Fiat to Shut Alfa Engine plant, Buy GM Motors

Italian carmaker Fiat plans to close an Alfa Romeo motor plant near Milan and will instead power some of its sporty models with engines made by former partner General Motors, unions said on Tuesday.

Fiat's Powertrain unit announced its decision to workers, who reacted by throwing insults at Fiat Chairman Luca di Montezemolo.

"Powertrain told us today that Alfa Romeo engines will no longer be made in Arese. The assembly lines will be dismantled and the six-cylinder Alfa Romeo motor will be replaced with an engine GM produces in Australia," unionist Vincenzo Lilliu said.

The decision comes 10 days after Fiat and GM dissolved a five-year alliance and two joint ventures in powertrains and purchasing but said they would keep buying each other's engines.

GM benefits from the deal as it still has access to Fiat's small diesel engines while Fiat, which mainly sells smaller cars, can use GM's big petrol motors for larger vehicles.

Unionists have long been fighting the gradual closure of Alfa Romeo's historic plant in Arese, north of Milan, as Fiat moves more car production to its huge, underused plant in Turin, and south to a factory near Naples.

On Tuesday, Lilliu and other members of the small but aggressive Slai Cobas union attacked di Montezemolo for banging the latest nail in Arese's coffin.

"You should be ashamed of yourself for taking engines away from Arese. And you call yourself an enlightened businessman!" they shouted as di Montezemolo left a meeting.

The unions said the decision would probably mean 800 workers currently on temporary layoff would now lose their jobs once for all, leaving only 400 people working in Alfa Romeo's style centre at Arese.

In December, Fiat-GM Powertrain said it would lay off 706 workers as it halted production of old engines that no longer met environmental standards and started making new replacement motors in Latin America.