Analysis: Fiat's Marchionne fights for new car industry rules

Fiat (FIA.MI) boss Sergio Marchionne is heading for a showdown with powerful industrial lobbies as he pushes for more flexible work practices that could lead to a broader shakeup of rules in the Italian car industry.

Marchionne fears that opposition by one of five unions at Fiat's underperforming plant at Pomigliano d'Arco near Naples could undermine a landmark productivity deal and has demanded an agreement before the end of September.

If no deal can be found, he has threatened to walk out of Confindustria, the employers lobby that has represented big business in Italy for the past 100 years, a move tantamount to pulling out of the system underpinning Italian labor relations.

"Fiat is the number one industrial company in Italy and other companies would soon follow," said Giuliano Cazzola, vice president of the parliamentary labor committee.

A new company has already been created to run the Pomigliano plant that will be outside Confindustria and therefore not subject to the national contract rules that currently apply.

But losing Fiat itself would emasculate Confindustria, tear a hole in a system that has been praised for its stability in the economic crisis and could foster a profusion of local deals.

RELIABILITY

The charismatic Marchionne, a Canadian-Italian management star who has been instrumental in turning around both Fiat and the ailing U.S. giant Chrysler, has said the issue could decide Fiat's future in Italy.

"For Fiat, it is key to restructure the Italian production base and make it efficient, otherwise should Marchionne leave, the whole recovery would collapse very soon," said Juergen Pieper, an analyst at Metzler Equities in Frankfurt.

"To make Fiat really competitive, it is really important to get new working conditions since Italy is not a cheap place to produce cars and Fiat right now is too dependent on the energy and the motivation of its CEO."

Recent figures, which showed new car sales in Italy falling 19.2 percent in June, underline the challenge facing an industry that is being forced into a radical rethink of the way it works.

"The only thing we have asked for is to have more reliability inside the factory," Marchionne wrote last month in an article in La Stampa, a Turin daily owned by Fiat.

Although four out of five trade unions and 62 percent of the 4,800 employees have approved the plan, which introduces a new Saturday night shift and limits the right to strike, FIOM-CGIL, Italy's main engineering sector union has refused to sign it.

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