Italy

Crisis at Fiat

www.socialistworld.net, 05/07/2002
website of the committee for a workers' international, CWI

The crisis surrounding Mirafiori car plant and the whole Fiat Empire is sending shockwaves through Italian society. In America they say, “What’s good for General Motors is good for the USA”. In Italy the same goes for Fiat.

Clare Doyle, CWI, 2 July 2002.

It was revealed in May that the company suffered a second quarter of unprecedented losses in its car-making division (with a total loss last year of €550 million). It risked its debt mountain of €35 billion being down-graded to ‘junk’ status. At the same time, the company’s patriarch and boss since the 1960s, Giovanni Agnelli, was reported to be suffering badly with cancer. When a rumour spread that the man known as the “uncrowned king of Italy” had died, shares on the Milan stock market plummeted.

Luciano Regalo of the magazine ‘Chi’ (‘Who’) wrote: “When Agnelli stumbles, Fiat stumbles and when Fiat stumbles, so does Italy”. Shares recovered when the rumour was scotched, but the fact that the senior figure in the Agnelli dynasty was having to go to New York for prostate surgery was symbolic of the possible fate of Fiat car-making in Italy. While General Motors already has a 20% stake in Fiat Auto and retains the option to buy the rest in 2004, there has been widespread speculation that the American Corporation giant would be asked to step in earlier, thus assisting in a surgical operation to keep alive the rest of Italy’s last manufacturing colossus. Some kind of a deal has been put together with banks who will hold a controlling stake in Fiat if rationalisation fails to turn the situation around.

But who will feel the pain? Thousands of workers in Turin - in Fiat itself and in numerous associated industries and services - and probably thousands more elsewhere before too long. And this is before the already struggling Italian economy feels the full impact of a collapse of confidence in capitalism in the US and in the rest of the world as a consequence of the latest exposures of billion dollar scandals in some of the top US based companies. Together, these calamities show up what is wrong with the capitalist, anarchic way of organising production.

The ‘miracle’ of Italian capitalism falters

Although the family firm of Fiat is more than a century old, it is associated most with the post Second World War ‘miracle’ of Italian capitalism. Just ten years ago it employed 220,000 workers in Italy and 68,000 abroad. (Today the figures are 95,000 and 100,000 respectively). Five years ago it produced 600,000 cars in Turin; today it is down to 300,000. Fiat Auto still accounts 1.5% of Italy’s Gross Domestic Product.

The Fiat conglomerate as a whole, which many say will have to be broken up and ‘rationalised’ still further, is involved in trucks, racing cars, aviation, agricultural and construction equipment as well as business services, insurance, energy, football (it owns Juventus) and publishing, including ownership of the highly influential newspaper, La Stampa.

In an interview in his own paper, Giovanni Agnelli admitted that he was advised by the late Chairman of Mediobanca to sell Fiat’s car production to Daimler Chrysler. His response at that time was that he was far from prepared to “retire to the island of Tonga with a pile of money”. If that was the prospect for Mirafiori’s workers and the thousands whose jobs depend on car production in Italy, they might not complain. Unfortunately, with no reserves in the bank and with a rate of joblessness of more than 10% already, there is no alternative for Fiat’s workers but to fight.

Only too fresh in the memory of every Fiat car-worker is how quickly the Olivetti giant, based at Ivrea, one hour’s drive from Fiat’s home Turin, crashed to the ground. One decade ago, pioneering Italy’s drive into high technology, it employed 92,000 in that town. Now there are no more than 2,000 working for a shell company amongst the many involved in controlling Telecom Italia.

Incidentally, the Agnellis lost a battle three years ago for control over Telecomm Italia – initially to a small band of northern entrepreneurs, which subsequently handed over to the tyre producer, Pirelli. In politics as well, the Agnelli’s star has already begun to wane. The “uncrowned king” was not a supporter of Berlusconi’s bid for power at the beginning and is still critical of the intransigence of the government over Article 18 of the labour law and other issues [anti-labour laws that provoked last month’s huge general strike]. He feels too much is at stake in a head on collision with Italy’s working class. At the same time, his influence has waned in the top businessmen’s club – the Confindustria – which has seen the middle and small bosses under D’Amato take control.

