Fiat chief's Chrysler warning

By Gilles Castonguay | April 16, 2009, Thursday |

Print Edition

FIAT SpA's chief executive, facing a two-week deadline to work out a partnership with Chrysler LLC, warned the troubled United States car maker's unions he would ditch the idea unless they agreed to cut labor costs.

In a clear message to US and Canadian unions, Sergio Marchionne said a deal on the partnership had only a 50-50 chance of succeeding because of lack of progress in talks with union leaders.

Canadian unions were especially resistant, he said.

"Absolutely we are prepared to walk. There is no doubt in my mind," Marchionne said.

The unions had to agree to match the lower labor costs of plants run by Japanese and German makers in the US and Canada, he said.

Under the latest version of the companies' proposed partnership, first announced in January, Fiat would take an initial 20 percent stake in Chrysler in exchange for the technology to make small cars and access to foreign markets.

Chrysler has been warned by the US that it would go into bankruptcy if it fails to complete the deal, designed to save the smallest of the Detroit's Big Three car markers.

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Fiat chief's Chrysler warning

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