Auto Workers Strike Ahead of GM- Fiat Meeting

ROME December 13, 2004; The AP reported that some Fiat autoworkers struck for two hours Monday, a day ahead of a top-executive meeting that could determine whether Fiat SPA insists on an option to force General Motors Corp. to buy the struggling Italian auto group.

The strike at the Mirafiori plant in Turin, where Fiat is based, was called to protest turnaround plans by Fiat Auto chief executive Herbert Demel, the Italian news agency ANSA reported from that northern city.

Demel has not called for any general job cuts or factory closures, but earlier this fall he urged more efficient use of Fiat's production facilities.

Fiat Group's chief executive, Sergio Marchionne, is scheduled to meet with GM chairman and chief executive, Rick Wagoner, in Zurich, Switzerland, on Tuesday.

Italian news reports over the weekend said Fiat was considering insisting that GM, the world's largest automaker, honor the so-called "put option," part of a 2000 deal by which Fiat has the right to sell the group's auto business to the U.S. automaker.

Under that deal, GM bought 20 percent of Fiat Auto and agreed to an option giving Fiat the possibility of selling the remaining stake if it so decides. The share size was later diluted to 10 percent after Fiat initiated a capital increase in 2003 and GM didn't participate.

The Detroit-based automaker has expressed doubts over the possibility of Fiat exercising the option, and the two companies last year agreed to postpone the trigger by one year to January 2005.

The Italian news reports said that GM might balk at going ahead with the option, reportedly ready to argue that some actions taken by the Italians since the 2000 deal effectively nullify the agreement.

A Fiat spokesman in Turin declined to give details about Tuesday' meeting.

After years of losses, Italy's largest private-sector employer is trying for a turnaround for its auto division. In September, Fiat SPA named 24 new managers for Fiat Auto, with power concentrated in Demel's hands in hopes of achieving quick decision-making.

CEO Marchionne is himself a newcomer after decades of top management dominated by Agnelli family members and close associates.

An Agnelli family member, Lapo Elkann, was asked Monday if the carmaker is for sale.

"I don't think so, I work there," Elkann quipped to reporters as he arrived for a meeting of the Agnelli family trust in Turin. Elkann, grandson of late longtime Fiat chairman Giovanni Agnelli, is in charge of marketing at Fiat Auto's three main brands.

On Friday, Fiat chairman Luca Cordero di Montezemolo told group managers that 2005 will be "even more insidious" than this year. He cited the effect of the strong euro on some export markets, Italy's sluggish economy and fierce competition. Montezemolo said new car models starting next spring were a hopeful factor.