Fiat Group CEO Sergio Marchionne’s key productivity deal won narrow backing from workers of the historic Mirafiori plant in Turin, with 54% of them voting in favor of the groundbreaking contract that limits strikes and absenteeism in exchange for investment.
The agreement enables the automaker to start building Jeep models in Italy and it’s also considered as a crucial step in Alfa Romeo’s U.S. launch. The deal was fiercely contested by a more hard-line Italian union, which threatened the deal with strikes. Fiat said last week that it’s ready to pull out altogether from the country if an understanding is not reached.
However, the positive outcome means that Fiat and Chrysler can go ahead with their €1 billion euro ($1.32 billion) joint-venture, with 60% of the investment to be covered by Fiat which wants to build around 150,000 Alfa models a year at the plant. Chrysler will provide the rest in order to get an annual quota of about 100,000 units of the next generation Jeep Compass/Patriot, due to launch in 2013.
Aside from being the catalyst for further development, the new labor contract was also necessary if the Fiat Group was to improve its productivity.
In 2009, Mirafiori workers built 178,000 cars, less than a third of the 600,000 vehicles their Polish counterparts of the Tychy plant managed, with both factories employing roughly the same number of workers. That means productivity at Mirafiori averaged 30 cars per employee a year, compared with almost 100 at Tychy.
It’s clear that this is “an industrial scheme which needs to be reformed”, said Gianluca Spina, dean of the business school at Milan's Polytechnic, before the referendum result was announced.
While Fiat Chairman John Elkann said that “controversies and contrasting positions” have to be put aside and future challenges faced in “a constructive manner”, CEO Sergio Marchionne issued a much more aggressive statement, heavily criticizing the opposing union. The full statement is available below.
Statement from Fiat CEO, Sergio Marchionne
We are pleased that the majority of workers at Mirafiori have understood Fiat’s commitment to transform that plant into one of international standing. We are pleased because their vote demonstrates their confidence in themselves and their future.
They have chosen not only to say “yes” to a new opportunity for Mirafiori, the opportunity to work and compete with the best. They have also chosen to take their destiny into their own hands, to take an historic step and become the architects of something new and important.
In a country such as Italy, which has always been tied to the past and reluctant to change – and yesterday’s referendum was in part a demonstration of that – those who voted yes showed vision.
Their vote represents a desire to achieve rather than being resigned to decline. It represents a courage to overcome the inaction of those who just talk and expect things to happen.
I have always been extremely proud of what Mirafiori represents for Fiat, of its role as custodian of our Group’s and our nation’s industrial heritage, and of the capability it has always demonstrated.
Mirafiori and those who work there did not give up when, in 2004, many were predicting the plant would close. Together we brought the plant back from the brink of despair, giving it back its dignity and future.
The majority of our workers have not allowed themselves to be conditioned by the many accusations and attacks of those that sought to gamble with their future. They have chosen instead to commit themselves, to dedicate their abilities and passion to making a difference. This is the best response to the lies and provocations of recent months.
By saying “yes” to the agreement, they have closed the door on extremism, that creates nothing but chaos, and they have opened the door to the future, to the privilege of transforming Mirafiori into a factory of excellence.
I hope that those who voted no, putting aside their ideologies and preconceived notions, will realize the importance of the agreement in safeguarding the future of all workers.
The plan for the Mirafiori plant is very ambitious. The company to be created in partnership between Fiat and Chrysler will enable establishment of a new platform at Mirafiori for the construction of large SUVs for distribution under both the Jeep and Alfa Romeo brands worldwide, including in the United States. This will allow us to achieve very high production levels, of up to 280,000 vehicles per year, and also open the way for the potential creation of jobs.The sole purpose of the agreement that serves as the basis for achieving all of this – the same agreement that has been at the center of so much conflict – is to ensure the plant works more effectively, without infringing on any rights.
It doesn’t penalize workers in any way. Rather, it maintains unchanged all conditions of the national collective agreement which are in their favor, as well as all those conditions which Fiat has over time extended to its workers directly. The work organization is, in fact, the same that has been experimented with at Mirafiori for more than 2 years and takes account of the level of fatigue associated with the type of work performed. The introduction of 18 shifts includes a Saturday evening shift which is the most problematic. Accordingly, it has been agreed that, even though workers are still compensated, it will only be activated if there is a real need and, in any case, will be treated as overtime. Full utilization of the 18 shifts would also enable an increase in annual pay of around €3,500 per year.
We have also taken account of other needs relating to overtime. As employees cannot always be available, we have instituted the option of substituting up to 20% of those workers who are unable to work overtime. By revising the system of breaks, reducing them to 30 minutes and monetizing the difference, we have also brought ourselves into line with standard practice at factories throughout the rest of Europe and the world. For sick leave, in relation to which many absurd things have been said, the agreement simply provides for monitoring of the rate of absenteeism, to avoid potential abuse. A commission operated jointly with trade unions will evaluate, on an individual basis, cases where the company is not liable to cover absences.
The purpose of this clause is to call attention to the problem, by provoking individual conscience and sense of responsibility, and I hope that it is never invoked.
Finally, we have simplified the compensation structure which will make pay-slips easier to read and also have a positive effect in the case of overtime or shift work, with supplements being applied to basic pay, which is higher than current minimum contractual values.
As the majority of our workers have understood, there is nothing exceptional in the Mirafiori agreement, other than the opportunity to relaunch the plant and give it the profile it deserves internationally. The criticisms leveled at us have been unjust and often frustrating. When you see your efforts being misrepresented, you sometimes ask yourself if it is really worth it.
The majority of workers at Mirafiori have given the clear message that commitment to building something better is always worthwhile.
