Europe > Southern Europe > Italy > The Serbian division of the Italian car manufacturer Fiat has temporarily halted production

Italy: The Serbian division of the Italian car manufacturer Fiat has temporarily halted production

2014/09/10

Fiat Automobiles Serbia, the country’s major exporter, announced on Monday that it had suspended production at its plant in the town of Kragujevac because of the market slowdown, causing anxiety part around 3,000 workers who were ordered to stop working for three days.

"The causes of this temporary setback are external and related to the situation in the European and world automotive markets, which is influenced by the economic crisis," the company said in a statement.

It did not say at the same time as production would resume.

The workers at the Kragujevac plant were given three days off, starting last Friday, on 65 % pay, said the chairman of Fiat’s Independent Trade Union, Zoran Markovic.

Markovic said however that there was a possibility that there could be additional enforced days off this month.

He said he believed that the reason for the halt in production was low request for Fiat's 500L small minivan, which began to be manufactured in Serbia in July 2012.

“We did not receive an official explanation, but I guess that the issue is the decrease in request for Fiat vehicles, which caused a reduction in production,” he told Serbian public broadcaster RTS.

The company insisted that it was trying to ensure that operations returned to normal.

“The Fiat Automobiles Serbia company, as an employer with a strong sense of social responsibility, is aware of the necessity of maintaining jobs for its employees, inclunding its own importance for the economy in Kragujevac and Serbia as a whole,” its statement said.

“The temporary closure of the factory is directed exactly towards preserving the factory and its operations, and therefore the jobs as well, and it will be put into full operating mode as any minute at this time as possible,” it added.

In 2013, Fiat was the major Serbian exporter with 1.5 billion euros’ worth of export sales.

The Kragujevac plant, on a 1.4 million square metre site, is the major of its kind in south-east Europe and has the capacity to turn out 300,000 Fiat 500 Ls annually.

The Serbian government and Fiat signed an agreement to set up the company on September 29, 2008, as a joint business association.

The Turin-based auto giant holds a 67 % share in the company while Serbia has a 33 % stake.

The arrangement between Fiat and Serbia has at no time been published, and a lot of observers have criticised the government’s subsidies of the company.

Serbian daily Politika reported that in 2013 alone, the government subsidised Fiat to the tune of 51 million euro, while the same year the company earned 10 million euro profit, with the national taking 3.3 million euro of that.

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