By Gilles Castonguay
MILAN--Fiat SpA (F.MI, FIATY) faced a political storm Saturday
as two government officials joined in a growing chorus of calls for
the automaker to explain whether or not it plans to follow through
on an ambitious plan to spend billions of euros to revamp factories
in Italy.
"It's clear that Fiat has to clarify...its commitment to the
project," Industry Minister Corrado Passera told reporters.
In April 2010, Fiat Chief Executive Sergio Marchionne revealed a
plan to invest 20 billion euros ($26 billion) to revamp factories
in Italy and double production to more than 1.4 million units per
year by 2014.
Fiat has spent about EUR1.5 billion to renovate some plants. But
a year ago, the Fiat boss said that--amid the economic crisis--he
was putting the plan on hold and would decide how to go forward in
October 2012. Fiat reiterated its position last week, sparking an
uproar among union leaders.
On Friday, the criticism took a new dimension when a prominent
Italian entrepreneur, in a statement, lambasted Mr. Marchionne for
the about-turn. In an unusually harsh statement, Diego Della
Valle--owner of Tod's SpA (TOD.MI) fashion house and shareholder of
luxury retailer Saks Inc. (SKS)--called Mr. Marchionne "inadequate"
for failing to keep a commitment made to the thousands of workers
and their families who depend on Italy's biggest manufacturer for
their livelihood.
Mr. Della Valle didn't spare criticism of the Agnellis, Fiat's
founding family, one of whose sons--John Elkann--is chairman of the
car maker, which controls Chrysler Group LLC.
"[They] are making the wrong choices or, even worse, choices
that are most convenient for them," he said. "Serious Italian
entrepreneurs, who truly thrive on competition...who respect their
own workers and are proud to be Italian, don't want in any way to
be associated with people like them."
Fiat declined to comment or to make Mr. Marchionne available for
comment.
A spokesman for Mr. Elkann also declined comment.
Mr. Della Valle's vitriol came amid growing anxiety about Fiat,
one of the country's biggest employers, and its role in helping to
create jobs and lending support to the weakening Italian
economy.
"It is unrealistic to expect that a project announced two and
half years ago would remain unchanged," Fiat said in its fresh
statement last week, adding that it reserved the right to do
whatever necessary to stay competitive.
On Saturday, Labor Minister Elsa Fornero said she was keen to
meet with Mr. Marchionne to discuss the issue. Management has a
responsibility "not just to shareholders but to...all stakeholders:
the workers are first," she said.
After he came on the scene in 2004, Mr. Marchionne was hailed by
Italians as a savior for dragging Fiat away from the brink of
collapse and making it profitable again. Five years later, he was
seen by analysts and investors as a genius for taking control of a
bankrupt Chrysler to create a group with enough heft to compete in
the world.
But the gradual shift of emphasis towards the U.S. has raised
doubts among Italians about Mr. Marchionne's commitment to their
country, where Fiat has gone back to losing money, hampered by too
much production capacity.
He has shut factories down and put workers on furlough for
extended periods.
In the U.S., where he spends half of his time overseeing
Chrysler, things are doing much better, thanks to a recovering
market.
Mr. Della Valle isn't a shareholder in Fiat, but he is a
shareholder in other major companies in Italy--and he has in the
past voiced his discontent publicly about corporate matters. He
withdrew from a shareholders' pact at RCS Mediagroup SpA (RCS.MI),
publisher of the leading Corriere della Sera newspaper, after a
spat over corporate governance. Fiat is a shareholder of RCS.
He also criticized the way in which the board at insurance giant
Assicurazioni Generali SpA (G.MI) got rid of its chief executive in
June.
Mr. Della Valle has business with Fiat. His fashion house,
Tod's, has a partnership with Ferrari, 90% owned by Fiat, to make a
collection of shoes, wallets and other accessories bearing the
prancing-horse logo of the luxury sports-car maker.
Ferrari Chairman Luca Cordero di Montezemolo, who once was
chairman at Fiat and has other business ventures with Mr. Della
Valle, said Friday that Mr. Della Valle's statement on Fiat was
"absolutely unacceptable."
Write to Gilles Castonguay at giles.castonguay@dowjones.com.
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