Fiat plants in Italy shut over fuel strike

Sergio Marchionne Fiat's boss Sergio Marchionne will be having his first meeting with the new Italian prime minister

Italian carmaker Fiat has halted production at all five of its plants in its home country as it struggles to cope with an ongoing transport strike.

Lorry drivers have been protesting over taxes on petrol passed in the austerity budget of Prime Minister Mario Monti since January, maintaining road blocks.

Fiat has said that it has made 20,000 fewer cars over the last three weeks due to the protests.

Its plants would stay closed if the strikes continued, it told the BBC.

The carmaker said it had four plants in the south of Italy and one in Turin.

The closure includes its Pomigliano plant, near Naples, where it is making the new Panda.

Plant closures in the past weeks could cause a 10% loss of its Italian market share for this month if drivers do not resume work in the coming days, the company warned.

Earlier, Fiat chief executive Sergio Marchionne met Mr Monti for the first time since the start of the crisis - but the carmaker did not want to comment on what was discussed.

Mr Marchionne afterwards told journalists afterwards that the meeting had been "perfect", but without elaborating.

The BBC's Alan Johnston in Rome says the meeting went off against the grimmest possible background - the Fiat car-lots of the factories just full of unshifted vehicles.

Union battles

Separately, it was revealed this week that Mr Marchionne received 14.5m euros (£12m) in compensation - 2.5m euros in cash and the rest in shares.

Analysis

The Italian lorry driver strike is a protest against fuel taxes that push up their costs.

As such, their beef is with the government rather than with Fiat.

But Fiat is being hurt by the strike: it is making it difficult to deliver cars to customers, and it is causing parts shortages in its factories, which makes it difficult to continue producing cars.

So the carmaker has decided to get involved in the brawl, insisting that conditions need to be right for it to keep its Italian car factories open.

The Fiat Group is the largest private taxpayer in Italy and also controls US carmaker Chrysler.

Since taking over as chief executive in 2004, Mr Marchionne has been reorganising the company's car plants in Italy.

Despite resistance from unions, more flexible work practices have been introduced.

But according to the company, Fiat's Italian plants are running at just 50% of their potential capacity, while plants in the US and Poland are working at full speed.

Mr Monti leads a government of technocrats tasked with leading Italy out of its debt crisis, and has pushed through a package of spending cuts, tax rises and pension reforms.

Mr Monti took over from Silvio Berlusconi last year in response to the crisis, and says that without the measures Italy would face economic disaster like that which has affected Greece.

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