Italy's car manufacturing:Time to change - EIU
With Italy's car market in freefall, Fiat is desperate to make cuts in capacity. The Economist Intellegence Unit asks whether politicians and unions allow that?
Source : https://www.marocafrik.com/english/Italy-s-car-man...
Fiat announced at the beginning of August that its was halting further invesment in its home market in Italy which prompted calls for state intervention to protect jobs. Fiat's chief executive Sergio Marchionne stressed the need to cut overheads because of saturation and over capacity in Europe's car markets as sales fall below 2008 levels.
Fiat and other European car makers are heavily reliant on their homemarkets for sales.Fiat's first half results were only saved by good results from its US subsiduary Chrysler. Even so, Fiat lost €246m (US$304m) in the second quarter, with revenue down 7.5% to €9.2bn.New sales in Italy plummeted more than 20% year on year in July, with 2012 new deliveries on track to hit the lowest level since 1979, the EIU says. There are fears that Fiat maycut back investment permanently.
National unemployment rising and Fiat employing over 60,000 people at its five Italian plants. Fiat like other manufacturers in Europe faced with the same situation is contemplating plant closures.Peugeot-Citroen plans to shut a factory in France, after recently announcing a first-half loss of €819m. The EIU says that two US car makers may close their european operations. Ford and General motor's subsiduary Opel are both expected to loose US $1 billion each this year. Opel has shut a plant in Belgium and is planning to close one in Germany.
The EIU says that these closures are not enough and will require more cuts. European employment laws make sacking employees costly and because of over capacity european manufacturers have the capacity to produce 2 million cars more than they can sell. A company advising on restructuring suugests that it may need the closure of 12 plants to regulate the problem. It seems that Francois Hollande will have to accept the closure of Peugeot's Aulnay factory near Paris. European governments do not have the funds to sustain employment in artificially high manufacturing, the situation the EIU concludes is not sustainable and the policy will have to change.
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Fiat and other European car makers are heavily reliant on their homemarkets for sales.Fiat's first half results were only saved by good results from its US subsiduary Chrysler. Even so, Fiat lost €246m (US$304m) in the second quarter, with revenue down 7.5% to €9.2bn.New sales in Italy plummeted more than 20% year on year in July, with 2012 new deliveries on track to hit the lowest level since 1979, the EIU says. There are fears that Fiat maycut back investment permanently.
National unemployment rising and Fiat employing over 60,000 people at its five Italian plants. Fiat like other manufacturers in Europe faced with the same situation is contemplating plant closures.Peugeot-Citroen plans to shut a factory in France, after recently announcing a first-half loss of €819m. The EIU says that two US car makers may close their european operations. Ford and General motor's subsiduary Opel are both expected to loose US $1 billion each this year. Opel has shut a plant in Belgium and is planning to close one in Germany.
The EIU says that these closures are not enough and will require more cuts. European employment laws make sacking employees costly and because of over capacity european manufacturers have the capacity to produce 2 million cars more than they can sell. A company advising on restructuring suugests that it may need the closure of 12 plants to regulate the problem. It seems that Francois Hollande will have to accept the closure of Peugeot's Aulnay factory near Paris. European governments do not have the funds to sustain employment in artificially high manufacturing, the situation the EIU concludes is not sustainable and the policy will have to change.
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Source : https://www.marocafrik.com/english/Italy-s-car-man...