Battle-Hardened Fiat Girds Again

LIKE other automakers worldwide, Fiat is struggling through a slump. Strong foreign competition has cost the company 10 percent of its market share in Italy since 1990.

The automaker recently announced plans to slim down management, concentrate on its core business (automobiles, industrial vehicles, and farm machinery), and introduce more car models.

"We are undergoing an investment plan that will involve something like 50 trillion lira [$35.8 billion] from here until the end of the century in the whole group," says Fiat's Roberto Zangrandi. "As far as the automobile sector is concerned, we have 18 new models in the pipeline."

Weak consumer confidence and concern about unemployment have been factors in low auto sales. "Fiat, like other auto companies, predicted growth in the market in Europe and also in the Eastern European countries," notes Gino Mazzone, a national secretary of FIOM-CGIL, one of several unions representing Fiat workers. "And that didn't happen and it won't happen in '93."

Gianni Agnelli, Fiat's 71-year-old chief, is no more sanguine about the immediate future. "The world economic situation is certainly not favorable," Mr. Agnelli recently told company managers. "Furthermore, the measures undertaken by the [Prime Minister Giuliano] Amato government, while indispensable, also bring Italy to limited, if not near zero, growth. That means that ... one cannot begin to talk of recovery before 1994."

That is the year that Agnelli has chosen for his retirement in favor of his younger brother Umberto.

ALTHOUGH Mr. Zangrandi and Mr. Mazzone say permanent layoffs are not in the offing, Fiat put about 3,600 workers on temporary unemployment after the closure of an auto plant at Chivasso. Work will be found for them in other Fiat operations.

Meanwhile, more competition looms. An informal European Community agreement limits the Japanese presence on the continent to 15 percent of the market, but frontiers among member states will fall in the coming year.

Zangrandi seems unconcerned: "We are used to competition not only in Italy, but we are also used to competition in Europe."

Foreign automakers combined, among them Volkswagen and Renault, already sell more cars in Italy than Fiat. While Fiat still holds 44.5 percent of the market, Germans have wrested away 32 percent and the French 15 percent.

To build the successor to the Uno, Fiat's bread-and-butter model, the company is constructing a new factory in Melfi, where labor costs are lower. Melfi will imitate the Japanese model of starting from scratch, says Zangrandi, using new workers and new technology and making components right next door to the automotive plant.