It has been six months since we last met. They were difficult months for the economy, for the industrial world, for workers. Consequently, it was also a difficult period for the Fiat Group. But we were not passive bystanders. When we met in June, Fiat had just concluded the agreement with Chrysler. At that time we laid out, in broad strokes, the rationale behind the transaction. In the meantime, we have taken significant steps forward.

The plan we presented in Detroit on November 4th represents a new beginning for Chrysler. That plan includes, over a 5-year period, the launch of 21 new models, the sharing of product platforms with Fiat, billions of dollars in savings and a significant increase in sales volumes. By 2014, Chrysler will have annual sales of 2.8 million vehicles, 40 percent more than in 2008 and more than double this year's volumes. Almost 60 percent of those vehicles will be based on Fiat platforms. And over 40 percent of engines will have Fiat technology. Annual revenues will be approximately USD 68 billion and operating income USD 5 billion, with the current debt level halved and American taxpayers fully repaid. I wanted to underline this upfront not only because expectations for Chrysler are extremely high, but also because, as we will see shortly, this project represents a lynchpin for Fiat's future. It is my desire that today's meeting is anything but a mere ritual.

We have a very ambitious plan for Fiat, above all for Fiat in Italy. A plan which is forward-looking and which is intended to strengthen the Group's industrial presence in Italy. Some of the assumptions we are working on perhaps don't agree with the cold calculations of financial analysts. But we have sought to find the right equilibrium point between industrial logic and social responsibility. I ask you all to keep that in mind. I am convinced - and have been for some time - that there is no other way of managing a large and complex enterprise such as Fiat. Catering to the needs and considerations of just one interest group would have devastating effects. The one extreme, based on pure economic considerations, would result in painful consequences that nobody here wants. The other extreme, based exclusively on social concerns, would result in the business eventually disappearing. And I don't believe anyone here would want this either.

The most reliable projection for demand in the Western European auto market in 2010 is about 12 million registrations. That would be 1.5 million units less than this year. In Italy too, steps taken to underpin demand succeeded in limiting the hemorrhaging. The sales figure for the full year should be around 2.1 million units, a slight drop over 2008. Forecasts for next year are that demand will be more or less flat compared to 2009, assuming renewal of eco-incentive schemes. It would be reasonable to project, however, that without a gradual phasing out of such incentives, market demand would fall to about 1.7 million units.

Much more serious is the situation for light commercial vehicles. This segment experienced very weak demand in 2008, with drops of 10-11% in Western Europe. This year it fared even worse. As expected, measures to stimulate demand have had no effect. Economic conditions have continued to penalize fleet renewals, pushing sales volumes even lower. The decline in Western Europe was dramatic: down almost 30 percent in 2009. Expectations for the coming year are that demand will remain at the same low levels. The markets which have been most severely affected include trucks and commercial vehicles. The current negative trend shows no sign of reversing. We are seeing double-digit declines in every geographic market. 2009 will close with global demand down over 20%. In Europe the drop will reach almost 40%. And the outlook for 2010 is anything but positive. It is difficult to make any precise estimates, but volumes are unlikely to shift far from the very low levels experienced this year.

The construction equipment market has also seen acute declines. Truly historic levels, in the negative sense. Demand, which for Western Europe is expected to fall in excess of 50% in 2009, will, in all likelihood, continue to remain at very low levels throughout 2010. Agricultural equipment, which at the beginning appeared to have held up against the crisis, has also been hit. The tractor market in Western Europe is expected to record a 10-15% decline for 2009 and a further decrease is expected for 2010. This negative shift has also impacted the combine market, which has seen a 10-15% falloff this year. Once again, further declines are expected in 2010. These figures speak for themselves. The macroeconomic circumstances we are faced with are anything but favorable.

