Identifier
Created
Classification
Origin
02ROME5750
2002-11-27 11:25:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Rome
Cable title:  

FIAT: WORKER PROTESTS CONTINUE; SICILIAN SOLUTION IN SIGHT?

Tags:  ELAB ECON PGOV SOCI IT 
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UNCLAS SECTION 01 OF 02 ROME 005750 

SIPDIS

SENSITIVE

DEPT FOR EUR/WE AND DRL/IL
DOL FOR ILAB/BRUMFIELD, LEVINTOW

E.O. 12958: N/A
TAGS: ELAB ECON PGOV SOCI ECON PGOV SOCI IT ITELAB
SUBJECT: FIAT: WORKER PROTESTS CONTINUE; SICILIAN SOLUTION
IN SIGHT?
UNCLASSIFIED


PAGE 02 ROME 05750 01 OF 02 271251Z

REFTELS: A) ROME 5139 B) MILAN 723

SENSITIVE -- NOT FOR INTERNET DISTRIBUTION.

UNCLAS SECTION 01 OF 02 ROME 005750

SIPDIS

SENSITIVE

DEPT FOR EUR/WE AND DRL/IL
DOL FOR ILAB/BRUMFIELD, LEVINTOW

E.O. 12958: N/A
TAGS: ELAB ECON PGOV SOCI ECON PGOV SOCI IT ITELAB
SUBJECT: FIAT: WORKER PROTESTS CONTINUE; SICILIAN SOLUTION
IN SIGHT?
UNCLASSIFIED


PAGE 02 ROME 05750 01 OF 02 271251Z

REFTELS: A) ROME 5139 B) MILAN 723

SENSITIVE -- NOT FOR INTERNET DISTRIBUTION.


1. (SBU) SUMMARY: FIAT AUTO, TRADE UNIONS AND THE BERLUSCONI
GOVERNMENT CONTINUE THEIR POSTURING AROUND THE AUTOMAKER'S
PLAN TO CUT COSTS BY IDLING THREE PLANTS AND LAYING OFF OVER
8,000 EMPLOYEES. ALTHOUGH FIAT'S LENDERS APPEAR TO BE THE
ONLY ONES CONTENT WITH THE PLAN AS CONCEIVED, WORKER
ACTIVISM, POPULAR ATTENTION -- AND GOVERNMENT MEDIATION --
IS FOCUSED ON SICILY, WHERE CHRONICALLY HIGH UNEMPLOYMENT
AND THE SPECTRE OF A RESURGENT MAFIA MAGNIFY THE SOCIAL
IMPACT OF 1800 LAYOFFS AT FIAT'S TERMINI IMERESE PLANT.
WITH THE ENTIRE SICILIAN PARLIAMENTARY DELEGATION HAILING
FROM THE PARTIES IN PM BERLUSCONI'S COALITION, THE
GOVERNMENT IS DETERMINED TO PREVENT THE PLANT'S PERMANENT
CLOSURE. AT ITS HEART, THE WRANGLING IS NOT ABOUT THE
RESTRUCTURING PLAN'S IMMEDIATE IMPACT; IT'S ABOUT COMPETING
VISIONS FOR THE LONG-TERM HEALTH AND DIVERSITY OF THE
ITALIAN ECONOMY. FOR MANY ITALIANS, THE FIAT CRISIS HAS
BECOME A LEITMOTIF FOR THE FUTURE SHAPE OF THEIR INDUSTRIAL
SECTOR AND LABOR MARKET -- AND WHAT ONE SEES DEPENDS VERY
MUCH ON WHICH END OF THE PENINSULA ONE LIVES. END SUMMARY


2. (U) SOME OBSERVERS (INCLUDING US) HAVE LIKENED THE
MANEUVERING AROUND THE RESTRUCTURING PLAN TO A HIGH-STAKES
POKER GAME. BUT IN RECENT WEEKS, IT'S LOOKED MUCH MORE LIKE
A GAME OF CHICKEN, WITH EACH PARTY SPEEDING TOWARD THE
OTHERS, ACCELERATOR JAMMED TO THE FLOOR, HOPING TO FORCE THE
OTHER PARTIES OFF THE ROAD. THE GOVERNMENT AVERTED A MAJOR
UNCLASSIFIED

PAGE 03 ROME 05750 01 OF 02 271251Z
COLLISION AT A NOVEMBER 25 "MEDIATION" SESSION (TO WHICH IT
HAD CONVOKED THE PARTIES) BY PERSUADING FIAT TO POSTPONE ITS
PLANNED LAYOFF OF 7600 WORKERS FOR 10 DAYS. THE
POSTPONEMENT, DEMANDED BY LABOR AS A PRECONDITION FOR

FURTHER TALKS, SETS THE STAGE FOR FURTHER DISCUSSIONS OF A
MODIFIED FIAT RESTRUCTURING PLAN.


