2002 marked the Fiat the culmination of a crisis that had been going on for more than a decade. The company was losing 5 million euros a day and in the Milanese city circles when they spoke of "those bankrupts from Turin" they were referring to Fiat.
Unlike the 1980 crisis, which was due to the continuation of permanent conflict in the workplace over the previous decade, which had led to the factories becoming ungovernable, the crisis which finally broke out in 2002 was due to the loss of competitiveness and attractiveness of its product.
After ouster of Engineer Ghidella from the automotive sector at the end of the 1980s, the Fiat had lost market share in Italy and Europe, moving from the position of leader in the European market with 18% to a progressive decline, reaching around 7% at the beginning of the new century, not only behind the German and French companies, but also behind the European branches of the American and Japanese companies.
The alliance with GM
Already two years earlier, in March 2000, in an attempt to safeguard the interests of its shareholders, the Company had turned overseas by signing a alliance with General Motors, which provided for the American side to subscribe to a 20% stake in Fiat Auto in exchange forFiat's entry into GM's capital with a stake of approximately 5,1% for a value of 2,4 billion dollars, making it its first private shareholder.
For Fiat, the alliance was meant to represent the integration of its forces with a world leader in the automotive industry, accelerating with structural and cost-cutting interventions a return to profitability, which had been too absent in the auto sector's accounts.
Il nodal point The agreement, however, recognized Fiat the right to a “put” option to sell the remaining 80% of Fiat Auto to GM starting from the fourth year and within the following five years of the alliance.
As the then CEO of Fiat told the management meeting: “We have burned the ships with no way back.” A choice declared irrevocable!
Le things then went differently. In February 2005, GM, in order to avoid exercising the “put” option, itself provided Fiat with the “return ships” with a cash payment of 1,5 billion euros and the return of the shareholding it had in Fiat Auto.
Fiat: the crisis and the closure of the factories and the start of Melfi
- the nineties of the last century are years of deep crisis for Fiat.
To reduce the structural costs, they are factories closed ofAutobianchi of Desio, of the spear Chivasso, of the Fiat Rivalta, of theAlfa Romeo of Arese. There will be no recourse to collective dismissals for staff reduction, but they will be placed in retirement or early retirement for thousands of workers and for others we will resort to financial incentives for leaving.
The employment situation in Italy eased in the mid-90s when the Melfi plant, which would have employed over 7000 people.
Initially, the company had decided, with a view to reducing costs, to set up a new factory in Portugal for the production of the model to be launched, the Fiat Punto, given the competitive conditions that country offered in terms of economic and financial incentives and a labor cost that was more than half lower.
After a heated debate at union level to compensate for the closures of the factories in the North, Fiat finally decided that it could favor a national choice, on the assumption that it should be consistent with the essential objectives of cost containment with specific reference to the flexibility of work performance and to an intensive use of the systems.
In this sense, an agreement was stipulated with all the metalworkers' unions specific collective labor agreement for Melfi which envisaged a labour cost 20% lower than that of the other Fiat plants.
They are critical years also for the top management of the company: in the space of a few years, five managing directors will take turns in the parent company and four in Fiat Auto.
Despite the restructuring processes implemented, the reduction of the workforce, the reduction of labor costs and the joint venture with General Motors, the production and financial situation continues to worsen.
The 3 billion loan and the capital increase
In the spring of 2002 Fiat was forced to enter into a contract with a pool of four banks un loan of 3 billion euros (the so-called “convertendo”) and even to sell one's share in GM to Merryll Lynch for 1,16 billion dollars. What's worse, the annual production of cars in Italy collapses from 1,7 to 1,1 million cars, a level from the 60s.
mirafiori, the iconic car plant, no longer produces even 1000 cars a day compared to over 3000 in the 2002s. In the first nine months of XNUMX, the Group's net result was negative by almost one billion euros.
For this reason the company decides to launch a capital increase of 2,5 billion euros and start, at the end of October, after some inconclusive meetings with the unions, the procedures for the declaration of a company crisis with the suspension from work at zero hours of approximately 7500 workers, declared structural redundancies.
