Silesia shivers on car news
But the development also raised fears of a slimdown in the potentially combined operations on a cost-saving basis. Both Fiat and General Motors are crucial employers and near neighbours in Silesia where unemployment has been concentrated by large-scale redundancies in traditional smokestack industries such as coal and steel.
While some industry observers calmed fears of cost cutting, others pointed to the slowdown in sales on the world market which is the direct cause of the troubles afflicting world-wide Fiat operations. The Polish market alone is too small to keep both plants busy, so Fiat and GM both concentrate on exports which are expected to be boosted by EU accession.
General Motors already holds a 20% segment of the ailing Italian carmaker which it took up in 2000 and, according to a share swap agreement signed between the two companies, has the right to exercise a controlling stake in Fiat between 2004 and 2009.
The two firms are sizing up the shape of the deal, but Fiat chairman Paolo Fresco said that GM's plan to write off most, or possibly all, of the $2.4 billion invested in the 20% stake in Fiat Auto, was "an opening gambit in price negotiations".
The buyout will undoubtedly affect Fiat subsidiaries all over the world, including its Polish division, Fiat Auto Polska, which manufactured the first car for the domestic market in 1931. Since the fresh beginning of its operations in Poland following the start of economic reforms, Fiat Auto invested over $2 billion in its operations and manufactured almost three million cars in the last ten years. It now employs over 3,000 people in its plant in Tychy.
The investment for a time boosted Italy to top of the foreign investment league in Poland. The company makes cars from its Cinquecento, Siena and Seicento ranges in the Tychy plant.
GM established a presence in Poland in 1991 and opened a new $620 million plant in Gliwice four years ago, where there are currently 2,000 employees. In 2001, GM Poland produced more than 100,000 cars, of which 90% were exported. All of them carried the Opel marque.
Auto industry watchers say General Motors and Fiat have already decided against a straight merger between Opel and Fiat operations because of difficulties in combining two carmakers which have their own specific difficulties.
Neither the Fiat nor the GM offices in Poland wanted to comment on the prospective buyout or the reports appearing in the global media. But a GM spokesman in Gliwice agreed that within several years Fiat engines would be used in GM's Polish-manufactured automobiles, such as Opel, with whom Fiat already has a technical exchange agreement.
With potential Polish workforce of at least 5,000, industry experts expressed their concerns for their future employment. The Italian mother company has scheduled almost 7,000 layoffs.
"It will really depend on the investor," said Wojciech Drzewiecki, the president of Samar, a company that analyses the automotive market. "If GM would decide to increase its production, this would not take place. If however, because of a drop in exports the production would fall, so would employee numbers."
Local politicians said the story of the GM plant has so far served as a potential warning.
Kazimierz Majda, an SLD councillor in Gliwice, told the Business Journal that people were "very disappointed" with the company.
"Opel promised a lot to the city and its inhabitants, but as it turned out most of them were not fulfilled," he said. "As a matter of fact, the city lost more than it gained, as it contributed the land and prepared for the construction of the plant.
"We expected a lot more advantages and higher employment. Now a lot of people who started off working for Opel are now working in the nearby mines."
