Serbian Economy Minister Mlađan Dinkić says that implementation of the Fiat deal will be delayed because of the world economic crisis. However, he said that the Zastava factory in Kragujevac would stay open and continue working.

“The investment is in no doubt, people will have jobs in Kragujevac and, of course, everything will move more slowly than we and Fiat wanted, but that is not down to us or them, but to the world financial crisis,” Dinkić said at the Euromoney economic conference on Central and Eastern Europe.

Dinkić said that a business plan for 2009 would be made in the next few weeks that would define the payment and implementation dynamics of Fiat’s investments in Zastava. According to him, cars would certainly be produced in Kragujevac, but the production dynamics and the number of cars made were still uncertain because of the fall in demand. “That will depend on market demand, because it is in Fiat’s interest to produce for the market, not to stockpile,” the minister explained.

He said that the factory in Kragujevac would be completely reconstructed in the next 12 months and prepared for producing Fiat cars. “We are starting with production of the Punto immediately, because that is not tied to the project of releasing a new car model,” Dinkić said. Fiat Serbia is due to take over the assets and workforce of the Kragujevac-based Zastava factory by April 15 and produce Fiat cars there.

The Zastava Independent Union has called on the state to offer “alternative jobs” following the 10-month postponement of implementation of the Fiat contract. Union officials have sent an open letter to President Boris Tadić, who said last night that Fiat was proposing a postponement and that he had called for a meeting to discuss the problem. Union officials state that they are glad that Fiat is not backing out of the project, but they propose that alternative jobs should be offered to Zastava workers that would help, along with the investments, preserve the Kragujevac-based factory and its 133 associated companies.

Report courtesy of B92