MILAN (Reuters) – Stellantis is considering whether to close one of two production lines at its Melfi car plant in southern Italy, the head of the FIM CISL union said.
Jeep’s Renegade and Compass models and the Fiat 500X compact SUV are assembled at Melfi, which is considered Stellantis’ most efficient plant in Italy, but its current entire production could be moved to a single production line.
Closing a line at Melfi, which employs some 7,300 workers, could mark a first step by CEO Carlos Tavares to tackle excess capacity in Italy.
FIM CISL’s Ferdinando Uliano told Reuters the plan was being assessed and Stellantis had not made a decision. The union had yet to receive official confirmation that the project was being considered, he added.
“We are very worried,” Uliano said. “Once you have reduced production capacity at one site, it’s very difficult to gain it back”.
Stellantis had no comment. Tavares has committed not to close plants or cut jobs.
The carmaker’s production in Italy is under scrutiny for costing more than elsewhere, as Stellantis seeks more than 5 billion euros ($5.9 billion) a year in savings following its creation from the merger of France’s PSA Group and the Italian-American Fiat Chrysler earlier this year.
Shares in Milan-listed Stellantis closed up 1.4% at its day’s high of 14.41 euros.
Downsizing plants was at the heart of Tavares’ “back in the race” strategy at PSA, where he helped the Peugeot maker recover from near-bankruptcy around a decade ago.
All plants producing fewer than 250,000 vehicles per year saw their capacity cut from two production lines to one to maximise capacity at the remaining line.
In France, PSA took that route with its assembly plants at Rennes, Poissy and Mulhouse. It later applied the same approach at Opel-Vauxhall plants when it bought the business from General Motors Co.
Some 249,000 cars were produced in Melfi in 2019, according to figures provided by local unions, after topping 300,000 in 2018. Production fell further last year to about 215,000 units following the COVID-19 crisis.
Elsewhere in Italy, Turin’s Mirafiori has two lines, while all of Stellantis’ other sites in the country have one.
Unions will meet with Stellantis’ “enlarged Europe” region top executives on April 15 in Turin to discuss the outlook for its production sites in Italy.
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(Additional reporting by Gilles Guillaume in Paris, Editing by Alexander Smith, Mark Potter and Angus MacSwan)