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Fiat reshapes its competitive outlook

On a wall of the cavernous main railroad station here is a huge map of Italy. Sprinkled on the display are more than 50 cities up and down the Italian "boot," each one containing a Fiat facility: an assembly plant, distribution facility, and the like.

The map brings into focus the size and ever-present impact of Fiat on this country today.

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Yet, for the past five weeks Italy's largest private employer has been wrenched by the worst labor-management confrontation since 1969.

Now, however, after a knock-down fight with the trade unions, Fiat has finally forced the militants to accept its right to reduce the work force by 23, 000, a significant victory for the company, according to observers. Fiat employs some 147,000 in Italy.

The unions, pressured by the 30,000 workers who marched on the Turin City Hall more than a week ago, have finally agreed to accept the layoffs until June 1983, after which time the workers, if still without jobs, have the right to be rehired by Fiat.

Furloughed workers get 93 percent of their pay through a special state fund.

At issue also was Fiat's insistence that it decide who will be dropped and who will be kept. The 11-point agreement may set a pattern for future factory-labor relations in Italy.

The company's plan, according to Vittorio Di Capua, worldwide sales manager for Fiat, is "to build 421,000 fewer cars in the next 18 months" because of a sharp dropoff in global demand. Fiat SpA, a widely diversified company, is expected to lose up to $50 million on its car operations this year, about the same as in 1979.

Hitting Fiat where it hurts -- in the pocketbook -- the union had held up the production of the brand-new Panda, a car that some 50,000 Italians are waiting in line to buy.

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Even with the Fiat plants in full operation, productivity is far less than that in other European countries, such as West Germany and France. The trade unions for more than 10 years have had a vise grip on Fiat and, as a result, the company's flexibility to build cars has been restricted all across the board. The carmaker, for example, cannot move people from job to job inside a plant, says Mr. Di Capua, let alone shift them to another plant, even one that is nearby.

"How can you build cars and compete in the world?" asks a Fiat executive who debates the next move. The new labor pact may lead to an improved situation, Fiat officials hope.

Italy has been in the midst of a cabinet crisis for the past three weeks, and this fact has only complicated the situation for Italy's long-suffering automobile industry.

"When the new government finally does take over, we hope it can do something, " a Fiat spokesman in the United States pleads.

Meanwhile, the shape of fiat itself may be in the midst of major change. The Agnellis, chairman Giovanni and his younger brother, Umberto, are taking a less visible role in the company these days. Umberto, in fact, resigned as managing director of Fiat SpA in a surprise mvoe in August. The younger Agnelli, however , retains the vice-chairmanship of Instituto Finanziario Industriale, the Agnelli family's holding company, which owns 31 percent of Fiat.

The younger Agnelli has been under severe attack by the unions and left-wing political parties for some time. his resignation as managing director has further reduced the visible role of the Agnelli family in the hard-pressed firm.

Government-owned Alfa Romeo is also sorely hurt by the poor productivity of its work force. The company now has signed a deal with Nissan of Japan to produce up to 60,000 cars a year in Italy's depressed southern region by 1983. The plan, vehemently opposed by Fiat, would link up Alfa engines with Nissan chassis, and has been a controversial subject in Italy for more than a year.

Whether it will finally get off the ground is still uncertain. Fiat fears it would open the door to a floodtide of Japanese cars down the road. Italy now limits Japanese imports to 2,200 cars a year.

As the Italian economy goes on subsidizing such unproductive companies as Alfa Romeo, the profit-dependent firms have to pay for it. "We are against this sort of thing," asserts Mr. Di Capua of fiat. "We have to pay for this unproductive and negative system in Italy."

Fiat, he adds, "is a private international corporation with a social sensitivity; but it also has a need to make a profit. We don't have any understanding of this fact at the political level."

Indeed, the repetitive labor strife at Fiat is having a sharp effect on the company's research-and-development efforts for the future.

In calling on Dr. Paolo Scolari, director of product engineering, I was met at one of Fiat's many offices, scattered around this northern industrial city.

"Today, we are meeting here and we are not working in our research laboratories and design departments," the engineering chief said. "Thus, there are many activities that unfortunately have been completely stopped, and this means that we will have a lot of hard work to make up for this lost time."

The effect on Fiat R&D is severe, he admitted, but not devastating.

"What we would like to do is do things faster," he declared.

Meanwhile, Fiat's research objectives are twofold:

* Improved fuel economy all across the board.

* Development and use of of lighter-weight materials while, at the same time, keeping a tight rein on costs.

The company has scheduled a capital outlay of $6.5 billion over the next five years.

fiat has some 6,500 research people on the payroll, including those at both the auto company and corporate facilities. The Italian carmaker also cooperates with other European auto companies, including PSA Peugeot-Citroen in France and the highly rated Porsche research think tank at Weissach, near Stuttgart.

"We have been working with Porsche on two engines, a 2- liter and 2.5-liter, that are considerably advanced right now," Dr. Scolari said.

"However, when the engines will reach the production stage I cannot say. They obviously are more expensive, but the level of performance is remarkable."

If Fiat and the union do not finally settle their longstanding confrontation, the new engines and a lot more, may be a long time in coming.

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