Nevertheless, the Fiat Group has done everything possible to respond to the difficulties generated by this crisis. We initiated a series of significant cost containment actions. We reworked our strategies to take the crisis into account. These steps enabled us to achieve a 2.6% trading margin for the third quarter - one of the best in the sector - and to record a positive bottom line. Now, however, the time has come to re-establish a more long-term focus to how our business is structured. The Fiat Group's business plan will be presented to the global financial community by the Spring of 2010. It will be a rigorous, detailed plan which sets out our annual growth and strategic targets for each sector up to 2014.

Let’s now take a look at the plan for Italy by individual sector. Iveco has been heavily impacted by negative market trends. Our European sales have practically been halved. Naturally, this has had a significant knock-on effect on production levels at our plants. The plant in Brescia operated at under one third of capacity, while the plant in Suzzara was only at 40% capacity. We acted to protect domestic production levels as much as possible. This meant an almost total shutdown of our activities in Spain. Production is now predominantly concentrated in our Italian plants. In addition, an agreement was reached with trade unions to implement a restructuring plan at the Brescia plant. This will result in more than €20 million in investment and allow us to refurbish the main areas of our production facilities in preparation for when the market picks up again. For all three plants, we confirm the current production focus: the new Eurocargo in Brescia, the new Daily in Suzzara and buses in Avellino.

On the components side, all Group businesses operating in this sector were affected by the weak market. Despite this, however, we intend to maintain a solid industrial base in Italy. This area of our business doesn't get much attention because public opinion is focused on cars. However, it is fundamental not only to our own production system but also to our maintaining a solid industrial presence in Italy. This area of our business employs more than 25,000 people and encompasses FPT Powertrain Technologies' engines and transmissions, Magneti Marelli's components, Teksid's aluminum products, and Comau's production systems. We are talking about a total of 36 plants in Italy. Several of these stand to benefit from projects involving Fiat Group Automobiles and the alliance with Chrysler. In addition, the Fiat Group has in recent years intervened to help many suppliers in difficulty, some of which are quite significant in size. In some cases, we offered financial assistance. In other more severe cases, we chose to buy the company out, making it part of the Group. To cite a few examples, this happened for Ergom, Itca, Teksid Aluminum, Imam and - just a few days ago - even with MPI from the Meridian group. This was no small undertaking, including from a financial point of view. Such interventions meant that companies which are important to the industrial fabric of this country were able to survive. Even more important is the fact that more than 10,000 jobs whose future was seriously compromised were saved. These transactions enlarged and strengthened the Group's presence in Italy in the components sector.

In addition to initiatives undertaken to help suppliers, we also have plans to intervene significantly in logistics for plants and parts. The objective is to rationalize these activities through the World Class Logistics program so that they are more fully integrated and better synchronized with production processes. This will enable us to obtain significant improvements in the technical efficiency of our plants, the quality of our products and the ergonomics of our workstations, thereby eliminating waste, defects and breakdowns. In the near future, our plan will lead to the re-insourcing of many employees. We are talking of nearly 3,000 people, in addition to the more than 900 workers who already joined the Group between the end of 2008 and the beginning of 2009.

But there is another reason which justifies strong opposition to this proposal. Makers of commercial vehicles are struggling for survival and simply cannot afford to face any additional burdens. All the more so when they will produce derisory benefits for the global environment. This regulation will do nothing more than increase the cost of these vehicles, giving rise to an incredible contradiction. The end result will be to further suppress demand at precisely the moment when it needs to be supported. That is why all automakers are asking for the draft regulation to be radically modified. Adding to the sector's difficulties today will only put the production of commercial vehicles at risk in Europe and, obviously, in Italy.

