Fiat plant set to cut jobs over weak EU demand

ZEYNEP TOPALOĞLU ISTANBUL - Hürriyet Daily News

Employees pose for a photo during a press event at an assembly line of Tofaş, a Koç Holding enterprise which produces Fiat cars. The carmaker has announced that it will lay off 800 workers in a bid to lower the number of daily shifts to two from the current three. However, the capacity will not fall, Tofaş says.

Tofaş, the Turkish maker of Fiat cars, announced it will return to two production shifts and will not renew the contracts of 800 workers that expired at the end of 2012, due to deteriorating sales in Europe and forecasts saying the decrease will continue through the next two years.

The new shift order will start as of Jan. 7, Tofaş said in a filing to the Istanbul Stock Exchange (İMKB).
The company’s top export markets in Europe were Italy, France and Spain. However, sales plummeted in these countries – particularly light commercial vehicles sales at 20 percent – forcing Tofaş to halt factory production for 52 days in 2012.

The company aims to avoid deduction of overall production capacity in 2013 and maintain 2012 levels by cutting the cost of contracted employees.

Despite the intent to preserve last year’s production levels, the factory’s established production capacity is 400,000 vehicles and, after the measures, is predicted to be 310,000 vehicles in 2013, according to media reports.

In March 2011, Tofaş raised shifts from two to three and employed temporary, contracted workers in response to a seasonal demand boost, the company said. Previous raises will be reversed with these newmeasures.

Tofaş claimed in its statement that the contracted workers were informed of the possibility of a layoff and they will be prioritized in the case of future recruitment.

The announcement gave rise to curiosity over whether other automotive companies will follow suit in response to the fall in European demand.

Competitors feel easy

Renault, the other automotive giant producing in the northwestern province of Bursa alongside Tofaş, told the Daily News on the phone that there would be no layoffs, cuts in shift numbers or decline in capacity, especially as they recently began production of the new Clio 4, which gave the company a rise.

Meanwhile, Ford Otosan does not foresee any slowdown either, due to production of new models and exports to the U.S., daily Milliyet said yesterday.

According to sector authorities and the related trade union, as there would not be a remarkable fall in production for Tofaş, the move poses no great risks for sub-producers in the sector.

The automotive sector topped Turkey’s export items last year with a $19 billion volume, however, this was a 5.26 percent fall from the record-breaking 2011. Some one third of these exports were from Bursa. New car registrations in Germany, a key gauge of demand in one of the most important sectors of Europe’s biggest economy, fell nearly three percent last year, official data showed yesterday.