Fiat released a hard
hitting statement along with its Q3 financial report in
response to a demand to clarify its proposed Fabbrica
Italia plan from Italian stock market regulator
Consob.
The carmaker was upset
that this request had become public knowledge,
describing this leaking to an Italian newspaper as
"deplorable", although Consob had required that Fiat's
intent was announced when yesterday's report was
released. Fiat also registered its "dismay" in the way
that Consob's demand had been reported in the press,
believing that it has been misinterpreted.
The regulator was
responding after a one-day strike by the Fiom-Cgil union
last week designed to put pressure on Fiat to outline
its Fabbrica Italia plan which had called for a
20 billion euro investment in Italy by 2014, but which
has thus far shown very few tangible signs of being put
into action.
However Fiat's press
release yesterday in response to the inquiry does
somewhat justify the watchdog's concerns as the carmaker
has back pedalled someway from the Fabbrica Italia
proposal, now calling it an "expression of a strategic
direction". Fiat also says it will stop referring to the
plan any longer and that it won't supply the information
that Consob requested.
Fiat
statement: "Information on investments, product plan and
geographic diversification of revenues for 2011"
This press release is being
issued in response to a request received by Fiat on 20
October 2011 from Consob, the Italian stock exchange
regulator, for public disclosure of information pursuant
to Article 114 of Legislative Decree 58/98.
Fiat regrets and finds it
deplorable that on October 22, 2011 Consob's detailed
request had become public and reported by the press, In
these circumstances, Fiat reserves all its rights to
take appropriate measures to protect its interests. The
Company's dismay is even greater at the manner in which
the request, which is purely technical in nature and
scope, has been interpreted by several parties, and in
some cases even misrepresented, as being intended to
verify, in detail, the level of implementation of the
Fabbrica Italia project.
Fiat prepares multi-year
strategic plans to provide direction for the groups
combined activities worldwide and communicates the
essential elements of those plans to the market,
together with indications of its medium-term group
financial targets. Any significant variations in those
targets constitute price sensitive information, which
Fiat communicates to the market on a timely basis, as
required by law. Consob monitors compliance with that
obligation, among others, by issuers.
The Fabbrica Italia
project has never been a financial plan, but rather the
expression of a strategic direction that Fiat intends to
follow, the significance and scope of which is to
demonstrate Fiat's commitment to resolving issues
relating to its manufacturing sites in Italy, as well as
contributing to the development of the nation's
industrial potential. Fiat has always made it extremely
clear that achievement of such a result requires the
cooperation of all parties, trade unions and relevant
government agencies, involved in ensuring the
governability of plants and effective implementation of
agreements guaranteeing the necessary operating
flexibility.
Fiat, like all of its
competitors, continuously reviews its plans and must be
able to adapt them to market conditions, to respond to
actions and positions taken by other manufacturers and
to all other factors that can influence and impact their
implementation and their ultimate success. The
assumptions on which Fiats plans are broad in nature
and are not so detailed to enable, by monitoring the
level of achievement of a particular target, a
continuous and systematic confirmation of the extent of
implementation of Fabbrica Italia. Fiat is
therefore unable to provide information on its financial
plan which is so detailed to enable an analysis along
the lines requested by Consob.
In light of the potential
misconceptions, misunderstandings and unrealistic
expectations of detail associated with the Fabbrica
Italia project, Fiat will, with immediate effect,
stop any and all references to Fabbrica Italia,
while respecting commitments already initiated and
confirming its broad strategic intentions to contribute
to the resolution of Italy's industrial problems and its
future development.
Investments for Fiat (excluding Chrysler)
Fiat's investment plan for the
period 2010-2014 projects investments in tangible and
intangible assets, inclusive of capitalized R&D,
totaling 19.7 billion, of which: 3.7 billion in 2010;
4.5 billion in 2011; 4.2 billion in 2012; 3.6 billion
in 2013; 3.7 billion in 2014.
Investments in tangible and
intangible assets, inclusive of capitalized R&D
expenditure and R&D charged directly to profit and loss,
total 22.0 billion. 4.1 billion in 2010; 4.9 billion
in 2011; 4.7 billion in 2012; 4.1 billion in 2013;
4.2 billion in 2014. Out of such investments 16
billion are planned in Italy, as the portion
attributable to Fiat of a total investment of 20
billion, planned in Italy for Fiat and Fiat Industrial
S.p.A.2
For Fiat excluding Chrysler,
investments in tangible and intangible assets, inclusive
of capitalized R&D expenditure, for the period 1 January
to 30 September 2011 were 2.1 billion. Including R&D
expenditure charged directly to profit and loss, the
amount was 2.5 billion, broken down by geographic area
as follows: Italy: 1.2 billion; Europe (excluding
Italy) 0.7 billion; Latin America: 0.5 billion; other
regions: 0.1 billion.
With the approval of its third
quarter results, Fiat confirmed its investment target
for 2011 (tangible and intangible assets, inclusive of
capitalized R&D, as per market practice) of
approximately 5.5 billion for Fiat including Chrysler.
Investments totaling 2.1 billion for the nine months
ended September 30 were substantially in line with the
full-year target provided above as well as with the
previously announced target for Fiat excluding Chrysler.
Product Plan
Fiat confirms that, as of
today, the information provided at the Sanford C.
Bernstein Strategic Decisions Conference on September 20
remains valid. The product plan is subject to continuing
review and revision, based on trading conditions, market
developments, cost and a number of other factors and,
consequently, it is also subject to updates and
modifications which Fiat reserves the right to introduce
at any time.
Definition of the product plan
and related investments is based on a strategy intended
to maximize architecture convergence and standardization
of components for the relative architectures (mini,
small, compact, etc.) on which the various models are
produced.
In consideration of the above,
the plant allocation decision for individual models
takes place in the months prior to production launch,
based on a series of considerations, including the
characteristics of the site and other contingent
investment considerations, in order to ensure the best
utilization of available production capacity and the
greatest potential for success of the investment. This
approach follows current best practice in the automotive
industry aimed at reducing development and manufacturing
costs and ensuring flexibility in the utilization of
production capacity.