The other issue that is not much spoken about but risks hitting the sector like a hurricane is the free trade agreement between the European Union and South Korea signed in mid- October. A few salient facts are all that is needed to understand the grave consequences it could have. The European Union has always applied a rule in determining the origin of products from countries with which it has such agreements: local content must make up at least 60%. A lower level would give a country the possibility to use imported parts and components from low-cost countries to gain an unfair competitive advantage. In this case, however, the EU has chosen to alter the standard "Country of Origin" rule, lowering the minimum threshold to 50-55%. It also intends to allow the Korean government to reimburse domestic producers for import duties on parts from other low-cost countries which are used in products exported to Europe. The combination of these concessions would give Korean automakers an enormous competitive advantage, worth as much as €1,500 per vehicle. There is no justification for exposing the European auto industry in this way. Particularly in such critical market conditions. Particularly at a time when even the United States is reviewing the terms of its agreement with South Korea, directly in relation to the automotive sector and import/export duties. The US administration is against ratifying the agreement reached by the previous government despite opposition from Detroit automakers. In discussions with the Department of Commerce, Chrysler refused to accept the new conditions and denounced South Korea's closed market policies which penalize distribution of foreign products within its domestic market. This is a position fully shared by the United Auto Workers union. I am sure that for all of us "free trade" means competition which is free but honest, open but fair. The proposed agreement between Europe and South Korea would not be a free trade agreement but rather a way of bending the rules. That is why opposition is necessary before it is too late. Equality, equilibrium and fairness, the inviolate principles of trade, need to be re-established and upheld.

Fiat Group is ready to do its part to remove the structural obstacles which are halting development of the sector. But it is also crucial that there are no external initiatives that will act as a brake. Our recent actions were based on the conviction that today's world requires a new business model and a more efficient system. The alliance with Chrysler should be seen in this light. A view frequently expressed, that it is Fiat that has saved Chrysler, is misguided. There are significant benefits to both. The Chrysler plan not only represents a restructuring of the American company. It will also be key to the survival of Fiat Group Automobiles. The futures of the two businesses are now inextricably intertwined and both will receive enormous benefits from such a relationship. The primary benefit is that it will give us the critical mass necessary to achieve significant economies of scale. Combined we are the sixth largest producer in the world. This will enable us to increase volumes for each individual platform, in each of the main segments, so that we can achieve economic returns which justify the necessary levels of investment. By year-end 2012, we will have reached 1 million cars per platform in the Mini and Small segments. And by 2014, we will have also reached this volume target on the Compact platform.

The agreement will enable us to expand geographically so that we can take advantage of new market opportunities. For example, Fiat's return to the United States and the introduction of new products in Europe. The two businesses represent an ideal combination. The presence and experience of Fiat in the smaller car segments and of Chrysler in the medium and larger segments will enable the Group to offer a full product range. FGA will finally have achieved adequate coverage in the medium-large segment. Even our distribution network will be strengthened. This agreement also gives us the opportunity to further our commitment to sustainable mobility, broadening our expertise in alternative propulsion and fully leveraging our respective strengths.

Today Fiat is recognized as the most eco-performing automaker in Europe with the lowest level of CO2 emissions for both the Fiat brand and the Group. Over ten years ago we introduced the "Natural Power" line, a complete range of CNG vehicles for which our leadership is recognized. Our Group pioneered the Common Rail system, now used in all of the latest generation diesel engines which produce emissions that are 20% lower than for equivalent vehicles using a gasoline engine. We recently introduced the MultiAir system which, alongside improved performance, can achieve a 10% reduction in emissions on gasoline engines. Together with Chrysler, which has been developing hybrid and electric technologies for many years, we will continue to develop alternative solutions over the medium and long term.

The agreement with Chrysler is also behind the transaction we have finalized with regard to Bertone. Last month we acquired the site in Grugliasco, a solid part of Turin's industrial fabric which has well-developed logistics and supplier base. This plant will produce two high-end models. Production on the first will begin before the end of 2011 and the second in 2012. Once fully operational, the target is to produce 50,000 units per year. But beyond the operational plan for Bertone itself, the most significant aspect of this initiative is that it has enabled us to offer future employment to more than 1,000 people who were not previously part of the Fiat Group.

