Fiat builds Italian future on delivering premium export cars
After years of threatening to quit Fiat’s home country because of its low productivity and archaic labour laws, Mr Marchionne has set his sights on using the Turin area as its base for building premium cars for export.
Inside the newly retooled Grugliasco site outside the city, 2,200 car workers – many of whom have returned to full-time work after six years of lay-offs – are assembling luxury Maserati Quattroporte saloons and Maserati Ghibli sports cars largely for the US and Chinese markets.
This vision will be under the spotlight on Wednesday when – following Fiat’s buyout of Chrysler through a special dividend paid by Chrysler itself – the newly merged board is expected to vote to shift its primary listing from Milan to New York, its legal status to the Netherlands and its tax residence to London. Its main headquarters is also expected to move to Detroit.
In Italy, the long feared move has been met by hysteria in the local media as Fiat remains the country’s largest private employer, even after a decade of downsizing.
But globalisation is necessary for Fiat’s survival as it fights its way back from near bankruptcy a decade ago, says Giuseppe Berta, a Fiat expert at Milan’s Bocconi University. US profits have buoyed a European business that lost $1bn in 2012.
“This is our last chance to keep production in Italy,” Mr Berta says.
For Fiat-Chrysler employees inside the Maserati factory, the merger is already a success, because as a result of Mr Marchionne’s plan to make Turin a hub for luxury cars, many of them are back working full time after earning as little as €850 a week while laid off.
The factory had nearly 30,000 orders for new vehicles in the first 10 months of last year, mostly from the US and China, up from 6,300 the year before. It plans to lift production to 40,000 this year, putting Mr Marchionne’s target of shipping 50,000 Maserati cars in 2015 within reach, despite the initial scepticism of analysts.
Luca Cinquemani, assembly shop manager at the Maserati plant, is an example of the Italian-Canadian executive’s transformation of the group.
A Sicilian engineer, Mr Cinquemani was hired in one of Fiat’s plants in southern Italy eight years ago and then sent to work in several Chrysler factories before being brought back to oversee hundreds of car workers at Maserati. Aged 30, he is notably young in Italy, where people are generally considered inexperienced until they are over 40, a cultural tick that has reinforced massive unemployment and migration among Italian youth.
“I always loved cars,” Mr Cinquemani says with an infectious enthusiasm. “And if you love cars, and you grow up in Italy, who do you want to work for? It has to be Fiat. It’s a dream come true.”
But five miles down the road in Turin’s city centre, the mood is darker.
Piero Fassino, the city’s mayor, shrugs his shoulders when asked if he is concerned about the shift of Fiat’s executive offices to the US and London. “To my mind, it’s more important that we have production here – which we have – than a few legal functions,” he says.
Nevertheless, speaking to local business owners later that morning, he issues a rallying cry for them to adapt to a new world with less Fiat in it.
"We've been always used to just making something and someone would buy it. But today it is not enough for us just to produce something, we need to do marketing, we need to sell ourselves as a centre for culture and tourism, for our university. We are no longer just an industrial city,” he said.
Fiat’s network of suppliers worry
Fiat’s presence in Turin has faded since its glory days, an era that still looms large in the Torinese imagination, when the company’s dashing patriarch Gianni Agnelli was known as the de facto king of Italy.
In the 1960s, Fiat had around 100,000 employees, and cars were produced exclusively in northern Italy.
Today, it remains Italy’s largest private company but only employs 18,000 people directly in the Turin area, of which around 5,000 are still laid off. Fiat-Chrysler now has 158 manufacturing plants worldwide, and 71 per cent of its 215,000 employees are based outside of Italy.
There are signs of economic crisis in Turin. Shopkeepers complain they have been hit by a double blow of Fiat’s slow retreat and Italy’s crippling two-year recession. In the colonnaded arcade of San Federico, off Turin’s main Piazza San Carlo, half the shops are closed.
The city’s most famous restaurant Al Gatto Nero, where the Agnelli family came on its opening night in 1958, was almost empty on a recent lunchtime.
It is a stark contrast to Fiat’s 1960s dolce vita heyday. Then the restaurant had three seatings at lunchtime and its high-living clientele ate their way through 120 kilos of truffle a year, even grating it on ice cream, recalls the founder’s son Gilberto Vannelli.
Federico Bellono, head of the metalworkers’ union that represents the majority of Fiat workers in the city, applauds the investment in the Maserati factory. But his concern – like many in Turin – is the future of Fiat’s historic manufacturing base in Italy: the vast 2m square metre Mirafiori site in southwest Turin, which today works at only a 10th of its capacity.
Mr Marchionne has made clear that the extent of Fiat’s future commitment to the city depends on the export success of its rollout of the new premium Maserati, Alfa Romeo and Jeep models in the coming years.
“Our history and our future is entangled with that of Fiat,” Mr Bellono says. “We continue to live in a world of enormous uncertainty”.