Fiat workers' protest

Fiat workers blocked roads and factories across Italy yesterday, furious that thousands of them will lose their jobs on Monday and demanding the loss-laden company radically alter its restructuring plan.

Last-ditch talks with the government and Fiat to limit job cuts failed on Thursday, opening the way for Italy's top private employer to cut costs by laying off workers, but analysts and unions said Fiat needed stronger medicine to cure its ills.

"Cutting these jobs doesn't change anything. What Fiat needs to do is to sell more cars and there aren't enough models in the pipeline to reverse Fiat's revenue losses," said Gaetan Toulemonde, an auto analyst with Deutsche Bank in Paris.

Fiat shares dropped four per cent yesterday, against a one per cent fall in European auto stocks.

Thousands of workers flooded onto the streets in protest at Fiat's plans to lay off 5,600 workers from Monday, blocking the main railway station in Fiat's hometown of Turin and crippling Italy's main north-south motorway near Naples.

The four factories due to be hit by layoffs were empty as all the workers took to the streets.

Unions said they would strike again for four hours on Monday, raising the spectre of a winter of discontent. Workers at Fiat's sportscar maker Ferrari, which will not be affected by layoffs, would also strike.

Prime Minister Silvio Berlusconi said Fiat would "be able to recover strongly" thanks to its plan but investors were still concerned it would not drag Fiat out of deep losses.

"What Fiat really needs is a radical restructuring to compete with strong peers who produce better cars and have better price policies. The only alternative is to sell the auto arm," said Giulio Brunetta, fund manager at Alpi Adria Gestioni.

Labour leaders wanted Fiat to invest more in research and for Berlusconi's centre-right government to take a stake in the company. Instead, the government will pay 60 million euros to fund training and pass a law to retire some workers early.

"We don't take stakes in private companies or make them alter industrial plans. That is something Communist countries used to do before the fall of the Iron Curtain," Labour Minister Roberto Maroni told a news conference.

From 2004, Fiat has an option to sell Fiat Auto to General Motors Corp., which already owns 20 per cent.

Labour leaders said they wanted more information on what Fiat intended to do, fearing the US giant would be even more agressive in slashing Fiat's high-cost Italian workforce.

Unions, which have been fighting the government on labour reforms, slammed the government for working out a plan with Fiat and merely presenting it to unions as "take it or leave it", while Industry Minister Antonio Marzano said he had talked Fiat into softening the blow of its cost cuts.

Fiat agreed to reopen a plant in Sicily next autumn and to take back the bulk of their workers once the layoffs ended.

In return the government said it would pass a law so Fiat could put 2,400 workers on early retirement if they could not find new jobs. The workers would be paid from social security for three years and then by Fiat for a period to be decided.

Workers in Termini Imerese, a run-down industrial town near the Sicilian capital Palermo, still feared the plant's 1,800 jobs would be lost permanently.

"I feel like 30 years of my life just went down the drain," said Salvatore Lo Duca, 50, who has worked at the plant since 1973. "All of us here have poured our lives into this company, and yet there feels like there's nothing in return".