We have been through an epic crisis and if Fiat had not reached the agreement with Chrysler, our future plans would be very different and far less ambitious. But this agreement will provide a basis for a serious restructuring of our Group. All of the prerequisites necessary to remove the structural weaknesses which have been dogging us for decades, including production overcapacity are now there. In the United States, they have recognized this need and have tackled the problem face on, determined to transform the shackles of the crisis into an extraordinary opportunity. We have been witnessing a courageous structural shift in the US, with government, companies, trade unions and financial institutions working side-by-side to do more than merely save the auto industry. Real and significant measures were taken to rationalize production. It is a true rethinking of the model from an ecological perspective. An attempt to create a solid foundation on which the sector can be rebuilt. Through the alliance with Chrysler, Fiat has the privilege of being involved in the process of re-establishing the US auto industry. We can bear witness to the extraordinary determination of the US government and the profound sense of responsibility demonstrated by all stakeholders. Everyone did their part to achieve the best result, a result which benefits everyone.

I give you the example of Chrysler. The planned realignment of the company's production capacity, which was announced in June following negotiations with the government and unions, calls for excess capacity to be eliminated within a couple of years. This means a significant reduction in the number of Chrysler plants in the United States from 20 to 13. It means that, compared with 10 years ago when the company had 29 plants, production capacity was more than halved. And the workforce was also drastically reduced. Between 2004 and today, the number of blue-collar workers decreased over 40%. The same is true for clerical staff. In the twelve-month period from June 2008 to June 2009, the total workforce decreased one fourth, which represents approximately 17,000 jobs. Similar workforce reductions also took place at General Motors.

On the contrary, in Europe the problem of production overcapacity is yet to be addressed. Many governments, each in their own way, have given support to the sector through ecoincentives or direct financial support to domestic producers. More specifically, the various forms of government aid have included: new credit lines, loan guarantees, research subsidies, contributions toward the development of engines which are eco-friendly and/or use alternative fuels, aid for capital investment, refinancing for consumer financing divisions. The most significant intervention was from the French government which made an almost €8.5 billion aid package available to PSA Peugeot Citroën and Renault. But many other national governments also intervened. As I have stated in the past, I believe such interventions are very dangerous because they place a few players in a position of advantage, forcing others - such as us - to compete with their hands tied behind their backs. In addition, the lack of a common European vision and unified action risks becoming a chain around our ankles exactly at a time when we need to be moving as rapidly as possible.

The objective, for both America and Europe, would appear to be the same: to revitalize those industries which are crucial to the economy. But there is a real possibility that the results will be drastically different. The American plan focuses on overcoming problems that have afflicted the automotive industry for years and building a new, more sustainable future from both an economic and environmental perspective. European plans, by contrast, are not addressing the underlying root causes precisely because they lack a common vision, each nation choosing instead to look inwardly. We cannot continue along with blinkers on, pretending that everything is OK. We, in Italy, want to confront and resolve this problem. We want to confront it in an earnest and coherent manner.

The five Fiat Group Automobiles plants in Italy together produce 650,000 cars per annum and employ nearly 22,000 people, out of total 30,000 FGA employees in Italy. In Poland, a single plant produces approximately the same number of cars with less than one-third of the people. In Brazil, a single plant produces 730,000 units per year with 9,400 people. These figures speak for themselves. The number of cars produced per employee is completely disproportionate. It is not a question of efficiency, but rather a level of capacity and workforce utilization which goes against any form of industrial logic. What is clear is that if we were to design our Italian production facilities from scratch, we would design them completely differently. An industrial structure such as the existing one is doomed to fail. Nobody could believe that this situation is sustainable in the long term. A solution needs to be found for the future of the Group and jobs in Italy. We need to address the problem face on and with concrete solutions.

