Tuesday May 5, 09:59 PM
Fiat's grand plans hit resistance
By Simon Sturdee
BERLIN (AFP) - A drive by Italy's Fiat (Milan: F.MI - news) to create a global car giant from the remnants of General Motors (NYSE: GM - news) in Europe and Chrysler hit the skids on Tuesday as fierce resistance emerged on both sides of the Atlantic.
Unions expressed fears that Fiat head Sergio Marchionne would close plants and slash thousands of jobs if what he calls his "marriage made in heaven" to form the world's second-biggest automaker after Toyota becomes reality.
A report in Wednesday's edition of the Germany daily Frankfurter Allgemeine Zeitung (FAZ) appeared to confirm their fears.
Citing a sensitive internal document, it said Fiat would want to cut 18,000 jobs, closing or scaling down 10 factories in Europe if it closed the Opel/GM deal.
Worst hit would be GM's Vauxhall factories in Britain, an Opel factory in Belgium and factories in Italy, said the paper, citing "Project Football," a leaked Fiat document marked "highly confidential" and dated April 3.
Earlier, Marchionne told the German daily Bild that he would not close any factories in Germany, where GM Europe employs about half of its 56,000 European workers at Opel.
But he added: "Opel can never make money in its current size, and if you don't make money you won't survive... The workforce of course has to be reduced. No one can change that."
In Britain, the head of the country's main carworkers' union Unite had already said he feared that Vauxhall -- part of GM Europe, employing over 5,000 workers in Britain -- could be sacrificed if Marchionne got his way.
"Quite frankly this move sends shivers down my spine... These proposals are not so much a sale as a giveaway," Unite joint general secretary Tony Woodley said.
Unions in Italy were also unhappy. Fiat is by far the country's biggest private sector employer, paying the wages of more than 82,000 people including 30,000 in its auto division at five assembly plants.
Fresh from securing a 20-percent stake in the bankrupt Chrysler last week, Marchionne also wanted to snap up GM's European business to create a new giant making between six and seven million vehicles every year.
GM is expected by analysts to follow fellow Detroit (DETROIT.SN - news) "Big Three" behemoth Chrysler into bankruptcy soon and has been trying to offload some of its European operations, based on Opel and Vauxhall, for some time.
Industry sources told AFP on Tuesday that Fiat was also looking at picking up GM's operations in Latin America where the US firm sold 1.2 million vehicles last year.
A spokesman for GM's unit Saab (Stockholm: SAABB.ST - news) said however that Fiat was not among 10 parties from North America, Europe and Asia seeking to acquire the Swedish firm.
On Monday a smiling Marchionne was in Berlin touting his plans to ministers in the hope that the German government would help the takeover become reality.
But Economy Minister Karl-Theodor zu Guttenberg said that although Fiat's plans were "interesting" he needed more details and that there were other interested parties.
Hendrik Hering, economy minister in the state of Rhineland-Palatinate where Opel employs 3,000 people at an engine factory that might not form part of Marchionne's vision, went further, calling Fiat's scheme "unacceptable."
German Chancellor Angela Merkel's government has reportedly drawn up a 14-point list of criteria that any buyer of GM Europe has to fulfil before Berlin opens its chequebook.
Frank Schwope, auto analyst at NordLB bank, said that Fiat also has its work cut out winning over GM executives in Detroit. "GM, at the most, will allow Fiat to take a minority stake in Opel," he told AFP.
Fiat is also not the only show in town.
The Financial Times reported that as many as six others including sovereign wealth funds from Abu Dhabi and Singapore and three private equity groups were also eyeing GM Europe.
Another possible suitor is Canadian car parts giant Magna, teaming up with Russian automaker GAZ, controlled by billionaire Oleg Deripaska, and Russia's biggest lender Sberbank.
Marchionne also faces a group of disgruntled Chrysler creditors who on Monday launched a bid to block the US firm's "illegal" and "fatally flawed" restructuring.
Under a plan announced on Thursday by US President Barack Obama, Chrysler aims for a "surgical" bankruptcy to wipe out a portion of its debts, allowing the creation of a new firm owned by unions, governments -- and Fiat.
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