Fiat's Global Gamble Met With Wariness In Turin

Amid the global economic crisis that has pummeled U.S. automakers, one Italian manufacturer sees an opportunity: Fiat is hoping to become a global company making 6 million cars a year.

Fiat Chief Executive Officer Sergio Marchionne has already sealed a deal with Chrysler, and he hopes to do the same with General Motors' European subsidiaries.

Marchionne has global ambitions, but not everyone in Fiat's hometown of Turin is so confident.

The 15,000 workers still employed at the last Fiat plant in the city are worried and tense. Most don't want to talk to reporters. And one who did would give only his first name, Giuliano.

"We know that when there's a merger, workers always lose. Fiat's a good product, but the auto industry is changing, and I fear there's not much of a future for workers like us," he says.

Fiat management has imposed a media blackout until merger negotiations in Germany are completed, and even unions are being kept in the dark.

Global Ambitions And Worried Workers

Vittorio De Martino, a top official of the powerful metalworkers union, says his union has "no information whatsoever."

"American unions were active participants in the Chrysler deal; the German unions have also been involved in their talks. We'll get the news only once the deal has been concluded," he says.

De Martino fears that will mean a 10 percent reduction of Fiat's Italian work force.

About 80,000 workers are employed at Fiat's five remaining Italian plants. Production has declined steadily, and the facilities now make just over one-third of the nearly 2 million vehicles Fiat produces annually. The majority come off assembly lines in Brazil, Serbia, Russia, Turkey and elsewhere; the popular Cinquecento model is made in Poland.

For decades, the city of Turin was known as Italy's Detroit: a gray, early-to-bed, one-company town.

Angelo Pezzana, owner of the Luxembourg Bookstore, says the Fiat owners, the Agnelli family, set the tone.

Agnelli has never been a great name like Guggenheim, Rockefeller or Ford, he says.

"They were not at all interested in culture. They never built a museum, nothing. They were industrialists. They built nothing for [Turin] except a big industry, which has its value, too," Pezzana says.

But in recent years, as Fiat went through a serious crisis and production was sent abroad, the city of Turin went through a cultural and architectural revival. Today, its city center — dotted with magnificent 17th and 18th century palaces and squares — is filled with pedestrians and outdoor cafes.

Fiat's Research An Asset

Despite the automaker's production difficulties, Fiat's research and development arm, the CRF, revolutionized the industry with the "common rail," an environmentally friendly diesel engine technology now used by every major European carmaker.

Turin Mayor Sergio Chiamparino says the quality of CRF research persuaded the U.S. administration to back the Fiat-Chrysler deal.

Fiat's research center is flanked by a municipally funded, state-of-the-art technological campus that also has attracted researchers from General Motors.

And the Turin area hosts 5,000 small industrial software firms, aerospace companies and even Europe's biggest motorboat maker.

The concentration of research and technological know-how could be vital to the future of the auto industry and is one of the cards Fiat CEO Marchionne brought to negotiating tables in America and Germany.

A completely new geography of the auto sector is emerging, says Giuseppe Berta, a professor of industrial history. He says Marchionne can count on the transformation of the global car industry and the decline of American auto dominance.

"Marchionne thinks that if he is able to arrive first to organize a new group, he will succeed," he adds.

But it's not yet clear whether this will be enough to make a medium-sized player like Fiat into a global giant of the car world.

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