"Fiat has and will continue to have its central roots in Italy," Luca di Montezemolo said in a television interview that was broadcast yesterday as he attempted to soothe union worries over jobs cuts that would arise from a merger between Fiat and Opel.

Fiat Group Chairman Luca di Montezemolo has said that Fiat will continue to have its roots in Italy as the unions representing Fiat and Opel workers' prepare to meet in Frankfurt today to discuss the proposed merger and its impact on jobs. Concerns are growing rapidly over the impact of a merger with GM's Opel division and particularly as the Italian unions have openly expressed their worries that widespread job losses and factory closures will follow in Italy if a deal to combine the two carmakers' operations along with Fiat's stake in Chrysler goes ahead.

"Fiat has and will continue to have its central roots in Italy," Montezemolo said in a television interview that was broadcast yesterday. Soothing union worries he added: "One thing to be said is that we need to sit down with the government and the unions in a constructive way to discuss structural issues arising not from deals [with Opel and other carmakers] but from a very steep fall in demand."

A secret leaked internal Fiat document dubbed "Project Phoenix" that was presented to the German government last week foresees two factory closures in Italy, one in the north and one in the south, while in addition the Termini Imerese plant on Sicily that currently produces the Lancia Ypsilon model will be 'reassigned' to other manufacturing duties within the rump of the Fiat Group once the planned spin-off of the automobile manufacturing unit has taken place.

The unions representing Opel and Fiat workers will meet today at the German IG Metall union's headquarters in Frankfurt to discuss their strategy and options, and with neither side expressing themselves so far as being in favour of a Fiat-Opel merger. With Fiat Group CEO Sergio Marchionne telling German government ministers' last week that he will preserve the bulk of jobs in Germany, with just one engine plant employing 1,100 workers to be closed the Italian unions fear that cuts will come amongst the 31,000 staff who work at Fiat's five plants in Italy, as well as at factories in Austria, the UK and Belgium. "Italy can’t pay for Marchionne’s plan to create an auto giant worldwide,” Enzo Masini, who is representing the Fiom-Cgil union at today’s gathering, told Bloomberg. “In Italy, Fiat is the only automaker so there’s no chance of finding another job for a redundant worker.” Fiat's unions, as well as the Italian government, have called for a meeting with Marchionne to discuss his plans further but no date for a briefing has been set as yet. "We have asked Fiat to have a business plan for Italy for months,” Vincenzo Comella, a regional leader of the Uilm union, said in an interview yesterda. “They told us we had to wait for the end of the crisis; now Marchionne is showing business plans all around the world, except to Fiat workers.”

Meanwhile Fiat's main rival bidder for Opel, the Canadian-Austrian components and contract manufacturing firm Magna International, has boosted the credibility of its own bid with Russian carmaker GAZ expressing an interest in becoming involved. While GAZ won't contribute financially it would provide a manufacturing base for Opel in Russia. The Magna bid, which would see it taking around a 20 percent stake in Opel and its UK counterpart Vauxhall, is being financed by Russian banks.