3. (SBU) ALTHOUGH THE ENTIRE PLAN OSTENSIBLY WILL BE UNDER
REVIEW, IT'S CLEAR THE GOVERNMENT'S MAIN OBJECTIVE WILL BE
TO HAMMER OUT AN AGREEMENT THAT PRESERVES MOST, IF NOT ALL,
THE 1800 JOBS AT FIAT'S PLANT IN SICILY. BEHIND THE SCENES,
EVEN LABOR SEEMS TO AGREE WITH THIS APPROACH; UNION
OFFICIALS IN MILAN HAVE TOLD US THEY EXPECT MOST OF THE
WORKERS IDLED FROM AN ALFA ROMEO PLANT NEARBY TO QUICKLY
FIND OTHER JOBS IF, AS EXPECTED, THE PLANT IS PERMANENTLY
CLOSED. AT THE NOVEMBER 25 SESSION, FIAT OFFICERS
REPORTEDLY PROPOSED MODIFICATIONS UNDER WHICH THE SICILIAN
PLANT, SITE OF THE MOST DRAMATIC PROTESTS, WOULD REOPEN IN
SIX MONTHS AFTER RETOOLING TO PRODUCE A NEW VERSION OF THE
PUNTO -- PRODUCTION THAT WOULD BE SHIFTED FROM FIAT'S
MIRAFIORI PLANT IN TURIN.


4. (U) IN THIS AND FUTURE PASSES OF CHICKEN, EACH OF THE
DRIVERS HAS SOME HEAVY MUSCLE RIDING SHOTGUN. THE UNION
CONFEDERATION LEADERS CAN POINT TO THE THOUSANDS OF FIAT
WORKERS, THEIR FAMILIES AND OTHER SUPPORTERS WHO HAVE STAGED
A ROLLING SERIES OF STRIKES AND OTHER ACTIONS TO DRAMATIZE
THE IMPACT OF THE LAYOFFS. THOUSANDS OF FIAT WORKERS AND
THEIR FAMILIES NOVEMBER 12-15 BLOCKED PALERMO'S AIRPORT AND
TRAIN STATION, THE MESSINA FERRY TERMINALS AND SICILIAN
HIGHWAYS, SNARLING TRAFFIC, PROMPTING WIDESPREAD DELAYS AND
UNCLASSIFIED

PAGE 04 ROME 05750 01 OF 02 271251Z
BRINGING MUCH OF THE REGION/ISLAND TO A STANDSTILL. WORKERS
FROM THE ALFA ROMEO PLANT OUTSIDE MILAN SHUT DOWN MALPENSA
AIRPORT FOR AN HOUR NOVEMBER 21 AND BLOCKED A MAJOR FREEWAY
NOVEMBER 25. STRIKES HAVE IDLED ALL OF FIAT'S PLANTS
SEVERAL TIMES. OBSERVERS POINT TO THE DIFFERENT ATMOSPHERE
AT THE VARIOUS FIAT PLANTS AFFECTED: AT THE ALFA PLANT
OUTSIDE MILAN AND AT FIAT'S HEADQUARTERS IN TURIN, THE MOOD
IS ONE OF ANGER; AT THE SICILIAN PLANT, IT IS ONE OF
DESPERATION. METALWORKERS HAVE STAGED A SECTOR-WIDE
SOLIDARITY ACTION, AND ONE OF THE METALWORKER FEDERATION
LEADERS TOLD US TALKS WERE UNDERWAY TO ORGANIZE A SOLIDARITY
STRIKE AT FIAT'S OTHER EUROPEAN PLANTS.


5. (U) ON MANAGEMENT'S SIDE, FIAT AUTO'S LENDORS AREN'T JUST
ALONG FOR THE RIDE; THEY'VE LEANED ACROSS AND ADDED THEIR
FOOT TO THE ACCELERATOR. UNINTERESTED IN EITHER PROVIDING
FURTHER LOANS OR BECOMING FIAT SHAREHOLDERS BY BUYING BACK
THEIR DEBT, THE BANKS CONTINUE TO PRESS FOR MAXIMUM COST
SAVINGS. THE COMPANY HAD A MUCH-PUBLICIZED MEETING WITH ITS
MAJOR LENDORS NOVEMBER 21. AFTERWARD, IT DECLARED THAT IT
WAS WILLING TO ADJUST THE DETAILS OF ITS RESTRUCTURING
PROPOSAL BUT COULD NOT ACCEPT ANY CHANGES THAT REDUCED THE
PROJECTED COST SAVINGS (AT LEAST 2 BILLION EUROS).


