07.02.2011 ITALIAN GOVERNMENT UNLIKELY TO OPPOSE FIAT-CHRYSLER HEADQUARTERS IN DETROIT

ITALIAN MINISTER FOR LABOUR MAURIZIO SACCONI

The Italian government appears to be backing away from a confrontation with Fiat over its dramatic new proposals to merge with Chrysler Group in the next two to three years and to shift its headquarters from Turin to Detroit in new comments made by Minister for Labour, Maurizio Sacconi (above).

The Italian government appears to be backing away from a confrontation with Fiat over its dramatic new proposals to merge with Chrysler Group in the next two to three years and to shift its headquarters from Turin to Detroit in new comments made by Minister for Labour, Maurizio Sacconi.

CEO Sergio Marchionne unleashed a storm of controversy in remarks he made on Friday night at the JD Power Automotive Roundtable conference in San Francisco when he suggested that the the two companies (currently Fiat owns 25 percent of Chrysler Group) could merge in the near future and be headquartered in the U.S., a strategy of consolidation between the two companies that is seen by many in the automotive industry as logical. While these remarks caused newspaper headlines across Italy yesterday which carried into this morning, Marchionne also shocked the North American media at the conference by calling the U.S. and Canadian state loans to Chrysler, "shyster" loans, with a written apology being hastily issued.

In Italy though it was the concept of moving Fiat's headquarters out of Turin, where Fiat has been based since it was incorporated by a group of investors that included Giovanni Agnelli in July 1899, that caused waves with the Mayor of Turin demanding "immediate clarification" and the opposition party's spokesman for labour affairs describing the plans as "worrying". Yesterday saw Marchionne, as well as Fiat Chairman John Elkann, spinning out a new and softer - although meaningless - line that the merged Fiat-Chrysler entity would in fact have no less than four 'global headquarters', and as well as Turin for Fiat and Detroit for Chrysler, there would be centres in Brazil and at an unnamed Asian location. They didn't however say where the key power would lie in the future.

Also yesterday, the AGI news agency reported that Italian Prime Minister Silvio Berlusconi will meet Marchionne this week to discuss the matter with the meeting also set be attended by Finance Minister Tremonti, Labour Minister Sacconi, Economic Development Minister Romani and the Cabinet undersecretary Gianni Letta. Government officials and Fiat executives got in touch with each other yesterday to organise the meeting, although the exact date has yet to be decided.

Sacconi is the key figure in the government side as he holds the labour portfolio, and he seemed to back away from confronting Fiat over the plans, instead he hid behind the 20 billion euro "Fabbrica Italia" investment proposal and suggested that the investments Fiat made in Italy in the near future would be the present government's key demand. "We have for some time hoped that Fiat will integrate with other carmakers to achieve the scale necessary to compete in the global market," Sacconi said in an interview on the Mattino Cinque TV programme, reported the Wall Street Journal this morning.

"If there is a merger between Fiat and Chrysler, I think the group will inevitably have one headquarters in the U.S. and one in Italy," the minister added, before voicing his view that proposed investment plans for Italy, which have already been set in motion for two plants (Mirafiori and Pomigliano d'Arco) would be the most important issue for the present government: "What matters insofar as Fiat's roots in this country is that it carries out its planned investments because these represent choices that can't be reversed for a long time," Sacconi said.
 

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