Fiat to Withdraw From Italy’s Leading Employers’ Group

The decision by Fiat, the country’s largest manufacturer, comes a little more than a week after the employers’ group, Confindustria, signed an agreement with labor unions that aimed to weaken national legislation that would liberalize the labor market by allowing employers to negotiate contracts with the workers at individual factories rather than be tied to national contracts.

Sergio Marchionne, the chief executive of Fiat, has made being able to dismiss employees in Italy more easily a key point in his efforts to improve the company’s competitiveness. He has threatened to pull all production out of Italy if Fiat is not allowed to override national contracts and negotiate directly with its workers.

Jean-Claude Trichet, the president of the E.C.B., and Mario Draghi, who will take over leadership of the central bank in November, wrote to Prime Minister Silvio Berlusconi in August outlining the changes necessary for Italy to restore the confidence of investors who were dumping Italian government bonds.

The letter specifically mentioned the need for wages and working conditions to be negotiated by individual companies. The E.C.B. has been buying Italian bonds since August in an effort to shore up the market. Corriere della Sera published the E.C.B. letter last week.

“If Fiat begins to negotiate its own contracts, the company no longer needs Confindustria, which negotiates for employees on a national level,” said Giuseppe Berta, a professor specializing in industrial relations at Bocconi University in Milan. “The move de-legitimizes Confindustria and saps its power.”

Mr. Berlusconi has long championed himself as an economic liberal who would stimulate the Italian economy, yet his government has done little liberalizing and has been unable to get the country out of the economic doldrums that have lasted for the better part of the past decade. Italian government debt is about 120 percent of the gross domestic product.

“Confindustria has supported Berlusconi for years without getting much in return, so in the last year they have moved closer to the opposition and have gone as far as calling for a change in government,” Mr. Berta said.

The new legislation, passed in August, coupled with another agreement signed with labor unions in June, “would have enabled all Italian businesses to compete internationally under conditions that are less disadvantageous in comparison with those of our competitors,” Mr. Marchionne wrote in a letter to Emma Marcegaglia, chairwoman of Confindustria, announcing Fiat’s withdrawal.

The letter, dated Sept. 30 and released Monday, said Fiat’s withdrawal would be effective Jan. 1.

Fiat “cannot afford to operate in Italy in an environment of uncertainty that is so incongruous with the conditions that exist elsewhere in the industrialized world,” the letter said.

Fiat will apply the new provisions passed by the government and will consider collaborating with local and regional organizations that are part of Confindustria, Mr. Marchionne wrote in the letter.

While Mr. Marchionne has been at odds with Ms. Marcegaglia for months, Fiat’s decision was once thought impossible because the carmaker had been a pillar of the employers’ group for years. Gianni Agnelli, for decades the patriarch of the family that has controlled Fiat for a century, was the chairman of Confindustria in the 1970s, and Luca Cordero di Montezemolo, another Fiat chairman, headed Confindustria from 2004 to 2008.

Mr. Marchionne said that quitting Confindustria would not affect the company’s investment plans for Italy. While Fiat confirmed Monday that it would make a sports utility vehicle at its Mirafiori plant in Turin, it pushed the date of the beginning of production back a year, to the second half of 2013. Fiat also pushed back the start of production of a new turbo engine for its Alfa Romeo brand to 2013.

“With overproduction in world car production and with the need to outfit the new production lines, it makes sense for Fiat to take things slowly so they can see where the market is going,” Mr. Berta said.

Article source: http://feeds.nytimes.com/click.phdo?i=85cda3e2d4640676427b9affd1936181