Fiat: Unions must agree to cost cuts

MILAN (AP) — Automaker Fiat Group SpA will walk away from a deal to take a 20 percent stake in Chrysler LLC if the U.S. automaker’s unions don’t agree to major cost cuts, Fiat CEO Sergio Marchionne said in an interview published Wednesday.

Fiat and Chrysler are up against an April 30 deadline for Fiat to take a stake in the failing U.S. automaker in exchange for small car technology, but Chrysler first needs concessions from creditors and unions to ink the Fiat deal.

The Canadian Auto Workers union is scheduled to resume negotiations with Chrysler on Monday after a two-week hiatus, CAW President Ken Lewenza told The Associated Press.

If the Fiat alliance isn’t finalized by April 30, the U.S. government has threatened not to provide any more aid and let Chrysler be sold off in pieces.

“Absolutely we are prepared to walk. There is no doubt in my mind,” Marchionne told the Toronto Globe and Mail. “We cannot commit to this organization unless we see light at the end of the tunnel.

A Fiat spokesman confirmed Marchionne’s statements. Marchionne was attending a shareholders meeting of the Swiss bank UBS in Zurich on Wednesday.

Marchionne said there is a 50 percent chance the deal will fail because of lack of progress in labor negotiations in both the United States and Canada.

“The dialogue is out of sync,” Marchionne said. “I think they need to see what state the industry is in. Canada and the U.S. are coming in as the lender of last resort. ... No one else would put a dollar in. This is the worst condemnation of the viability of this business.

Marchionne said no one wants to remove the U.S. and Canadian autoworkers’ unions from the table. “But it will happen if a bankruptcy process drags on. The UAW and the CAW have a unique opportunity here to change the framework of the discussion.”

Lewenza said Marchionne’s comments were “not helpful.” He said he was open to more negotiations with Chrysler but has not been in talks with the automaker in two weeks because it has been focusing on wringing concessions from stakeholders in the U.S.

“We were in bargaining, as I said, and we were inches away from getting a deal, and then it broke up,” Lewenza said. “Chrysler, not the union, at that particular time changed their priorities and put their focus on what’s happening in the United States. So for [Marchionne] to say the CAW is reluctant is ridiculous. That’s not the fact.”

Chrysler spokeswoman Shawn Morgan did not immediately comment. UAW spokeswoman Christine Moroski declined to comment.

Chrysler Vice Chairman Jim Press has said he is optimistic the company will finish the Fiat talks by the April 30 deadline, but he told dealers during a conference call Tuesday that the alliance was not a done deal.