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Tuesday, 11 December, 2001, 06:58 GMT
Fiat Auto to cut 6,000 jobs
Fiat Punto
Demand for Fiat's cars has fallen sharply
Car manufacturer Fiat Auto has said it will cut 6,000 jobs outside Italy over the next two years as part of a big shake-up of its business and warned it will make a loss this year.

The Fiat board also accepted the resignation of Roberto Testore, who has run the auto division over the last six years as it racked up mounting losses.

Fiat is Italy's biggest manufacturer and the car firm, Fiat Auto, accounts for 46% of its sales.

But the auto unit only contributed 5.1% of Fiat's overall operating profits last year.

Fiat said it will either close or restructure 18 of its factories over the next two years, two of them in Italy and 16 abroad.

Fundraising

Europe's fifth biggest car-maker also revealed a plan to raise money to cut its seven billion euro debt pile ($6.2; 4.35bn) by selling new shares and bonds.

The company will make a two billion euro bond issue to cope with the worker pay-outs and push 66 million more shares on to the market to raise another one billion euros in new capital.

Market sources say the debt will be sold to the world's largest carmaker, General Motors, on Tuesday morning in exchange for about 32 million shares.

The struggling car maker also said it will sell about two billion euros' worth of assets next year but provided no further details.

Argentina loses out

Fiat Auto's new chief executive will be Giancarlo Boschetti, who heads the truck-making business Iveco.

Fiat did not say which plants would be closed as a result of the restructuring plan.

But the announcement contained bad news for Argentina, currently mired in a four year recession and struggling to gain a fresh loan from the International Monetary Fund to avoid a debt default.

Iveco is to move its operations from Argentina to Brazil.

This is Fiat Auto's second restructuring announcement in as many months.

In early October, the car firm said it would cut production by 100,000 cars in 2001 and reduce costs by up to 10% by the end of 2002.

At that time it said layoffs would be temporary.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Martin Shankleman
"Fiat's sheer scale and size makes it vulnerable"
The BBC's Theo Leggett
"The first casualty of Fiat's restructuring programme is Roberto Testore"
John Lawson, auto analyst
"Fiat has been pushed into competing in terms of price"
See also:

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05 Oct 01 | Business
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06 Jul 01 | Business
Fiat sparks corporate war
28 Mar 01 | Business
MG Rover 'in Fiat talks'
13 Mar 00 | Business
Fiat and GM forge alliance
16 Jul 01 | Business
Fiat raises Montedison bid price
14 Mar 00 | Business
Fiat shares plunge after deal
27 Jan 00 | Business
Fiat mulls a German merger
11 Jan 99 | The Company File
Fiat talks to Volvo
10 Jul 98 | The Company File
BMW rubbishes Fiat merger rumours
14 Dec 97 | Europe
Fiat heir dies at 33
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