6. (U) THE BERLUSCONI GOVERNMENT'S CAR IS ALSO CROWDED,
JAMMED AS IT IS WITH THE ENTIRE SICILIAN PARLIAMENTARY
DELEGATION (NOT TO MENTION SEVERAL OF THE CABINET'S MOST

UNCLASSIFIED

UNCLASSIFIED PTQ7268

PAGE 01 ROME 05750 02 OF 02 271251Z
ACTION EUR-00

INFO LOG-00 NP-00 AGRE-00 AID-00 CEA-01 CIAE-00 COME-00
CTME-00 DODE-00 ITCE-00 DOTE-00 ANHR-00 SRPP-00 DS-00
EB-00 ED-01 EXME-00 E-00 FAAE-00 UTED-00 VC-00
FRB-00 HHS-01 H-01 SSA-01 TEDE-00 INR-00 ITC-01
LAB-01 L-00 VCE-00 AC-01 DCP-01 NSAE-00 NSCE-00
OMB-01 OPIC-01 PA-00 PER-00 PM-00 PRS-00 ACE-00
P-00 SCT-00 SP-00 IRM-00 SSO-00 STR-00 TEST-00
TRSE-00 USIE-00 PMB-00 DSCC-00 PRM-00 DRL-02 G-00
SAS-00 /013W
-------------- 0F535A 271253Z /38
R 271125Z NOV 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC 7087
INFO DEPT OF LABOR WASHDC
EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 02 OF 02 ROME 005750

SIPDIS

SENSITIVE

DEPT FOR EUR/WE AND DRL/IL
DOL FOR ILAB/BRUMFIELD, LEVINTOW

E.O. 12958: N/A
TAGS: ELAB ECON PGOV SOCI ECON PGOV SOCI IT ITELAB
SUBJECT: FIAT: WORKER PROTESTS CONTINUE; SICILIAN SOLUTION
IN SIGHT?
UNCLASSIFIED

PAGE 02 ROME 05750 02 OF 02 271251Z

PROMINENT MEMBERS) AND THEIR CONSTITUENTS. SEVERAL
PARLIAMENTARIANS HAVE THREATENED TO BLOCK PASSAGE OF THE
2003 BUDGET ABSENT GUARANTEES THE TERMINI IMERESE PLANT WILL
REOPEN, AND DEPUTY PRIME MINISTER FINI WARNED FIAT IT WOULD
"FACE A FIGHT, AND NOT JUST WITH THE SOCIAL PARTNERS" UNLESS
IT MODIFIED ITS PLAN. THE GOVERNMENT'S CAR IS ALSO RUNNING
ON CASH; THE LABOR MINISTRY MUST DECLARE AN EMPLOYMENT
'STATE OF EMERGENCY' BEFORE FIAT CAN SHIFT THE IDLED WORKERS
OFF THE PAYROLL INTO AN EMERGENCY UNEMPLOYMENT SCHEME
FINANCED LARGELY BY THE GOVERNMENT (UNDER WHICH THEY WILL
RECEIVE A GENEROUS 80 PERCENT OF THEIR SALARY FOR AT LEAST
ONE YEAR).


7. (SBU) AT THEIR HEART, THE NEGOTIATIONS ARE ABOUT THE
SICILIAN PLANT'S LONG-TERM PROSPECTS; THIS IS WHERE TERMINI
IMERESE BECOMES A LEITMOTIF FOR FIAT'S -- AND MORE BROADLY,
MANUFACTURING'S -- FUTURE IN ITALY. FOR MANAGEMENT, THE
PLANT'S IDLING IS AN ACCOUNTING DECISION THAT WILL RESTORE
THE FIRM TO COMPETITIVENESS AND/OR MAKE IT MORE ATTRACTIVE
TO GM (FIAT HAS AN OPTION TO SELL GM A CONTROLLING STAKE IN
THE COMPANY IN 2004). FIAT HAS SAID IT WILL REOPEN THE
PLANT IN 12 MONTHS IF SALES OF THE MODEL MANUFACTURED THERE
IMPROVE. THE TRADE UNION CONFEDERATIONS ARGUE THE COMPANY
HAS NOT PRESENTED A COMPREHENSIVE RESTRUCTURING PLAN, WITH
NEW INVESTMENT IN DESIGN AND PRODUCTION, TO DEMONSTRATE THAT
IT PLANS TO REOPEN THE PLANT AND MAINTAIN CURRENT EMPLOYMENT
LEVELS. THIS REFLECTS THE UNION'S INTEREST IN MAINTAINING A
VIABLE, INNOVATIVE AUTOMOBILE INDUSTRY IN ITALY, ONE IN
WHICH TRADITIONAL ITALIAN STRENGTHS IN DESIGN AND
PRODUCTIVITY WOULD OUTWEIGH LOWER LABOR COSTS OFFSHORE.
UNCLASSIFIED

PAGE 03 ROME 05750 02 OF 02 271251Z
FIAT'S ACQUISITION BY GM, THEY FEAR, WILL LEAD TO A STEADY
DECLINE OF MANUFACTURING JOBS AS THE "GM COLOSSUS" SHIFTS
PRODUCTION TO PLANTS OUTSIDE ITALY.


