Fiat CEO Sergio Marchionne has recently threatened to cease manufacturing in Italy if he cannot bring down operating costs and increase productivity. This article in Businessweek (Oct.28-Nov.4, 2011) can make for an interesting class discussion on a whole variety of OM issues, from efficiency to capacity to productivity to union relations to off-shoring. The standoff between Italy’s largest manufacturer and one its hard-line unions (metalworkers–who are 12% of the workforce) is 
emblematic of the challenges facing the country. Italy’s industrial competitiveness has been eroding steadily, while Eastern European rivals have been working hard to improve conditions for corporations. The World Bank just ranked Italy 87 th in terms of ease of doing business; Hungary, Poland, and the Czech Republic all scored better.
Let’s look at the productivity gap (see Chapter 1). Fiat’s 22,000 factory workers in Italy assembled 650,000 cars in 2009. But the 6,100 employees at its plant in Tychy, Poland, built 600,000 vehicles. The Italian workers, in effect, each made 30 cars a year on average, compared to about 100 in Poland. And auto workers in Italy earn $38.55 an hour, more than 3 times the wage paid in Poland.
This productivity gap has Marchionne pushing Italian unions to agree to more flexible hours and to limit strikes and curtail absenteeism. (12,000 workers took part in an Oct. 21st strike). Says the union head: “Fiat workers, not its managers, want to keep the company in Italy”. An impasse with unions could end up with production shifted to other locales in Europe and the US–a move made easier by Fiat’s ownership of a controlling stake in Chrysler. An Italian economist writes: “If Fiat moves abroad, it will become a metaphor for a country that cannot be reformed, that has lost all hopes in the future”.
Discussion questions:
1. How is this also an issue for American auto makers?
2. Relate the article to news regarding Greece’s economic problems.