Fiat Signs Accord with Most Unions on Pomigliano, One Remains Outstanding

Fiat has signed a new agreement on working conditions with four out of the five unions represented at the Pomigliano d'Arco plant that should see substantial investment take place here and would herald the return of the production of its Panda. Dow Jones International News has reported that the agreement was signed on Tuesday (15 June) with the FIM, UILM, FISMIC and UGL unions, and that this agreement would be put to the vote of its membership at the plant on 22 June. Antonio D'Anolfo, an official for the UGL union told the ANSA news agency that "It's a positive agreement. We have reached an objective of vital importance: for the first time in history, we succeeded in bringing back a car to Italy."

Despite the agreement being signed, the outstanding FIOM-CGIL union has remained unmoved in its rally against the new working conditions that Fiat has asked for. The FIOM's National Secretary Giorgio Cremaschi told Italian radio that "our position is very clear, we do not believe that rights can be sacrificed to resolve a crisis," before adding "We will oppose this even if the workers vote to approve it." He stated "Should workers vote to increase the number of shifts at a factory, even if this means more work, we would accept this because the national contract foresees it," but said that "if workers are asked to give up their right to strike or change regulations regarding their safety, then we will oppose this. Such rights cannot be the subject of a referendum vote in a single factory."

The leader of the CGIL faction, Guglielmo Epifani went further in an interview in La Repubblica, telling the newspaper that CEO Sergio Marchionne "can't trade rights for jobs." He said, "there are conditions which present very serious problems. These include those regarding illness coverage and limits to the right to strike. We have consulted leading legal experts who have told us that not only are these clauses illegitimate but they are also unconstitutional". The senior figure went on to say "Thus our reservations are well-founded. In court the accord would not hold up." Epifani also said that Marchionne's threatened "Plan B" would be "a defeat for him."

However, the leader of the CISL Raffaele Bonanni mounted a backlash against the FIOM-CGIL, telling ANSA that it is "lying." He stated "The rules in the national contract are all safeguarded. What the FIOM has been saying are all lies and I appeal to the CGIL's sense of responsibility." The official added "I respect Epifani's intellectual honesty and hope he does not get blinded by the smokescreen FIOM is trying to create in order to mislead the media and once again hide its own aversion to innovation." Bonnani said that the most important thing that could come out of this agreement is "to invest in Italy and above all to send a message that our country is open to investment. Our greatest risk is that Fiat decides to invest not in Italy but in Serbia, Poland or Detroit [United States]".

As the FIOM-CGIL's abstention from the agreement continued, the Italian government remained positive that an agreement would take place. The country's labour and welfare minister Maurizio Sacconi was reported by Reuters as saying "I am and remain optimistic. I am convinced that all conditions are in place, better if formally signed by all, to make the investment and give the car industry and Southern Italy a future."

Outlook and Implications

The agreement that has been signed by the majority of the unions represented at the Pomigliano d'Arco plant is certainly one more step towards the 700 million euro (US$858.7 million) of investment being made at the facility. However, Marchionne has already said that no guarantee of the return of Panda production to the country would be made until he had assurances from all five unions (see Italy: 14 June 2010: Fiat CEO Casts Doubt over Pomigliano Plant's Future Despite Majority Union Backing). There have been reports stating that the automaker could make some changes to the agreement to appease the FIOM-CGIL, and a spokesperson for the union confirmed this with Just-auto yesterday. However, given what has taken place in the last day this seems not to have been agreeable if this was the case. With the terms that have been brought to the table by Fiat having being agreed by others, it could be that the union is taking this stance as an act of posturing, particularly as they are aware as to how important the plant is to the economic situation in the area surrounding the facility. Further to this, the investment could also bring further jobs to the region, given the increased output from the supply sector that will be required by lifting production output of the plant from less than 50,000 units per annum (upa) in 2009 to around 250,000 upa by 2014, as well as lifting capacity utilisation to around 90%.

There are also the wider implications. Fiat Group Automobiles has five plants in the country (discounting Termini Imerese in Sicily which is set to be closed), and has also recently acquired Bertone's old facility in Turin. As part of Fiat's strategic plan for the next five years it is set to invest 20 billion euro in the country, and any problems at this early stage could result in a change that could see some investments made elsewhere for fear that they would encounter similar problems. There is also the effect that this would have on those companies which may have been considering setting up a site in the south of the country. Unlike the north, this area has always struggled to attract investment, and any has depended on the subsidies from the local government. With militant unions and a seemingly unwilling workforce, there will be even less reason to want to invest any money in future. With this in mind, there is every reason for the union to return to the table for the sake of not just those it represents, but also those it could represent in future. We will also see an indication of the union membership's feelings towards these new conditions when a vote on the agreement for the four which have agreed with Fiat takes place next week. If no agreement is reached by the FIOM-CGIL and Fiat by then, a positive result could put further pressure on the union to back down prior to the strike that it has announced will take place on 25 June.