Thursday, April 16, 2009

Fiat warning to Chrysler unions

The boss of Italian carmaker Fiat has threatened to walk away from an alliance with US carmaker Chrysler if unions do not make concessions.

"Absolutely we are prepared to walk. There is no doubt in my mind," warned Sergio Marchionne.

Chrysler needs to find a partner in order to secure more government funds to help it survive. It reached an agreement with Fiat in January.

The US carmaker has until 30 April to finalise a partnership deal.

Otherwise, the carmaker may not receive any further assistance from the US administration. Without the funds, the carmaker could go under.

Separately, a group of investors has approached troubled carmaker General Motors (GM) about buying its Saturn brand and distribution network.

Saturn is just one of 13 brands owned by GM both in the US and abroad. The carmaker has also been bailed out by the US government is in desperate need to cut costs and raise funds.

'Unique opportunities'

Chrysler does not have such a large range of interests to sell off to raise cash and is looking to Fiat to secure its future.

But Mr Marchionne's comments reveal that a partnership between the two firms is still some way off.

"We cannot commit to this organisation unless we see light at the end of the tunnel," he said.

He wants labour unions in the US and Canada to agree to cost-cutting measures.

"I think they need to see what state the industry is in. Canada and the US are coming in as lenders of last resort. No-one else would put a dollar in. This is the worst condemnation of the viability of this business," said the Fiat boss.

"The UAW [United Auto Workers union] and the CAW [Canadian Auto Workers union] have a unique opportunity here to change the framework of the discussion," he added.

CAW boss Ken Lewenza said he was "surprised" and "disappointed" by the comments.

"I want to give [Mr Marchionne] a great deal of credit for turning around Fiat Corporation, but he didn't turn around Fiat by attacking workers in Italy," he said.

Chrysler received $4bn (£2.67bn) in state aid in January this year but the US authorities have said any further assistance depends on the carmaker finding a partner.

Rival General Motors has also received massive loans from the US government and faces bankruptcy if more aid is not forthcoming.

The carmakers are suffering from a massive slump in sales during the US recession.

Story from BBC NEWS:

Published: 2009/04/15 22:34:09 GMT

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