MILAN, Italy — Fiat and Chrysler Chief Executive Officer Sergio Marchionne on Friday proposed a joint venture with Chrysler LLC to build Alfa Romeo and Jeep brand vehicles at Turin’s Mirafiori auto plant.
The proposal to produce Jeep and Alfa Romeos for theEuropean and export markets is the first significant step toward integration in Europe between the Italian and U.S. automakers since Fiat took control of Chrysler with a 20 percent stake in June 2009.
In the U.S., Fiat has introduced the subcompact Fiat 500 and has started to build engines with Fiat technologyat U.S. plants.
Marchionne made the proposal during a meeting with unions in Turin, part of his efforts to reach more flexible work agreements at Italy’s plants as a condition to $26.64 billion in investments planned for Italy.
Fiat said in a statement that Fiat and Chrysler would invest $1.3 billion in the Mirafiori plant, proportional to the volumes produced by each brand. Under the plan, Mirafiori would produce up to 280,000cars a year by 2012, compared with 178,000 last year, more than half for export, especially to North America, Fiat said.
“The consensus of the unions and workers is indispensable to assure the necessary level of competitiveness,” Fiat said at a statement. Fiat is seeking more flexibility in production and work rules.
The plan would help Fiat reach a milestone to raise its share of Chrysler by providing a way to improve Chrysler sales internationally.
Fiat received a 20 percent stake of Chrysler in exchange for clean-burning engine and small-car technology lackingat Chrysler, as well as management prowess. It can raise its stake to 35 percent in 5 percent increments by meeting defined targets, including the introduction of more efficient engine technology, which it is achieving through the launch of the 500, and improving Chrysler sales abroad.
Mirafiori produces Fiatbranded Punto, Idea and Multipla vehicles, the Lancia Musa, and the Alfa Romeo Mito. Fiat already announced that replacements for the Idea and the Musa will be built in Serbia, while the Multipla is being phased out.
Mirafiori employs 5,800workers, a number which could increase.
“This is the plan we wanted,” Fiat union Fismic general manager Roberto Di Maulo said in an interview. “There’s no uncertainty about the future anymore.” He added that his union wants to complete an agreement with Fiat by Christmas.
The plan “keeps the work force,” said Antonio D’Anolfo, national secretary of the Ugl union. “It may lead to new hires.” Information for this article was contributed by Tommaso Ebhardt and Marco Bertacche of Bloomberg News.
Business, Pages 31 on 11/27/2010