Fiat’s network of suppliers worry about its globalisation shift

Since Fiat was founded in 1899, a community of suppliers, known in Italian as Fiat’s indotto, have grown up in Turin around the industrial group.

But a question mark now hangs over this network following Fiat’s merger with Chrysler and the mooted relocation of some of its legal and managerial functions to the US, London and the Netherlands.

In Turin about 10,000 people work directly for its suppliers, Fiat estimates. Among locals, it is accepted wisdom that for every Fiat job there are seven others that depend on the carmaker.

Italy’s largest auto suppliers, which had the ready capital to fund international expansion, have been able to follow on the coat-tails of Fiat globalisation. Two of the biggest auto parts suppliers – Brembo and Sogefi – have become international players, in part, by following Fiat as it has expanded internationally.

Brembo is the world leader for premium brake parts and a large supplier to German carmakers as well as Fiat’s premium marques.

The US accounts for 15 per cent of Sogefi’s global revenues, compared with 2 per cent a decade ago, according to the company, which makes suspension, filtration and air-cooling systems. Chrysler is a major new client for Sogefi since the merger with Fiat.

For smaller and midsized suppliers, Fiat is holding training programmes to help them to learn to globalise their businesses, according to the company.

But local leaders and trade unionists say the impact of Fiat’s globalisation coupled with a drying up of bank loans in Italy during its two-year recession have meant that many small companies do not have the funds to expand internationally to find new business abroad.

Francesco Daveri, an economist at Parma university, says Italy’s industrial sector will “be split between those companies like Brembo that can afford to expand and find new clients in the US and Germany, and the fringe of small or very small companies that must either invest or risk their survival”.

“It is an unequal crisis, the problem right now is to see where the net balance will be in terms of job creation in Italy. If it is negative, unemployment in industrial centres will be a big social problem,” he says.

Source: FT


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