FIAT & Chrysler: New labor contract, new right violations

Fiat workers approved last week a revamp of the carmaker’s oldest factory in Italy, clearing the way to implement a venture with Chrysler. 54 percent of employees voted for the investment in the Mirafiori plant in Turin in exchange for measures to limit strikes and curtail absenteeism (94% of the workers took part in the ballot).
FIAT CEO Marchionne needs a majority of the 5,500 employees at the factory to sign off an accord approved by most unions as he seeks to turn around Fiat’s unprofitable Italian operations and revitalize an alliance with Chrysler by sharing production for Jeep sports and Alfa Romeo cars. More importantly, the vote marks a milestone in Italian labor relations.
The CEO had said he may shift production abroad if the plan wasn’t approved. His tough talk has made Mirafiori the most important topic in the country the past two weeks, with daily front-page coverage by major newspapers and prompting commentary from political leaders including Berlusconi.
Fiom Cgil, Fiat’s biggest union which represents 10,000 of the carmaker’s 83,000 workers in Italy, was the only group that didn’t sign the Dec. 23 accord, saying the proposal curtails workers rights and worsens their conditions. Fiom has called a strike for Jan. 28 and said it may take legal action.
According to the Financial Times, productivity at Mirafiori averaged 30 cars per employee a year, compared with almost 100 at Tychy. Fiat’s European carmaking operations could generate a profit of 390 million euros in 2011 if Fiat shifted all production to Serbia and Poland, according to Kristina Church, a London-based analyst at Barclays Capital, who predicts a loss for the business of 855 million euros for this year after a 684 million-euro loss in 2010.
In addition to extra hours, workers would face shorter breaks and postpone lunchtime until the end of a shift. Absentees would risk having their pay withheld and unauthorized strikes face disciplinary action.
In a similar referendum last June, about 60 percent of workers at Pomigliano near Naples, Fiat’s least productive factory, supported a reorganization plan. Is it OK to trade off rights for the promise of higher productivity (or the threat of divestment or relocation)?