Indeed, the mass demonstrations and general strikes of the recent months against the very policies Confindustria is demanding have rocked Italian capitalism and its present government. Coming against this back-ground, the news from Fiat has infuriated the legendarily militant engineering workers. They have been involved in a number of spontaneous walk-outs at Fiat plants and in organised regional and national stoppages in the car industry. Why should these workers’ livelihoods be wiped out because the bosses cannot control their own system when it faces a crisis?

The Agnelli family, renowned for its massive wealth and political power, has grown fat over many years on the backs of the working class – through the day in and day out drudgery of hundreds of thousands of workers in Italy and in even cheaper-labour countries world-wide. You can be sure that not one of the Agnelli dynasty’s members will be left destitute, even if the whole business empire collapses.

Quite correctly, the trade unions and left parties are campaigning against any redundancies and for a plan to be drawn up to create alternative work in socially useful projects, if Fiat cars really cannot find a market.

Worldwide car overproduction

For a number of years now there has been an overproduction of cars worldwide. In 1985 it was estimated to be around 11%. By the turn of the century it had reached a massive 35% - the equivalent, as one commentator put it, to 80 average-sized modern assembly plants. At the same time, many millions of workers, including many in the car industry itself, cannot afford to buy a little family car, let alone insure it and run it.

Of course, an efficient and cheap public transport system would make the actual (rather than the financial) demand for private vehicles even less. Factories like Mirafiori, Termini Imerese etc. are capable of producing all kinds of vehicles both for public transport itself and for the production and distribution of food and other essentials world-wide. ‘Demand’ for vans, trucks and tractors is keenly felt in the struggling Mezzogiorno region of Italy, let alone the poverty-stricken continent of Africa and a whole number of countries of Asia and Latin America. But the food of profits – money – is sadly lacking.

The basic problem with capitalism as a whole, demonstrated in the car industry most graphically, is that those who work to create the things that are needed (and that make a profit for the owners of industry) do not receive back in wages anything like the value of the products they have made. This fundamental problem is behind the constant drive by capitalist companies to find, conquer or create new markets for their goods. It can be temporarily overcome by financiers making money available to both capitalists and to workers – at a price in terms of interest ‘swag’ and provided anyway by the surplus already ‘stolen’ from workers at the point of production!

Credit enables workers to purchase some of the things they need, but cannot really afford. This can include things as expensive as houses. But it means workers who take this option being almost permanently in debt. They are also being robbed in another way by having to pay huge amounts of interest to the money-lenders to provide them with profit.

Companies also borrow from financiers, on the basis of future profits, which should pay off the interest charges and the loans. If they fall on bad times, they can show a false picture and continue to borrow, as in the case of Enron and Worldcom and probably many more giants as well as minnows. When a crash comes, it is not the captains of industry in the companies or the banks concerned who pay the price, it is the workers of blue and white collar who are shown the red card.

This is why a union campaign must leave the bosses out of discussions on plans to save workers’ jobs. A left, socialist and ‘revolutionary’ party like Rifondazione should be demanding the nationalisation of the Fiat empire and the running of it through boards of elected representatives of the work-force. These can hire (and fire) any experts they need to reorganise production in the interests of the workers in the industry and the working class as a whole. Any amount of ‘rescue plans’ agreed to by the employers will leave the real decision-making in the hands of the directors and share-holders. They will continue to demand sacrifices from the work-force in order to maintain their profits. These capitalist tigers are not going to roll over and let workers’ co-determination boards pull out their claws. Capitalism operates according to the law of the jungle but with all the forces of the modern state and the media operating on their behalf.

