Fiat Plans to Fire More Managers; GM Won't Help

Fiat's Chief Executive Giuseppe Morchio on Friday refused to be drawn on a report that top managers would be fired in a restructuring plan due to be unveiled at the end of June.

Financial weekly Economy said Morchio would take an axe to Fiat's white-collar workers after cutting about 17,000 blue collars last year, some of them under a temporary layoff scheme. Asked about the cuts, Morchio simply said: "The atmosphere is very good at Fiat and people are highly motivated."

"We have to guarantee the credibility of our forecasts and be able to do more than we say we're going to," Morchio added.

The magazine reported that Morchio's plan would oust Giancarlo Boschetti from the driving seat at Fiat Auto, the core car arm which has dragged the industrial group deep into the red, while Michel de Lambert, CEO of truck unit Iveco, would also go.

Boschetti took over at Fiat Auto in December 2001 and penned a plan to pull into profit by the second half of 2003. In March, he put that target back to 2004 and said the maker of the Punto city car would not hit breakeven in any quarter before that.

"We have done a lot of work (on the new plan) but we still have to clear up many points so I don't think it is right to give you a taster of what it will include," Morchio said.

Morchio, Fiat's fourth CEO in a year, has previously said his plan will be based on cost cuts, research and development and customer care. Chairman Umberto Agnelli has said Fiat will keep as many jobs as needed to make the company efficient.

Fiat's factories are working at less than 70 percent capacity and many analysts say Italy's biggest private employer needs to cut more jobs. That will be hard given the fierce opposition of fiery unionists and the Italian government.

At the same time, General Motors Corp. said today it still does not plan to participate in the 5 billion euro recapitalization of Fiat, but it added that it could change its mind.

Economy reported that GM has officially informed Fiat that it will not participate in a capital increase for Fiat Auto.

GM spokesman Jerry Dubrowski said in response to the report that the company stated more than a month ago in its quarterly report with the Securities and Exchange Commission that it chose not to participate in the recapitalization.

"We have the option of changing that decision in the future," Dubrowski said, "but at this point in time we have no plans to participate."

GM holds a 20 percent stake in Fiat Auto.