Crisis forces us to make choices. The choice before us today is to either pretend that everything is going well or act to protect the core of our business. Our future depends on the choices we make now. Continuing on as though everything was OK would be easy but would also lead straight to ruin. Our resources would be channeled toward keeping alive those areas that are performing badly with the end result being that the entire business would be dragged down. It is precisely now, however, that an act of courage is needed to remove the elements of weakness from the industrial system and focus on the elements of strength. That is the only sure way to create a sound base from which the business can move forward. A base which will be stronger and potentially more complete.

Let’s take a look at how, beginning with the Mirafiori plant. Our plan is to transform Mirafiori into a World Class Plant. This entails reorganizing the plant in order to build a completely new production line capable of contemporaneously producing several different models. This also involves rethinking logistics in order to deliver components to the production line in a much leaner and faster manner. The body-welding area will also be completely redesigned. This project will enable us to achieve several objectives at the same time: optimize the flexibility of the plant, reach full capacity utilization, make more efficient use of manpower, reduce training time and the number of tasks per person. Mirafiori will undergo a comprehensive transformation. A transformation which will be fundamental for the future because of the relative benefits this technology offers for the rapid addition of new products. For 2010, we can confirm that current production will remain unchanged. The investment necessary to carry out this profound transformation will begin next year. This plant conversion will be accompanied by a major training program for all employees involved. In 2011, production will continue for the Alfa MiTo, Lancia Musa and Fiat Idea which will then be supplemented by two versions of a new high-volume, compact MPV.

The Cassino plant is already equipped with a production line capable of producing three or more models, similar to the one we intend to build at Mirafiori. And the die-cutting facility there is the most modern in Europe. Logistics have been optimized and this year the plant achieved WCM Silver Level. The plant at Cassino is becoming an absolute cutting-edge centre of technology. In recent years we have invested significantly in this site and we intend to continue. We have other significant investment plans in the pipeline. Every area of the plant will benefit from further innovation. A new highly automated line will be installed for die-cutting. The body-welding line will be improved with advanced laser and plasma systems, in addition to a new under-body assembly line. The paint shop and assembly lines will be improved through the introduction of new technologies to assist workers. In 2010, production of the Fiat Bravo, Croma and Lancia Delta will continue accompanied by the introduction of the Alfa Giulietta. 2011 will be a year of major change. The plant will be established as Fiat's centre of excellence for the production of C-segment vehicles.

And now we come to the Giambattista Vico plant in Pomigliano d'Arco. As you know, the model we currently produce there have not benefited from incentive schemes. That is why this plant has been the most penalized by the decline in sales volumes. For 2009, the workforce utilization ran at an average of about one-third. This year production will just barely reach 36,000 units compared to a total capacity of 240,000 units per year. We expect 2010 to be even worse. At this level, the plant is not sustainable. We invested significantly in recent years. Just two years ago the site was completely relaunched. It was a program without precedent in Italy - and I believe even in Europe. We invested more than €100 million to create the best work conditions and increase the plant's efficiency. The production process was reorganized according the principles of World Class Manufacturing. All workers underwent an intense training program. This enabled us to resolve quality issues but has not solved the issue of production overcapacity. What is needed now is an act of courage which looks at more than just pure industrial logic. And securing a future for the plant would require a significant commitment of resources. As we signaled in June, it is our intention to allocate a new platform to this plant. We have looked at several scenarios which are still being evaluated. The current thought is to allocate the A platform to Pomigliano, which will be used for the future Panda. Establishing the A platform in Italy would significantly strengthen Fiat's overall presence here. The only segment not currently part of our production activities in Italy is the city car - a segment where we are the European leader. The B platform is produced at Melfi and Mirafiori. Production for the C platform is concentrated in Cassino. Adding production of A-segment vehicles at the Pomigliano plant would complement the production line up in Italy with an important strategic lynchpin. In our view this is the only solution to accomplish a major turnaround.

