equipment business, going back on a promise to create 1,000 net new jobs when it took over Alstom's energy operations in 2015.
And there are ways to pare employment without shutting down a plant. Mirafiori last year made about 30,000 cars, one-tenth the total in its glory days, after shifting to production of luxury Maserati SUVs.
"Closures will likely have to be made equally, with both sides agreeing to shut down one place in France and then the next one in Italy, for instance," said Frank Biller, an analyst at Landesbank Baden-Wuerttemberg. "It's not realistic to shut factories in Eastern Europe -- the problems are concentrated at the Fiat brand and it's out of the question there won't be job cuts."
Together, Fiat and Renault made about 8.7 million cars last year, which would put them third behind Volkswagen Group and Toyota. Combined with production from Renault's existing alliance with Nissan and Mitsubishi Motors, the total would be more than 15 million vehicles a year.