Fiat announced 1,500 layoffs at its Polish operations to reduce production, as demand is plummeting in Europe.
Fiat forecasts losses of 700 million euros ($903 million) in Europe this year. The cuts will come at the Tychy plant as well as from sales staff in the country, Fiat said in a statement on Friday. Fiat aims to produce fewer than 350,000 cars in Poland this year and less than 300,000 next year as the European auto market is set to hit a 17-year low in 2012.
In 2009, Fiat manufactured 600,000 cars at the Tychy factory. According to Fiat CEO Sergio Marchionne, demand in the region won’t recover earlier than 2014. Research firm IHS Automotive says about 26 percent of European auto production capacity is surplus to the current demand.
The Tychy plant employs 5,800 people who build the Lancia Ypsilon, the Fiat 500, the previous-generation Fiat Panda and the Ford Ka. Fiat announced the plant will stop making the Panda in the coming months.
Marchionne said in October that “everything is on the table” to raise capital to buy the Chrysler stake Fiat doesn’t already own. Fiat doesn’t plan new layoffs in Italy after shutting the Sicily plant in 2011. The Italian carmaker hopes to reach the break-even point in Europe in 2015 at the soonest.