Building the future Panda at Pomigliano would guarantee it extremely high volumes. We currently produce 290,000 units per year of the existing Panda. Within three years, we should be able to refer to Pomigliano as Fiat's second largest plant in Italy. This is a radical step, however, which will require considerable resources. The plant will need to be restructured and converted for its new mission. And this would represent a major financial commitment. To give you an idea, it would cost several hundreds of millions more than leaving things as they are and allocating production of the future Panda to Poland. It is indispensable therefore that this complex operation can be proven to be feasible. In addition, the restructuring would mean a further period of inactivity for workers at the plant. And this would require an extended period of income support. At the same time, at least a further €40 million would be required to train and update personnel on the new production methods. Finally, considering the expected volumes for this model, we need certainty that we will be able to respond to the curves in demand in real time through the use of overtime or other forms of flexibility to be agreed with the unions. In summary, this solution would require commitments from all parties involved. In my view, the scenario I have just laid out is the only one which would ensure the highest possible utilization of the plant. I repeat...from a purely industrial perspective it is not the ideal solution. However, I am convinced that if everyone in this room is interested in finding the right equilibrium between industrial logic and social responsibility, the path exists. This project, as with those I have presented for the other three plants, also forms part of a comprehensive plan to reinforce the industrial presence in Italy. It is an objective that can be met if we put a stop to the hemorrhaging of resources currently taking place at Termini Imerese. Those resources could then be channeled into investments to improve quality and production levels at the other plants.

Rounding out the allocation of production is the launch of the future Ypsilon in Poland in 2011 and a new family in Serbia based on the Small platform. Finally, production of the Ducato will continue at Sevel in Val di Sangro - the 50/50 joint venture between Fiat and PSA - which this year was heavily impacted by the collapse of the light commercial vehicle market.

Fiat Group has demonstrated its desire to seriously confront the issue of the environment. Our commitment in recent years has resulted in us being recognized as European leader for having products with the lowest emissions levels. The recent decisions by the European Union have, however, made our task even more difficult, forcing us to multiply our efforts to hold on to that position of leadership. Despite this, we have decided to focus a large portion of the Group's internal research efforts to the theme of energy efficiency. I am convinced that this is the principal element around which automakers will compete in the near to medium term. It was with great pleasure that we accepted the invitation from the Ministries for Research and Economic Development to join the research think-tank, which also includes representatives from the Regional authorities and Anfia. It is the first time we have witnessed a determination to confront these issues in a joint and integrated manner.

I don't believe anything else needs to be said. But let me make one thing clear. I am not reciting these figures in order to complain. Fiat has not asked for even €1 from the government and it has no intention of doing so. Not even for the eco-incentives. It is not our decision to make. It is a choice - like many others - which falls onto those who are responsible for shaping this country's industrial policy. We are prepared to stand up to any situation. I only wish that others would stop trying to bully Fiat. This also applies to the ratio of the number of cars produced in Italy to the number of cars sold in Italy. Those who maintain that this figure is disproportionate - if compared to other European countries - are perhaps seeking to avoid an important element. Fiat's market share in Italy is half that of the French or German automakers, as a group, in their respective domestic markets. It is clear that in both France and Germany, the significant presence enjoyed by domestic automakers enables them to maintain a strong production base which can be leveraged to develop an even more significant export market. What I mean to say is that we cannot continue making groundless accusations. Petty games don't get anyone anywhere. They only feed a climate of animosity and hurt Italy as a whole. What we need instead is for decisions to be made. If we want a great auto industry in this country, we need to behave accordingly. Only a decisive policy for growth and development can create the conditions necessary to strengthen Italian industry.

Create the conditions which could also attract new investment, including from abroad. For many years Fiat was cited as an obstacle to foreign automakers entering the market. I can assure that is not the case today. We would be the first to welcome a change of direction. We would be delighted if Italy became attractive to other automakers and prompted them to invest here - among the many other options available. This would be positive for everyone: for our economy, for jobs, for the supply chain and also for Fiat. I believe there is still much to do for this dream to become a reality. And the first thing to is to decide that we want it.