The stories cite the usual anonymous sources saying Fiat is attracted by the U.S. market financial advantages and noting Chrysler is currently the component bringing home the majority of the bacon.
Pardon us if we don’t get excited: there are two insiders who have repeatedly said that the old Lingotto factory in Turin might not be the home base of Italy’s largest private employer forever. Or even for very much longer.
One of these is Sergio Marchionne, Fiat’s CEO; the other is John Elkann, Agnelli family scion and chairman of the board.
For at least the past three years, Marchionne has been saying Fiat could move and has mentioned both The Hague and the United States as possible destinations. When Marchionne first mentioned that the company might leave Italy, then-Prime Minister Silvio Berlusconi took time off from his scandals long enough to summon Marchionne to Rome for a Saturday dressing-down. The talk subsided somewhat once pro-business Mario Monti replaced Berlusconi, but the state of flux that seems to have replaced that which previously passed for an Italian government has Marchionne looking westward again.
To Marchionne’s credit, he has repeatedly offered to keep Fiat in Italy. He has even transferred production from a very efficient plant in Poland to a plant in Italy to secure Italian jobs. Most recently, he said he would divert some production from the NAFTA region, where some Chrysler plants are running at or near full capacity, to Italy if the government would work with Fiat on the cost of exports. Most of the major labor unions have adopted new contracts but the Italian government seems to believe Fiat will stay the course merely because it has done so for 114 years and all this talk of relocating is political posturing to get financial concessions from a cash-strapped government.
John Elkann is normally more diplomatic than Marchionne, who has a penchant for blunt, if well-mannered, speaking. However, he has made no secret of his determination to put the success of the business ahead of the 114-year history of Fiat in Turin. In 2011, at the Meeting in Rimini, an annual cultural event, Elkann told reporters, “Fiat will continue to make cars; you have to see if Italy wants to make cars and if there are conditions for making cars like Fiat wants to do.”
Unfortunately, Italian politics have, if anything, gotten worse. The results of the elections earlier this year have so far failed to produce a prime minister who can put together a coalition to run the government. A lot of hopes are riding on Enrico Letta who was appointed by Italian President Giorgio Naplitano to build a government and get the country back on track.
Speaking of the turmoil, Marchionne was quoted by Italian newspaper Corriere della Sera when he said, “The certainty of running a country is essential for any industrial reality. I hope they hurry to restore credibility to Italy. Beyond the crisis, Italy is in a very difficult situation: without a prime minister and with the departure of Giorgio Napolitano, whose work in the seven past years inspires my enormous respect, there are no references.”
The signs of a potential, if not a pending move, are there. In April of 2012, Chrysler leased space in the old Dime Bank building in Detroit and had the structure renamed “Chrysler House.” The company has just two floors at this time, but there’s little doubt room could be found for Fiat’s corporate staff.
When Fiat Industrial and CNH complete their merger in the third quarter of this year, the new company will be based in the Netherlands. Marchionne, who is chairman of Fiat Industrial, hopes to have both U.S. and Italian listings for the company. Some analysts believe this could be a template for the structure of the merged Fiat automotive group and Chrysler. However, all the signs recently would indicate Marchionne and Elkann would be perfectly happy with just the New York listing and a Detroit address, especially if the European vehicle market doesn’t show signs of turning a corner.
No one is saying Fiat will close up shop and leave Italy entirely; the dislocation and financial impact of the loss of so many jobs could cripple the Italian economy. In addition, Fiat has already invested hundreds of millions into upgrading Italian plants and maintains that it plans to invest even more. However, even the loss of the headquarters would mean loss of significant tax revenues and as well as a blow to Italian pride.
Prime Minister Letta would do well to recall John Elkann’s comments at Rimini. Fiat will continue to make cars; it’s up to the Italian government whether or not they will be made in Italy.