Fiat Freezes Investments in Italy, After the Van Investment With Peugeot image

Fiat officially announced the 700-million euro deal with Peugeot for van plant in Italy, but said that it will suspend further investments in the region until labor laws will become clearer.

Fiat CEO Sergio Marchionne made the announcement at the Sevel Val di Sangro plant, which he plans to modernize and sell the van on North America. The decision to suspend further investment in Italy came after a court ruling, which cast doubt upon the validity of a labor deal recently reached with labor unions in exchange for further investments in Italy.

“Before going ahead with any other initiative in Italy, we need to be able to count on…a clear and reliable regulatory framework,” he said.

The court ruling says that “a union has the right to be present in the workplace even if it hadn’t signed the labor contract.” The ruling was gladly accepted by Fiom-Cgil, the union which has repeatedly filed lawsuits against the Italian automaker. The union accused Fiat of violating employees’ rights under the labor deal reached at its Italian plants.

After the union refused to sign the deal, the automaker banned it from having a presence in those facilities. Marchionne said that the 700 million investment with Peugeot will be the last one until a legal issue will be reached regarding this issue.