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HUMAN RESOURCES

In document Board of Directors and Auditors (Page 53-57)

At 31 December 2009, the Group had 190,014 employees, a decrease of 8,334 over the 198,348 figure at year-end 2008. Reductions in headcount were reported in almost all countries where the Group operates. Those reductions were more significant in the first half of the year and were primarily attributable to the fall in production volumes. Of the 24,600 departures recorded, concentrated predominantly in the first half, the majority were in Latin America and Europe, while over 50% of the approximately 15,100 new hires, which occurred predominantly in the second half, related to Group companies in Latin America and resulted from the recovery in the market and consequent increase in production volumes.

Changes in the Group’s scope of operations resulted in a net increase of about 1,200 employees, primarily related to the acquisition of the activities of Carrozzeria Bertone in Italy by Fiat Group Automobiles and a net increase from disposals and insourcing by Comau’s Service business line in Latin America, both of which were partially offset by the sale of Ergom France by Magneti Marelli.

ORGANISATIONAL AND MANAGERIAL DEVELOPMENT

The Group’s organisational configuration remained essentially unchanged with respect to the prior year. The alliance with Chrysler, the most significant new development during the year, lead to the creation of combined working groups and the sharing of experience and know-how, but did not result in any structural changes to the organisation. The Group maintained a two-pronged organisational approach, focusing on both the business (Sectors and brands) and principal business processes. As Group-level roles for the coordination of business processes have become established, their ability to influence business decisions has been enhanced as has the ability to oversee the management of individuals, particularly those with high potential, through the Talent Review process. Some organisational changes took place at Sector level and were generally oriented toward creating synergies to facilitate cost containment measures associated with the reduction in business volumes. The Performance and Leadership Management process, in place for several years and now including all managers and professionals, continued to serve as the basis for all personnel management decisions.

During 2009, a new application was launched in several countries (first phase of roll-out), that will enable information on individuals and entities within the Fiat Group to be integrated into a single, global database by year-end 2010.

Training

Investment in training to support the Group’s activities and individual professional development totalled around €48.9 million for the year.

Fiat Sepin’s Training unit provided training, consulting and professional support equivalent to a total 10,410 days of training and ‘on-the-job’ support. A further 17,382 hours of web-based distance learning were also provided to 5,971 users.

Grants and Scholarships

The Fiat Grant and Scholarship Programme for children of Group employees was a well-received initiative once again this year. In 2009, 566 grants and scholarships were awarded (159 in Italy) for a total of €1,089,700. In addition to Italy, recipients were also located in France, Spain, Poland, Belgium, England, Brazil and North America: all countries where the Group has a significant presence.

INDUSTRIAL RELATIONS

During the year, a constant dialogue was maintained with trade unions and employee representatives at company level to achieve consensus-based solutions to manage the impact on workers of measures taken to respond to the change in market conditions brought about by the global economic and financial crisis. The significant market contraction affecting all industrial sectors meant that, in addition to the gradual reduction of fixed-term and agency workers, it was also necessary to implement large-scale production stoppages, utilising vacation banks and, where available, temporary layoff benefit schemes or other measures based on collective agreements or company policy. Nearly all Sectors within the Group undertook restructuring and reorganisation during the year.

There was also intensive collective bargaining at various levels, resulting in major agreements being reached with trade unions on pay and employment conditions in countries where Group companies are located.

Social dialogue

At the European level, the Fiat Group European Works Council (EWC), a representative body for Group employees in the European Union, took part in information and consultation on the Group’s activities, as provided under EU Directive 1994/45/EC (now incorporated in Directive 2009/38/EC), with particular reference to those issues having a transnational impact. The EWC, established in 1997, has 30 members and its composition reflects the geographic distribution of Group employees in Europe. A meeting was held with the EWC’s select committee in May. At the annual plenary meeting, held on 26 and 27 November 2009, management representatives gave a presentation of Group results, conditions and trends in the market, and sales performance for the year. There was also an explanation of measures put in place to confront the current economic downturn and, for certain Sectors, plans for reduction of the workforce related to the rationalisation of overhead costs or a transfer of activity.

