Fiat plans big cost cuts, product launches

October 9, 2002 ROME, Reuteurs reported that Italian carmaker Fiat is planning a major cost cutting programme as well as a relaunch of its product line in an effort to return the company to profit, the Industry Ministry said in a statement on Tuesday.

The statement said Fiat CEO Gabriele Galateri di Genola met Industry Minister Antonio Marzano earlier in the day to present company plans to overcome the current crisis.

"The company's restructuring programme entails an initial phase of strong reduction in costs and the relaunch of its product range," the statement said.

"The aim is to reposition the company on the market and relaunch demand in order to reactivate a positive cycle and enable the company to hook up to the general national and international economic recovery," it added.

The industrial plan is expected to involve labour cuts, with unions warning that 5,000 jobs are at risk. Marzano urged the company to consider "with great attention" the problems caused by any layoffs.

The Industry Ministry gave no details of any possible job losses saying Fiat would address the issue later.

Turin-based Fiat is the country's largest private sector employer and the government is anxious to avoid a major round of redundancies, and the probable union unrest that would spark.

Fiat shares were down 3.5 percent to 9.09 euros, underperforming the DJ Stoxx Index of European car stocks, which was 2.1 percent lower, on what some traders said was concern that government pressure could cause Fiat to hold off on some of the job cuts.

"The government considers that the situation (at Fiat) is serious and proposes following developments attentively," Tuesday's ministerial statement said.

Fiat Auto expects to lose more than one billion euros this year, with its important domestic market share sinking to a record low of under 29 percent in September -- despite a broader market recovery.