Fiat and Daewoo look to more layoffs
By : Magdalena Wierzchowska
Fiat Auto Poland and Daewoo-FSO announced plans last week to lay off more than 2,000 employees as a result of declining car sales. While Daewoo-FSO said it was considering dismissing up to 1,300 employees, Fiat may sack 750.
Janusz Wozniak, the vice president of Daewoo-FSO, and Enrico Pavoni, the president of Fiat Polska, talked about the layoffs last week at a press conference for representatives of major domestic car companies. Wozniak said a final decision about the dismissals at Daewoo's Zeran plant would be made at the company's shareholders meeting on Feb. 23. Pavoni, meanwhile, refused to reveal any details about the possibility of redundancies at Fiat, but representatives of labor unions confirmed that the car maker's management had given them documents declaring 750 workers would be made redundant.
According to Wieslaw Brzozka, chairman of Fiat's General Solidarity Union, 580 employees of Fiat Auto Poland will lose their jobs, while another 170 will be dismissed by Powertrain, a Fiat affiliate. However, 450 more workers could be made redundant in other Fiat companies, bringing the total to 1,200, Brzozka said.
The potential layoffs stem from lagging new-car sales, which dropped 25% between 1999 and 2000. Car producers blame the decline on the rise in fuel prices, insurance costs and interest rates for bank loans as well as last year's 4% excise hike for new cars, which made customers turn to cheaper secondhand cars.
In addition, the Polish Chamber of Automotive Producers (PCAP) said price hikes always influence car purchases, which is one of the reasons why the used-car market skyrocketed last year compared to 1999.
"The decline of new-car sales doesn't seem to be connected with its saturation, as private imports of secondhand cars doubled compared to 1999," according to a PCAP press release.
If the present crisis on the new-car market continues, other layoffs may soon follow, according to PCAP. In the first half of 2000, the automotive sector generated 7.6% of Poland's gross domestic product, and employed nearly 5% of the country's manufacturing workforce, according to Jacek Zarnowiecki, a member of the Polish Association of Private Employees of the Automotive Industry and a board member of U.S. auto maker General Motors.
Employment in the automotive sector started to decline last year, according to PCAP. While most domestic car makers are backed by huge multinationals, car dealers and car-service outlets are vulnerable to a prolonged decline in turnover. "The financial standing of dealerships and service outlets has become dramatic," PCAP said. "Many are beginning to see losses, many are on the verge of bankruptcy. In many cases, dealerships have reduced employment by 10% or more. Further falls in new-car sales will undoubtedly cause additional dismissals in the sector, which employs approximately 70,000 employees."
