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Fiat move to the United States? Sacrilege

March 25, 2011

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Today’s special report, “Can an Italian Elvis make Fiat- Chrysler dance?” is stirring up a storm in Italy, where the suggestion that one of the country’s most hallowed institutions might up sticks and move to America is a big deal.

Here’s the critical part of the report:

This year, Marchionne had to rush to meet Berlusconi and Italian cabinet members to reassure them Fiat would “keep its heart” in Italy. In February he’d stirred up a ruckus among Italian politicians by flagging the possibility that Fiat might escape Italy’s died-in-the-wool unions and move the merged company’s headquarters to the United States within two years.

Chairman John Elkann was swift to assert that Fiat would not abandon homebase Turin, and Marchionne duly made an appearance in parliament to support him. But people familiar with his strategy say Marchionne is nonetheless keen to make such a move. The idea — which has not yet been discussed with Fiat’s board — includes keeping Turin as the centre for European operations and creating a possible separate hub in Asia, these people say. 

 ”The location where you establish the legal HQ is where you pay taxes,” said the second top Fiat source. “If I pay 70 percent tax in Italy and only 30 percent in the U.S., it’s a no brainer where to go.”

The report sparked angry reaction from Italian politicians and trade union leaders. Refoundation Communist Party leader Paolo Ferrero, for example, called it a “swindle” by Marchionne on the Italian people, and others urged the government to do something about it. Fiat issued a statement saying it had taken no decision yet and that a decision would depend on access to financial markets and a favorable environment for the manufacturing sector.

Italian speakers can read more in the Italian newspapers here:

La Repubblica and Corriere della Sera

It’s also worth taking a look at Gavin Jones’ analysis “Marchionne offers reform model for stagnant Italy.”

With Prime Minister Silvio Berlusconi embroiled in yet another sex scandal and bent more on political survival than policy initiatives, economic reform in Italy seems to have been commandeered by the charismatic Italian-Canadian businessman.

For almost a year Marchionne has been facing down Italy’s largest engineering union in a battle that could eventually change labour relations in the euro zone’s third largest economy more than any government has done for decades.

He announced the closure of one unproductive car plant in Sicily. He has threatened to stop investing in the others and move output abroad unless factories accept tougher rules on working hours, sick pay and strikes.  And he has formed new companies at the local factory level which operate outside employers’ confederation Confindustria, so they are not bound by the collective labour rules negotiated between the confederation and the trade unions.

 Read the full special report in PDF format here.

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