Italian manufacturer Fiat SpA has taken major steps to cut costs. Chief executive Roberto Testore has resigned, 6 000 jobs will be cut and factories will be closed.
Italian manufacturer Fiat SpA has taken major steps to cut costs. Chief executive Roberto Testore has resigned, 6 000 jobs will be cut and factories will be closed.
Roberto Testore, (pictured) who took charge in 1996, will be replaced by Giancarlo Boschetti. Boschetti is the current head of Fiat’s Iveco truck unit and has been with the manufacturer since 1964.
Testore has invested huge amounts of money in new models. Last year Fiat said it would spend about R120 billion on 19 new models by 2005. But the company has been hit hard by falling sales, which forced it to reduce production in October and lay off 20 000 employees temporarily. Analysts expect Fiat to record an operating loss of R19,6 billion.
Fiat Auto has lost more than R13 billion over the past three years. The Italian company is trying to raise R34 billion by selling new shares and bonds to reduce debt. It will sell assets worth about R19 billion in 2002.
The job cuts, which represent three per cent of its workforce, will be outside Italy. Fiat will close or restructure 18 factories by 2004 at a cost of R712 billion. Two of these plants are in Italy and additional closures may take place in Europe, North America.
Fiat said it would also idle 4 000 staff for three days in January to cut production of models such as the Marea and Multipla by 1 800 units.
In another change, its Fiat Auto SpA unit, which makes Alfa Romeo and Lancia models as well as Fiat-branded vehicles, will be split into four divisions: Fiat/Lancia, Alfa Romeo, International Development and Service.
Fiat also said it was reducing its activities in Argentina, which has been hit hard by an economic crisis. Iveco, the Fiat subsidiary, which makes commercial vehicles and diesel engines, will move its operations to Brazil from Argentina.
Fiat said the restructuring would not affect its alliance with General Motors, who has a 20 per cent of the Fiat Auto division.