In Italy, dialogue with the trade unions continued at both national and local level and was primarily focused on managing the significant decline in business volumes and consequent under-utilisation of production capacity. Also in 2009, there were two important meetings at Palazzo Chigi in Rome with representatives of national and local government and the trade unions. At the first meeting on June 18th, the Italian Prime Minister was also in attendance. At that meeting, the Chief Executive outlined the situation of the Group, measures being employed to respond to the contraction in the Group’s core markets, as well as production allocations for 2009 and 2010, with particular reference to the Italian manufacturing plants of Fiat Group Automobiles, Iveco and CNH. For CNH’s Construction Equipment business, given the significant drop in demand and the medium term outlook for the market, it was underscored that a thorough reorganisation would be required to ensure current production remains in Italy, to rationalise current plants to improve capacity utilisation and to define a plan to manage redundancies. At the second meeting on December 22nd, the Chief Executive outlined the industrial plan for Italy for 2010 and 2011, as well as the conditions necessary for the realisation of that plan. The CEO confirmed that the plant at Termini Imerese would discontinue auto production in 2011 and stated that, as there was no internal solution which would guarantee future employment for workers at the site, the Group stood ready to collaborate with government and unions, supporting viable proposals for conversion of the site which might be put forward by the Region of Sicily, other local authorities or private sector groups.

Management of production levels

Group production continued to be heavily influenced by extremely turbulent and volatile markets with erratic demand, such as for FGA in Europe, or depressed demand, such as for trucks and construction equipment. During 2009 also the agricultural equipment market experienced a significant fall in demand in both the tractor and combine segments.

The components Sectors were also impacted by the effect of the crisis on production levels at customer plants, both Fiat Group and external, although the level of impact varied between business lines.

In Italy, the Group made ample use of the temporary layoff benefit scheme. At 11 plants, employing approximately 11,000 workers, the scheme limits (52 weeks in any rolling 2-year period) were reached and recourse was made (as provided for under social emergency legislation) to the extraordinary temporary layoff benefit scheme (CIGS) which provides for a further 12 months coverage for company crisis due to sudden and unforeseeable events.

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For FGA, government initiatives in the form of eco-incentives to consumers adopted in many European countries during 2009 to stimulate demand had a positive flow-through effect including for some of the Group’s Italian plants, resulting in a reduction in the use of the temporary layoff benefit scheme and, in some cases, making it necessary to resort to overtime, or to transfer or second employees from other sites and companies where production stoppages were in effect, in order to respond to the increase in orders for certain models.

Under these extremely difficult circumstances, the Group succeeded, nonetheless, in converting 530 fixed-term contracts and 830 apprenticeship contracts into unlimited term employment contracts.

Outside Italy, production stoppages were also necessary to respond to the significant deterioration in volumes. Almost all Sectors utilised Chômage Partiel in France, Expediente de Regulación de Empleo in Spain and Kurzarbeit in Germany. In the United States, CNH instituted temporary layoffs at its plants in Wichita, Burlington and Calhoun, all belonging to the Construction Equipment business. Suspension of production activities, which took various forms, also involved the plants of certain Sectors in other countries, such as Poland, Belgium and the UK.

In Brazil, workforce reductions were made in the first quarter, primarily for blue collars, in response to the drop in production volumes attributable to the economic crisis, which began to ease in the second quarter. The reversal in the trend resulted in an increase in plant output and, consequently, a return to hiring and use of overtime.

In Poland, a significant increase in production volumes for Fiat Group Automobiles, driven by the introduction of eco-incentives and satisfied in large part through extensive use of overtime, also had a favourable impact on employment levels.

Restructuring and reorganisation was carried out in Italy and involved, in addition to measures to concentrate production for the Construction Equipment segment in two of the three existing plants, as mentioned previously, the principal Sectors where, pursuant to various agreements with the unions, redundancy programmes were established involving about 1,000 employees (primarily white collars) in 2009 and the first half of 2010. These are all employees who would become eligible for retirement during the period covered by mobilità (Government benefit scheme applicable to employees affected by collective redundancies for a duration of 3 years in northern Italy and 4 years in the south). In Spain, Iveco reached an agreement with the unions which allows for a reduction of approximately 350 employees at its plant in Madrid, including through early retirement. In France, restructuring was primarily handled through voluntary redundancy programmes and involved the FPT plants in Burbon Lancy and Garchizy, Magneti Marelli’s Electronic Systems business line and the Comau plant at Castres. CNH initiated information and consultation procedures at CNH France in relation to the planned headcount reduction of 46 in the commercial area of its construction equipment business, while in the USA, it downsized the workforce including through a programme of voluntary redundancies. In the UK, CNH undertook a restructuring and reorganisation of its product development activities, following transfer of those activities to Italy, and in manufacturing, as a result of the decline in business volumes. Approximately 200 employees were affected.

In Germany, Iveco reduced the workforce by about 200 following an agreement reached with unions which also provides for use of early retirement. Also of note is the Lighting business line (Magneti Marelli) business line’s planned relocation of pre-production for headlights and electronic components from Reutlingen (Germany) to Jilhava (Czech Republic) and Brotterode (Germany) respectively, involving some 130 employees.

