Fiat is acknowledging a “a collapse in orders” as Italian scrappage rebates expire, and as a result, all six Italian Fiat plants will close for two weeks [via the BBC]. The move is being justified as a break from past overproduction, with Fiat spokesfolks claiming “we’re only building to demand.” Though that might help CEO Sergio Marchionne justify his $6.5m paycheck, it couldn’t come at a worse time. Fiat is putting 30,000 employees out of work for the next 14 days, just as it faces widespread protests over the closure of its Sicilian Termini Imerese plant. With the Italian government (and even the Pope) condemning Marchionne’s decision to cut the perpetually money-losing plant, this unplanned vacation will give workers plenty of time to agitate and organize further resistance. Not that Marchionne could have avoided it. Italy’s consumer subsidies for new cars were keeping demand artificially high, and the Italian government was hoping it could offer their renewal in exchange for a Fiat commitment to the Imerese plant. But as the Wall Street Journal [sub] opines, Europe’s scrappage-swollen market has to come down to earth at some point. Just as Fiat has to rid itself of some of its terminally underperforming Italian capacity, at some point. And, as usual, there’s no time like the present.
It’s not fair! Fiat should keep that money-losing plant operating, making cars that nobody wants to buy!
And in view of Italy’s very low birth rate, eventually there’ll be nobody to buy anything. Burning up the railroad ties to keep the locomotive running.
Looks like cash for clunkers is as successful for the Italians as it’s been for us. What a disgrace this has all been… to destroy functioning vehicles… to borrow Chicom cash to pay for and destroy value… simply a disgrace.
In 1933, using similar logic, the US Federal government ordered 6,000,000 pigs to be slaughtered and buried. Not to be consumed… not to be distributed to the needy… but to be buried. I guess they saw the future, and so have we, and we can only hope that our future isn’t another decade of economic woe, as then.
Absolutely right; thank you for the reminder.
Imagine understanding history and how different people would be. There would be far fewer calling for the yoke to put on their own neck!
Let’s face it Italy is still in a Depression, the UK is just barely out of Recession and when the Tories take over Government there, they too will slide back in Recession, I have just returned from a visit there for a family matter, there are masses of people not working ie being laid off, no jobs etc, for any Industry whether Autos or any other manufacturing are in a no win situation, if people don’t have a income, they won’t be buying Vehicles or anything else.
The Tories have said that they would cut back on incentives, as soon as they are elected, what a mess!!
Come to Michigan. Seven years of interventionist state government, picking the winner and loser industries, and always spending and raising taxes has made the same mess. You can take the bandaid off with one quick jerk or you can take it off slowly and feel each hair rip. Slower is worse.
I’m confident that the Pope on duty combined with mighty Berlusconi will find a cure for the current overproduction problem. So, just relax…
Yeah, the pope’s infallible when he wants to be. Although he’d probably save Mercedes Benz if he had too.
If Italians won’t buy Fiats, I’m thinking they will really be a hard sell here in the US.
Always funny to watch people bash interventionism in this blog. How is it possible that the commentators have forgotten so quickly that unchecked laissez faire capitalism and unchecked financial crooks brought the world economy into the state it is in?
I can’t believe after all the things that happened in that last couple of years people still believe free market should regulate everything automagically.
Actually, to gently correct you, marjanmm, the world has not had anything resembling a free market for decades.
It’s been intervention of one kind or another by all nations, to varying extents.
I guess when you don’t know what sunshine really looks like, a slightly less cloudy day appears nicer than a dank dark gray cloud day, but to call the former a “sunny day” and think that it is, is not accurate.
Almost nobody alive has actually lived in a free market society of any fashion. We can, however, read about history and see how it worked for people willing to give it a chance – and it was successful enough that many of us would like to give it a try.
Lord knows the control freak powers that be have had their chance and all the results that you appear to be laying at the feet of “free market” are actually theirs.
Mr Carpenter,
I just don’t see how such a hugely complex system like world or a big country’s economy can be simply let alone trusting individual greed, ability, chance and initial conditions to influence it. What you get is artificially created endless and all accompasing machiavellian and darwinian struggle.
There is nothing humane about it. Doesn’t it leave bad taste in your mouth just thinking about it?