In February, at an industry conference, Fiat SpA and Chrysler LLC Chief Executive Officer Sergio Marchionne suggested that that the Italian automaker could eventually merge with its Detroit counterpart and move its corporate headquarters from Turin, Italy to the U.S.A.
Soon after, Fiat’s Chairman John Elkann, the grandson of Gianni Agnelli family who owns 30 percent of Fiat, stated the company had no plans to leave Italy. Marchionne also backtracked, but only after a meeting with Italian prime minister Silvio Berlusconi and other politicians, saying no final decision has been made and that nothing would be decided on the carmaker’s future headquarters until 2014.
Fast forward to March and a lengthy article on Reuters regarding Sergio Marchionne and future of the company, where the subject of Fiat’s headquarters is once again put on the table.
“The location where you establish the legal HQ is where you pay taxes,” said the second top Fiat source. “If I pay 70 percent tax in Italy and only 30 percent in the U.S., it’s a no brainer where to go.”
However, Reuters goes on to say that, “such talk is also an important weapon in the complex political mission that Marchionne has taken on, of trying to improve productivity in the eurozone’s third-largest economy.”
In other words, Marchionne, may be using this as a threat to convince politicians to make Italy more business-friendly in more ways than one.
There’s an ongoing debate in Italy about the firms plants. According to the report, production costs in Italy have risen 25 percent more than in Germany in the past decade. In addition, Fiat recently stated that its 22,000 workers in Italy built 650,000 cars in 2009, compared with 600,000 units rolled out by the 6,100 employees at the company’s Tychy plant in Poland.
However, it should be noted that these statistics do not take into account the differences in vehicle models (it’s one thing to build a customized Alfa Brera and another a basic Panda, for example) and working hours.
Marchionne did say though that if he can increase the efficiency of his factories in Italy he will also increase salaries, which are quite low by European Union standards as an average factory worker in Italy is paid around €1,300 a month compared to around €2,000 in Germany.
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