World Class Manufacturing (WCM)

During the year, the Group continued its gradual rollout of the World Class Manufacturing programme at all Group plants. The integrated WCM model has been introduced at 114 plants where it is applied to all production processes, optimising performance through the enhancement of processes, improvements in product quality, control and continued reduction of production costs, flexibility in responding to market demand and customer requirements, as well as the involvement and motivation of employees. In 2009, following specific external audits, 23 plants worldwide received WCM recognition, including 17 at Bronze Level, while Silver Level was awarded to: Cassino and Melfi (FGA) and Verrone (FPT) in Italy; Tychy (FGA) and Bielsko Biala (FPT) in Poland; and, Bursa (FGA) in Turkey. The application of WCM methodologies was also discussed extensively with trade unions and employee representatives who participated actively in projects and initiatives for employee involvement at plants.

Collective bargaining

With regard to collective bargaining, agreements reached in 2009 provided for pay increases or a one-off payment to compensate employees for cost- of-living increases and were in line or slightly above the official cost-of-living increase recorded for the period.

On 15 October 2009, negotiations were concluded on the national collective labour agreement for employees in the metalworking sector (excluding managers), applicable to around 97% of all Fiat Group employees in Italy. Agreement was reached between Federmeccanica and the trade unions (with the exception of Fiom-CGIL) based on the new contractual framework established in the Accordo Interconfederale signed on 15 April 2009 (again with the exception of CGIL). The renewed agreement, whose content is mostly pay-related, is valid for three years beginning 1 January 2010. Provisions in the October 15th agreement relating to employment conditions contained no substantial modifications to the national collective labour agreement dated January 2008. On 25 November, the agreement for the renewal of the national collective labour agreement for managers of industrial companies was signed. This agreement applies to the majority of Group managers in Italy. The new agreement is valid until 31 December 2013 and covers both pay and employment conditions.

At Group level, on the basis of the Agreement of 17 July 2009 (applicable to the majority of employees of Group companies in the metalworking sector in Italy) signed by Fim, Uilm, Fismic, and UGL and valid for 2009 only, a performance-related bonus was paid, which averaged €1,943 for employees in categories 1 through 4. The amount was approximately €500 lower than the average bonus paid in 2008 as a result of the decrease in Group results reflecting the impact of the global economic crisis. As an interim, experimental measure, in addition to the bonus referred to above, the agreement also provides for a gross one-off payment of €200 to workers at plants which achieve WCM Silver Level in 2009 or 2010.

Outside Italy, the main company-level collective agreements established during 2009 include the annual negotiation in France which resulted in salary increases, in line with inflation, of between 1% and 1.5% depending on the company.

In Germany, agreement for renewal of the metalworkers contract, signed in November 2008 and applied by most Group companies in Germany, provided for salary increases of 2.1% in February and May 2009. A few Group companies exercised the option, provided for in the agreement, to defer the second increase from May to December 2009.

In Poland, company-wide pay negotiations generally provided for one-off bonuses (rather than structural increases) which averaged around PLZ 2,500 and were payable in two instalments, one of which was directly tied to and conditional upon the achievement of productivity objectives.

In Brazil, most Group companies applied collective bargaining agreements in place with the local industry associations for each industry sector (e.g., FIEMG for the companies in the Belo Horizonte, Betim, and Contagem areas). Others have stipulated analogous company-wide agreements. Overall, increases under these collective agreements were higher than inflation, reflecting the country’s current economic growth and high production levels at Group plants but were, however, in line with increases applied for the local industrial system as a whole. Variable annual bonuses were also paid on the basis of company results.

The level of labour unrest experienced in Italy was higher than for 2008. Minor local labour action was also taken in defense of jobs - including strikes and protests against the non-renewal of temporary employment contracts and agency contracts and as result of the use of flexible labour mechanisms (transfer or secondment of workers from other locations or companies who would otherwise have been subject to temporary layoff; use of overtime; introduction of additional shifts, etc.) at certain plants where there was a significant increase in production levels due to the jump in orders following the introduction of government incentives to stimulate demand for the automotive sector.

In addition, in relation to the agreement for the Group performance bonus and the agreement for the renewal of the national collective labour agreement for metalworkers, limited strikes were conducted by Fiom-CGIL, the only trade union organisation which was not a signatory to the agreements.

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FINANCIAL REVIEW - FIAT GROUP

In document Board of Directors and Auditors (Page 53-57)