Cancellation of third shift in Fiat a huge blow to Kragujevac economy and subcontractors – Continued employment of 700 workers uncertain

Judging by the announcements coming from Kragujevac, several hundred people might lose their jobs, and the city's budget might lose around 10 to 15 million dinars in income taxes a month.

- The City receives 40 million dinars from the income taxes of FCA and its component manufacturers. If 1,000 FCA employees lose their jobs due to the cancellation of one work shift, the city will be operating with 10 to 15 million dinars less a month – explains the local government.

The company Fiat Chrysler Automobiles Serbia is canceling one of three shifts due to the decreased demand for its vehicles and the factory work will be organized in two shifts after the August holiday. As FCA stated on June 14, following the meeting of the company's management with the Unions' representatives, “the reduction of the workforce through voluntary leaving” is also being worked on.

As eKapija learns from unofficial sources in Kragujevac, around 700 of 3,000 Fiat employees might lose their jobs. Another 700 people working in Fiat's subcontractors might have to be let go too. The estimate is that it is the factory line workers who will lose their jobs, whereas the management will remain the same, our source adds.

Everything should become clear by August 1, when the company goes on holiday collectively. So far, it is known that a social program will be offered, more precisely, severance packages per years of service to “everyone who wants to apply”. Following that, the employees might be let go in accordance with the evaluation of each worker in the last three years.

- In order to meet the demands of the market, the company is prepared to adjust its production capacities by carrying out structural changes in the organization of the factory, by switching from a three-shift to a two-shift production schedule – says FCA's statement from the meeting in which the current state of the European auto market was deliberated.

The statement further adds that the company is cooperating with the unions on the voluntary leaving of the employees, which would be realized immediately. This, the statement says, is being done to the end of minimizing the social influence on the employees. The reorganization won't influence the continuity of the operations, the company's good performance, nor the volume level and the consolidated leadership in the export of FCA Serbia, the statement adds.

A blow to the city's budget

The mayor of Kragujevac Radomir Nikolic says for eKapija that the news that has come from Fiat is the worst piece of news he's heard in his year and a half of being in that position.

- Unfortunately, we've been expecting this to happen. There have been rumors about it in the past two years and the Fiat employees are well aware of how many times the work has been paused, how many times one of the shifts has been temporarily canceled, how many three- or four-day compulsory leave periods they've had due to lack of work, or rather, lack of sales – said Nikolic.

The mayor said that the state of the market was such that the demand was low for the model of the car produced in Kragujevac.

According to him, the cancellation of the third shift will hurt not only the fired FCA employees and their families, but also the budget of the City of Kragujevac, which will now operate with 10 to 15 million dinars less a month.

- Our goal is to draw in a lot of small investors to Kragujevac in the future, which will reduce the risk of a lot of people losing their jobs due to a change in operations of one investor, but that strategy will be implemented only after the new industrial zone has been made operational – said the mayor of Kragujevac Radomir Nikolic in his statement for eKapija.

The union

The head of the FCA union in Kragujevac Zoran Markovic said that the union had received the bad news from the management, but that he wasn't surprised, since it was known that there was a fall in the demand for vehicles in the markets of the world.

- We did, however, expect a much quicker response by the Government, as the owner of 33% of FCA's capital, more precisely Aleksandar Vucic, whom we kept inviting for 24 months to get involved in the talks with the company's leadership, which never happened – said Markovic.

As the head of the FCA union in Kragujevac said, there had been pauses in operations in the previous two years, due to the issues with suppliers and lower demand, but that “this is our most serious problem now”.

The Government still quiet

The Minister of Public Administration and Local Self-Government Kori Udovicki said that the Government had not yet discussed the announced cancellation of the third shift in Fiat's car factory in Kragujevac and the firing of employees.

- The Ministry of Economy is dealing with it at the moment – Udovicki briefly replied to the journalists' question about what the Government of Serbia would do as the owner of 33% of the capital of the Italian-Serbian company Fiat Chrysler Automobiles Serbia.

Deputy Prime Minister Zorana Mihajlovic stated that, regarding Fiat's decision, the state had honored all agreements and deadlines and that the problem lay elsewhere.

- I am not fully familiar with Fiat's announcement, and this is a question for the Ministry of Economy anyway, but if it is true, it is in no way a consequence of Serbia not providing the necessary conditions or not being a good environment for investments or there being any sort of a problem on our side – pointed out Mihajlovic.

She said that it was probably a consequence of the issues in Fiat's operations and their possible financial problems.

Automotive Cluster optimistic

Igor Vijatov, the manager of the Serbian Automotive Cluster, says for our portal that the new circumstances in Fiat were bad news for the subcontractors and the local economy on the whole, but that he still hoped that the Italian car manufacturer would change its decision.

- We need to wait and see whether this will really happen. I believe that the situation will change. Car sales go down each year in the summer, which means less work for the manufacturers. It's like that in the whole world, not just in Serbia. We can only hope that FAS will commence the manufacture of another model – says Vijatov and adds that, otherwise, the lowered Fiat capacities will significantly influence the operations of the component manufacturers and other subcontractors.

J.Dj. - M.K.