For a long time, one of the most telling comments on Italian industry focused on automobile giant Fiat. "What is good for Fiat, is good for Italy", went the saying. After yesterday, however, it may be that what is good for Fiat, is good for Detroit too.
The once Turin-based car maker yesterday confirmed the anticipated birth of a new company, Fiat Chrysler Automobiles (FCA), a company which will be listed on the New York Stock Exchange, will be controlled by a holding company in the Netherlands and will have a tax domicile in the UK. This announcement comes just one week after Fiat, which has been the controlling shareholder in Chrysler since 2009, became whole owner when buying out the remaining 41.5 per cent of Chrysler shares from the United Auto Workers VEBA Trust fund.
Lifeline
For the man who will head the new company, Fiat chief executive Sergio Marchionne, this deal represents a lifeline for Fiat, allowing it to benefit from a bigger presence in the US, the world's second-largest car market, while relying less on a slow, austerity-driven European market. With combined sales of 4.4 million cars in 2013, the new company falls far behind world leaders such as Toyota, Volkswagen and General Motors, which all sell about 10 million vehicles per year.
Inevitably, however, critics and trade unionists are now worried that Fiat's Italian plants will be facing serious job cuts as Italy assumes a much less central role in a globalised company spread across North America, Latin America and Europe. Mr Marchionne has said that in such a world, the notion of "headquarters" is "almost anachronistic", given that "we live in a world where power travels".
His Italian critics, however, stick to the old-fashioned notion that the location of corporate headquarters could have implications for the company’s community involvement and corporate giving.