8. (U) FOR THE GOVERNMENT, SUBSTANTIAL JOB LOSS IS THE
BRIGHT RED LINE; HOW EMPLOYMENT IS MAINTAINED IS LESS
IMPORTANT. CURRENTLY, THREE OPTIONS ARE UNDER PUBLIC
DISCUSSION:

-- RETOOLING THE PLANT AND PRODUCING NEW MODELS;
-- SELLING THE PLANT TO ANOTHER AUTO MANUFACTURER;
-- CONVERTING THE PLANT TO ANOTHER INDUSTRIAL USE (THE
SICILIAN REGIONAL PRESIDENT HAS SUGGESTED A CONTAINER
TERMINAL, THOUGH IT IS DIFFICULT TO SEE SUCH A FACILITY
EMPLOYING SIMILAR NUMBERS OF WORKERS).


9. (U) THE GOVERNMENT HAS SEVERAL TOOLS TO PROMOTE AND
ACHIEVE ANY OF THESE ALTERNATIVES. THE FIRST IS A SPECIAL
DEVELOPMENT FUND FOR SOUTHERN ITALY, WHICH THE GOVERNMENT
CAN DISPENSE TO OFFSET DEVELOPMENT COSTS (TO RETOOL THE
PLANT OR HELP FINANCE NEW MANUFACTURING ON THE SITE, FOR
EXAMPLE). IT MAY ALSO EMPLOY A VARIETY OF DIFFERENT ACCORDS
WHICH PROVIDE, WITH THE AGREEMENT OF LABOR, SPECIAL TERMS OF
EMPLOYMENT (FOR EXAMPLE, WAGE REDUCTIONS OR INCREASED SHIFT
WORK); IN ESSENCE THESE ACCORDS CARVE OUT EXCEPTIONS TO THE
NATIONAL LABOR CONTRACTS, OFFERING EMPLOYERS BETTER TERMS IN
EXCHANGE FOR CREATING JOBS IN HIGH-UNEMPLOYMENT AREAS.


10. (U) IT'S UNCLEAR WHICH OF THESE REMEDIES, IF ANY, THE
GOVERNMENT WILL CHOOSE TO EMPLOY. THE MOST LIKELY SCENARIO
IS A PROMPT DECLARATION OF THE REQUIRED "STATE OF
UNCLASSIFIED

PAGE 04 ROME 05750 02 OF 02 271251Z
EMERGENCY," AND COMMENCEMENT OF THE SPECIAL UNEMPLOYMENT
BENEFITS IN EARLY DECEMBER (WHICH SHOULD ALLOW FIAT TO BEGIN
REALIZING THE COST SAVINGS IT NEEDS TO MEET ITS LENDORS'
TERMS),FOLLOWED BY MORE LENGTHY NEGOTIATIONS TO DETERMINE
THE PLANT'S FUTURE.


11. (SBU) COMMENT: WE SHARE ONE CONTACT'S VIEW THAT THE
INTENSE FOCUS ON THE TERMINI IMERESE PLANTS SAYS A GREAT
DEAL ABOUT HOW ITALIANS VIEW -- OR CHOOSE NOT TO VIEW --
SOME OF THE UNCOMFORTABLE REALITIES OF THEIR CHANGING
ECONOMY AND LABOR MARKET. "THERE HAS BEEN INTENSE PRESS
COVERAGE OF WHAT AMOUNTS TO 6,000 JOBS, AND VIRTUALLY NONE
ON THE REGULARIZATION (UNDER WHICH 700,000 PREVIOUSLY
ILLEGAL IMMIGRANTS RECEIVED LEGAL STATUS)," HE NOTED.
PERHAPS THAT'S BECAUSE MOST OF THE IMMIGRANTS ARE ALREADY
FIXTURES OF LOCAL ECONOMIES IN NORTHERN AND CENTRAL ITALY, A
PHENOMENON MANY HERE WOULD PREFER NOT TO ACKNOWLEDGE. MANY
NORTHERN ITALIANS APPEAR ALREADY TO HAVE ACCEPTED THAT A
DIFFERENT FIAT -- LEANER, PERHAPS MEANER AND NO LONGER
LOCALLY-OWNED -- WILL EMERGE FROM THIS RESTRUCTURING
PROCESS. THEIR SOUTHERN COMPATRIOTS, WITH FEWER ECONOMIC
OPTIONS, ARE MUCH MORE FOCUSED ON THE IMMEDIATE
CONSEQUENCES.
SEMBLER

UNCLASSIFIED

>
2002ROME05750 - Classification: UNCLASSIFIED