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EDITIONS
 Tuesday, 31 December, 2002, 13:01 GMT
Berlusconi pledges support for Fiat
Fiat striker protesting against job cuts
Fiat began its first wave of lay-offs in December
Prime Minister Silvio Berlusconi has said the Italian government remains ready to step in to help Fiat, Italy's foremost industrial conglomerate which is struggling to stem big losses.

Plans to lay off more than 8,000 workers at Fiat Auto have led to strikes and demonstrations at its factories around Italy.

The Italian leader devoted part of his end of year press conference to discussing possible solutions for the car maker.

He said he hoped that Italian companies would show an interest in investing in Fiat Auto.

Strike wave

"If it becomes necessary, the government may be called upon for renewed interventions (in Fiat) but only in accordance with EU law," said Mr Berlusconi.

Fiat Stilo
Fiat's latest big launch, the Stilo, sold poorly

The government hosted talks between Fiat's management and trade unions in the prime minister's office in Rome in early December to seek ways to soften the impact of job cuts.

Mr Berlusconi added that he hoped Fiat's founding family would come up with more money to support the company.

"I hope the Agnelli family will decide to invest more capital in Fiat Auto and help it move forward, even if they do so through the sale of some other assets," Mr Berlusconi said.

Reluctant rescuer?

The Agnelli family continues to play an influential role in the firm, particularly the elderly patriarch Giovanni Agnelli.

His illness last year triggered a sharp rise in Fiat's share price as investors hoped his decision to stand back from day-to-day affairs would lessen family opposition to a sale to General Motors.

In 2000, Fiat Auto swapped a 20% stake for 6% of the US auto giant, with an option for General Motors to buy the rest of Fiat from 2004 onwards.

But General Motors is engaged in a restructuring of its own, and is not thought to be keen.

Mr Berlusconi said: "With the decline in General Motors' interest, the government hopes for an interest from Italian companies."

Falling sales

Fiat's market share in Italy has slumped from 60% to 30% in just a decade, and it lacks an equivalent slice of any other European market.

The fall in car sales has forced Fiat to cut jobs and sell assets in an attempt to stave off a financial crisis.

In December, the company sold its stake in General Motors for about $1.2bn (768m) in order to pay off some of its $6bn of debts.

The move was not enough to prevent a credit rating cut from Moody's, which slashed its rating of Fiat to junk status.

Fiat car sales for 2002 are expected to be 10% down on last year.

See also:

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23 Dec 02 | Business
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