Fiat idles Italian plants as workers paid to stay home
Fiat has kept thousands of Italian autoworkers on state-backed paid leave, idling factories for months as car sales slump across Europe.
Fiat has left thousands of its Italian autoworkers at home on paid leave as it idles five car factories for months at a time, using a state-backed programme to avoid mass redundancies while European car sales remain at record lows.
The Italian carmaker, which closed its Sicilian factory in 2011, has since kept its remaining domestic plants open in name but operating well below capacity. Workers assigned to these lines have spent much of the past two years at home, paid through Italy’s state-run scheme for employees on forced leave. Fiat produced fewer than 50,000 cars in Italy last year, far short of the volume needed to keep all 5,500 assembly line workers fully employed.
State support keeps jobs on hold
Rather than following the example of American carmakers, which implemented sweeping job cuts and plant closures after the 2008 financial crisis, Fiat has relied on Italy’s social safety net to keep its workforce attached to the company. The arrangement allows workers to receive a portion of their pay while production lines are idle, with the expectation that normal output could resume if demand recovers.
The approach has avoided further plant closures since the 2011 shutdown in Sicily, but it leaves thousands of workers in limbo. Many have worked only sporadically over the last two years, as the company adapts to a market where less than half of European car factories are running at the 75% capacity typically needed to break even, according to consultant estimates.
Fiat’s strategy and the wider European context
Fiat’s decision to avoid mass layoffs stands in contrast to moves by some competitors, but the company has not been alone in facing severe overcapacity. European car sales have fallen to their lowest levels in decades, leaving many factories across the region operating well below break-even point. According to industry analysts, fewer than half of Europe’s auto plants are running at profitable levels, and job security for autoworkers remains uncertain across the sector.
For Fiat, the use of state-backed leave has bought time to restructure without further inflaming tensions with unions or the Italian government. The company has so far avoided the kind of large-scale closures that have hit rivals, but the long-term future of its Italian manufacturing base remains tied to a recovery in demand. For more on Fiat’s struggle to maintain its Italian operations, seeFiat Has to Make Sacrifices to Stay in Italy.