The battle for public ownership

And this begs the question of how the workers’ movement can possibly win a battle for public ownership of a threatened industry or company. It can be done if the pressure is strong enough and if the capitalist class as a whole fears the consequences of either a major business failure or of a mass protest on the streets that could boil over into a threat to their very system. Even a right wing, bosses’ government can move to nationalise a country’s flagship company in a matter of hours if it is doomed to collapse. The Heath Tory government in Britain did precisely that with Rolls Royce in 1972. In the case of Fiat, the first response to the threat of 2,900 redundancies and sell-off from the arch champion of free enterprise himself, Berlusconi, was to talk immediately of state intervention. In the mid ‘90s incentives were given by the state for consumers to trade in their old models and buy new ones. As Fiat has one third of Italy’s car market, this helped stave off disaster at that time. Today’s government is considering plans to assist the production of low-emission vehicles such as the ones being developed at present by Fiat. But these will be half-baked and inadequate measures paid for with tax-payers (workers’) money.

It is the workers’ movement, with their vast experience and expertise, which must draw up and fight for a real and lasting alternative. It is clear already that businesses large or small cannot supply a solution. A comprehensive reorganisation of threatened manufacturing capacity can only take place on the basis of public ownership and democratic control by the working class.

The campaign will obviously include the fullest consideration of what socially useful things could be produced in the Fiat factories immediately threatened with cut-backs and closure. Some of the facts and figures already drawn together by the No Global and Social Forum movement can be utilised. They can spell out how much difference one tractor can make to the amount of food produced in a country where millions are starving to death or how much damage to rain forests can be avoided by developing vehicles that do not use fossil fuels. Vital to finding an alternative to mass redundancies and closures in vehicle manufacturing is the need to develop integrated and free public transport systems which provide an adequate substitute for the convenience of the ‘family car’.

But an alternative plan and a struggle for it raise the whole question of how capitalist society is run and the need for workers to link up internationally to defeat the bosses and their system. The CWI has put forward a programme for car-workers world-wide, suggesting a number of demands to be fought in every country involved in vehicle-building. They include:

Opposition to all job losses as a result of the crisis of overproduction and over-capacity! Share out the work with no loss of pay! No to the transfer of work between factories and countries without the agreement of the workers affected! No to any deals between the bosses and trade union leaders behind the backs of the workers! All decisions to be put to mass meetings of the workers!

A massive campaign is needed to save the jobs at Fiat including strike action as has already been undertaken. It should be linked to the issues at stake in the mighty struggle over article 18 and the general strike action undertaken by all workers.

All this should be linked with the need for a political fight to get rid of the Berlusconi government and replace it with a government of workers’ representatives armed with a genuinely socialist programme. In order to avoid the disastrous policies of the last centre-left governments, this would have to include the taking of all major industry and finance into public ownership and for management and control to be democratically organised through boards and committees to be made up in equal parts of directly elected workers, representatives of their organisations and of the government itself.

Italian workers will relearn revolutionary past

One of the main tasks of such a campaign would be to convince workers they can win. More than 20 years have elapsed since the end of the revolutionary ‘70s was marked by the debacle and defeat at Fiat in 1979. Important battles have been engaged in the intervening period – not least the general strike of 1982 and the mass movement that led to the downfall of the first Berlusconi government in 1994. Now yet another generation of workers, with Fiat metal mechanics to the fore, has taken up the baton of struggle. If they draw all the necessary lessons from the past they will be able to develop a strategy to ensure victory.

The whole history of capitalist Italy, not least in the most recent months, bears witness to the capacity of the working class to struggle for its rights, to draw in other classes behind them and to support parties that they see as anti-capitalist. Socialists have to live up to the challenge of proving that their ideas of public ownership and real communist democracy can lead to a society that is superior to the chaos of capitalism in every way – a society run by them and their representatives and not by a gang of thieves of any variety.