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Fiat CEO Sergio Marchionne, without Union ok on job cuts No Fiat deal
By Amarendra Bhushan for CEOWORLD Magazine Updated:April 15, 2009
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Sergio Marchionne says Chrysler’s unions must agree to job cuts or Fiat could walk away from a partnership.
Italian carmaker Fiat SpA will abandon its planned partnership with Chrysler LLC unless it’s American and Canadian unions agree to significantly reduce labor costs by the end of the month, Fiat Chief Executive Sergio Marchionne told Canadian newspaper the Globe and Mail.
“Absolutely we are prepared to walk. There is no doubt in my mind. We cannot commit to this organization unless we see light at the end of the tunnel,” Marchionne said.
Marchionne said there is a 50 percent chance the deal will fail because of lack of progress in labor negotiations in both the United States and Canada.
Fiat will look for another international partner if it can’t get Chrysler’s unions to agree to cost cuts. This deal with Fiat is Chrysler’s last chance to avoid a bankruptcy filing and possible liquidation.
Fiat, however, is prepared to abandon a deal unless workers at Chrysler’s North American plants agreed to match the lower labor costs of Japanese and German plants.
At the end of March, the U.S. auto task force gave Chrysler 30 days (by May 1) to complete an alliance with Fiat or face a cut-off of the government funding on which it is subsisting. That likely would push it into filing Chapter 11.
If the company filed for Chapter 11 bankruptcy protection, many of its assets and operations would be sold in discrete transactions over time, while other segments may be closed
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