He was followed by new Chief Executive Officer, Alessandro Barberis, who made his first major speech since taking up role at last Friday's board meeting.

The Fiat Group "Maestri del Lavoro" awards ceremony was held today at the Fiat Historic Center in Turin on occasion of the 36th Annual End of the Year Meeting with the top management.

One hundred fifteen current and former Group employees from all over Italy were awarded with the Star of Merit for Labor in recognition of their professional accomplishments in 2000, 2001, and 2002.

Fiat Chairman Paolo Fresco and Chief Executive Officer Alessandro Barberis participated in the ceremony.

In his speech, Paolo Fresco pointed out that "what has happened in the last few days is less fanciful and complicated than what reconstructions based on second guesses led people to believe. Dr. Galateri recently expressed his desire to leave the post of Chief Executive Officer, believing that a manager with extensive industrial experience was more suitable for the job. While I was truly sorry about his decision, I asked him to think it over, because he was doing a good job and was esteemed by everyone, not only as an excellent manager but also as an excellent person. We have to thank him for the work that he did during his few months at the helm. We are very happy that he agreed to remain on the Board of Directors." 

"The Board of Directors meeting held last Friday," Fresco continued, "accepted his decision and asked Alessandro Barberis to take over as CEO. Mr. Barberis, who has worked at Fiat for thirty-eight years, is an old hand at industry, considering that he worked his way up the company ladder. He worked his way through a lot of Sectors at the Group until he was named Chief Operating Officer. So, he knows Fiat and its people inside out, he knows what the problems are and how to solve them. Thus, he is the most appropriate choice to ensure continuity for the Company’s recovery."

Turning to the Fiat Auto recovery plan, Paolo Fresco then said: "I would like to make it perfectly clear to everyone that the measures that Fiat Auto is forced to take are absolutely necessary for us to align its output with sales volumes and permit it, with the help of yet other cost containment measures, to recover profitability. That is indispensable to financing its development. Although everyone who took the trouble to study the plan has found it to be a valid one, gossip prevailed over the facts. Sometimes we have the impression that our country is in the grip of a self-destructive frenzy. On the one hand, we hear people talk about the key role played by Fiat in the Italian system, and on the other hand people do not hesitate to disparage it. What happens is that rough talk not only discredits the efforts of blue collar workers and technicians, but also contributes to a negative image that inevitably has an impact on sales. The truth is that our situation is not as dramatic as it is depicted to be." 

"In a swirl of statements and outbursts," Fresco continued, "Fiat was made the object of patent lies. For example, that we did not invest much in making cars. Not true: Fiat has invested over 10.8 billion euros in Fiat Auto over the last five years, almost half of all investments made by the Group."

"People also say that we threw ourselves into a series of reckless acquisitions to diversify the Group business. In point of fact, we have carried out two fundamentally strategic operations in the last few years. On the one hand, the alliance with General Motors gave Fiat Auto a powerful partner. On the other hand, we made a major investment of about 6 billion euros to acquire CASE, which we have used to create a global leader in the agricultural and construction equipment sector. Furthermore, we have steadily refocused our portfolio, disposing of assets for almost 9 billion euros and investing about 7 billion euros in other acquisitions. Overall, we are less diversified now than we were four years ago and, thanks to the acquisitions, our businesses are much stronger."

Recalling that he had a special concern for the protection of stockholders’ interests, especially the 300,000 individuals, including numerous employees and pensioners, who have invested in Fiat, Fresco said that "they have as much a right to be protected as the factory workers."

The Chairman of Fiat concluded his speech by affirming that "the Group leadership has no dearth of courage and pride, because we have always fought and will continue to fight to protect the interests not of just one side, but everyone: our employees, the people who work for our suppliers, large and small stockholders, and everyone who has trusted in us."

The Chief Executive Officer of Fiat, Alessandro Barberis, then stepped up to speak. Thanking Mr. Fresco for his words of praise, he remarked: "I am here in demonstration of continuity. It couldn’t be any other way: I was on the team yesterday, and I am honored to lead it today. Even if the baton has been handed off to me, the team is still the same; our objectives are the same; our orientation is the same. So, as far as strategies are concerned, nothing has changed." Discussing the performance of the Company, Barberis emphasized that "the times are tough, we all know that. At the operating level, the negative result posted by the Group will largely stem from the loss at Fiat Auto."

As for the Company’s financial performance, Barberis said that "the debt problem has been reduced thanks to all the measures that we have carried out over the year, with the support of our stockholders and the contribution of our lenders. We think we can respect the commitments we made to the banks, even if we have to generate more operating cash flow." 

Speaking about the performance of Fiat Auto, the Chief Executive Officer affirmed that "Fiat believes in cars and will continue investing in car making. The plan worked out by Giancarlo Boschetti is broad and detailed and is funded by cash flow. We will invest 2.6 billion euros a year between 2003 and 2005. Anyone who says that we are not looking ahead to the future does not know what he is talking about. Unfortunately, the contents of our industrial plan were not taken into consideration by our counterparts at the head of the labor unions, who rejected them in whole even before discussing them. The same thing happened with the Program Agreement that the Government presented to us and which we accepted, finding it to be balanced. In fact, it lets us pursue all the objectives in our plan, while minimizing the social impact of our cost cutting measures and, last but not least, guaranteeing an income for everyone affected by the restructuring program."

Turning to the prospects for the coming year, Alessandro Barberis emphasized that "2003 will not be easy. Generally speaking, the markets certainly will not turn in a brilliant performance. There might be some glimmer of recovery towards the end of the year. What is certain is that we need to rigorously pursue a strict financial policy to consolidate the improvements that we have realized. By taking effective action on costs and the markets, we will have to generate enough cash flow for our future investments. We have credible, concrete plans that can and must be realized." 

In conclusion, the Chief Executive Officer of Fiat affirmed that "Fiat is still and will remain Fiat. A company with top-flight brains, skills, resources and technology. The fact that Iveco has won the ‘truck of the year’ award with the Stralis must mean something. And if the TM 190 by New Holland is also elected ‘tractor of the year,’ well then, without even mentioning Ferrari, we’re talking about recognition of the power of innovation that permeates the entire Group. And let’s not forget the good things going on over in the Automobile Sector. The Stilo model, for example, is not only the leader in its segment in Italy but is also greatly admired abroad. We sell six out of ten of them outside Italy. Then there’s Alfa Romeo, with its sporty cars and excellent new engines. And then we have commercial vehicles, where we’re struggling to reach the leading position in the European market."

Finally, Alessandro Barberis emphasized that Fiat will continue making major investments in the development of all sectors. However, there are people behind the investments, "and they have to be charged with desire, the ability to react and to roll sleeves up. All of us can make a contribution, whether it’s big or small. As for me," he concluded, "I am going to do everything to get us to pull together, work more and more as a team, and recover our enthusiasm and pride. Maybe we’ll have to wait a little while. But then the results are going to come in, and they’ll be results worthy of Fiat."