Fiat names new chief

Mr Barberis has worked at Fiat all his life

By Frances Kennedy In Rome

Italian car maker Fiat has named a new chief executive as part of a broad management shake-up aimed at reshaping the fortunes of the struggling firm.

Chairman Paolo Fresco kept his job

The news came after a crucial board meeting in Turin which also examined the wider crisis facing Italy's biggest private sector employer.

In a drastic restructuring plan to recoup losses, Fiat has announced 8,000 lay-offs at its Italian plants.

Friday's meeting is the result of differences between creditor banks, the company and members of the Agnelli family over how to tackle the crisis.

The meeting was a dramatic showdown between the various forces that determine the future of Fiat, a symbol of Italian industry fighting to survive in the globalised car market.

Chairman survives

On one side are those that want to try in every way possible to save Fiat Auto, the core business, which has seen its share of the car market plummet with re-structuring and re-investment.

Even within Italy, sales have been slumping

On the other side are those that want to accelerate a sell-off of Fiat to the American company, General Motors, and split up the component parts of the empire to sell them off.

However, a last minute compromise, with the intervention of the ailing patriarch, Gianni Agnelli, means there will be no abrupt change of direction, for now at least.

The board has named Alessandro Barberis, an engineer who has spent his entire career at Fiat, as the new chief executive.

And Paolo Fresco, the group's chairman who drafted the rescue plan, will remain in place despite pressure for his resignation.

Growing tension

Behind the changes, analysts say there has been an attempted coup by the powerful merchant bank, Mediobanca, to wrest control of the Fiat group.

The boardroom battle has created further uncertainty and tension among workers, who have rejected the rescue plan.

About 5,000 employees who have been temporarily laid off from factories around Italy are staging protests almost daily.

On Friday, more than 10,000 workers in the Piedmont region, home to Fiat's headquarters, marched through the streets as part of a four-hour strike in solidarity with their Fiat colleagues.