Marchionne Says Fiat May Close Two Italian Plants if U.S. Export Plans Fail

Fiat CEO Sergio Marchionne may have succeeded in signing a deal with the Italian worker unions, yet decreasing demand in the struggling European market may still force him to take extreme measures.

And while Marchionne does not expect the situation in Europe to improve “at least until 2014″, on the other side of the pond, he said that Chrysler’s plants are already at full capacity, necessitating imports from the group’s factories in Canada, Mexico or Europe to satisfy a third of U.S. demand.

Therefore, as he told Italian newspaper Corriere della Sera, it’s a perfect opportunity for Fiat’s Italian plants to increase their production and make up for the drop in local demand by exporting models to the States.

On the other hand, failure to do so will have dire consequences: “All the plants will remain were they are”, Marchionne said. “But if exporting to the U.S. were not to happen, we would have to withdraw from two of the five operating sites.”

Even though he did not name which sites he had in mind, Automotive News Europe reported that according to sources, the facilities most likely to be axed are the Mirafiori plant in Turin and the Cassino in Central Italy.

Mirafiori has an annual capacity of 200,000 units. It is currently manufacturing the Fiat Punto, Alfa Romeo MiTo and Lancia Musa, and according to the group’s plan, it will also build a new compact Jeep SUV that will be available in Europe, the U.S. and other markets.

The Cassino plant, which has a capacity of 300,000 units a year, manufactures the Fiat Bravo, Alfa Giulietta and Lancia Delta C-segment models. Since the next-gen Giulietta will be exported to the U.S., Cassino needs to produce more vehicles in order to increase its chances of survival.

In the end, it all comes down to productivity as Marchionne is confident that the new agreement with the unions will enable Fiat’s Italian operations to succeed in their mission to export to the U.S.

He has made it clear, though, that he won’t hesitate to shut down 40 percent of them if they fail to meet their targets.