The meetings at Palazzo Chigi
The Prime Minister, Silvio Berlusconi, immediately calls the company and the confederate and metalworkers' unions to Palazzo Chigi for November 5th to examine the crisis situation in the automotive sector.
In November and December several meetings were held meetings at Palazzo Chigi, in the institutional meeting room, the so-called Green Room, so called because of the colour of the upholstery, between the Government, the Company and the unions. The Government was represented by Deputy Prime Minister Gianfranco Fini and the Ministers of Economy Giulio Tremonti, of Productive Activities Antonio Marzano, of Welfare Roberto Maroni with the Undersecretary Maurizio Sacconi, of Community Policies Rocco Buttiglione, of the Environment Altero Matteoli and of Equal Opportunities Stefania Prestigiacomo (in practice almost the entire government). Fiat delegation was composed by the general manager, engineer Alessandro Barberis, and by the heads of industrial relations of the Group and Fiat Auto, Paolo Rebaudengo and the writer. For the unions the general secretaries of the Cgil, Cisl and Uil, Epifani, Pezzotta and Angeletti and Renata Polverini for the Ugl were present, supported by the metalworkers' secretaries of Fim, Fiom and Uilm, Caprioli, Rinaldini and Regazzi, as well as the territorial union structures of the main Fiat factories.
During the meetings, the company made it clear the motivations which had induced her to activate the procedure for requesting a state of crisis, she explained the industrial plan and the actions which were the basis of the projects aimed at overcoming the current negative phase and relaunching the automotive sector, defining its own mission for each plant.
While the union asked for state entry in the share capital and there was even a confederal secretary who proposed to activate the controlled administration procedure for Fiat. Minister Marzano charged the strategic consultancy firm Roland Berger to thoroughly verify the intervention plan for Fiat Auto on the process (production capacity), on the product (new models), on investments, on the commercial network, all interventions that it deemed suitable to overcome the company's crisis situation.
In particular, the consulting firm believed that the plan, in addition to the development of new products through a significant investment commitment, was aimed at reducing the cost structure and lowering the break-even point and, therefore, could be shared, provided that the potential for the development of production programs was ensured in the face of the success of the new models and market demands.
Furthermore, the end of November arrived with the legal terms of the zero-hour suspension procedure having expired and with the possibility for the company to act unilaterally starting from the following 9 December.
“The Program Agreement”
On the evening of December 4th Silvio Berlusconi gathered for dinner the ministers involved in the negotiations to define, in order to avoid Fiat sending suspension letters to the 7500 workers, a proposal to close the dispute to be submitted to the company and the unions. On the afternoon of December 5, the meeting resumed in the Sala Verde with the Undersecretary to the Presidency of the Council Gianni Letta who read the Government's proposal to sign a “Program Agreement” between all interested parties, Government, Fiat and trade unions.
With this proposal the Government made available a active labor policy, social safety nets such as long-term mobility and early retirement, tools to support innovation, research and development of new product and process technologies, and promoted a market policy aimed at stimulating the Renewal of the vehicle fleet with eco-incentives.
The government document also acknowledged that the conditions for a state of corporate crisis existed and, therefore, for the recourse to the extraordinary wage supplementation fund, also identifying interventions for the reduction of the number of surpluses and the strengthening of the prospects of workers' return.
The company gave its adherence to the government proposal while the metalworkers' unions rejected it, deeming it an unacceptable solution as it did not provide for a real intervention by the state in the automotive sector.
After this union rift in the following years the relationships in the company will normalize progressively with the reformist and participatory unions Fim-Cisl and Uilm-Uil, but they will remain in conflict with the opposing union Fiom-Cgil until, in 2011, they signed the Fiat National Labour Contract with only the first two unions.
The arrival of Marchionne
In January 2003 the Lawyer passed away, and after some time, in May 2004, his brother Umberto also passed away. It was Susanna Agnelli, now the "patriarch" of the Family, to impose, June 1, 2004, to the Fiat board of directors the appointment of Sergio Marchionne as CEO, which, once the period of crisis has passed, promoted the restructuring and Fiat's big relaunch.
