Italy Auto Industry at a Crossroads: Around 230 workers in Italy’s “Motor Valley” have gone on strike over the planned closure of their auto parts factory, becoming an early casualty of the European Union’s shift toward electric vehicles. Marelli, owned by U.S. fund KKR, wants to shutter the plant in the Emilia Romagna region, which specializes in making internal combustion engine components for car giants like Stellantis, Volkswagen, and BMW. The reason? It’s become “unsustainable” in the face of the EU’s ban on new petrol cars from 2035.
This labor dispute exemplifies the complex challenges governments face as they navigate the transition to greener energy to meet ambitious climate goals. Up to 70,000 jobs are at risk in Italy alone as the push for green transport gains momentum, according to the auto industry lobby ANFIA.
Marelli has temporarily put the closure plan on hold but has confirmed its intention to abandon the plant, leaving workers in a state of limbo. For about 20 couples, the situation poses a dire threat to their entire family income.
“Our lives would cease to exist,” said Grazia Vitiello, a 57-year-old worker at the Marelli plant, whose husband also works there.
The stories of these workers underscore how the transition to electric vehicles is already impacting people’s livelihoods, well before EVs become an affordable option for most consumers around the world.
Marelli came into being in 2019 after Fiat Chrysler sold its component unit Magneti Marelli to Japan’s Calsonic Kansei, owned by KKR, for a hefty 5.8 billion euros ($6.1 billion). Initially, the company boasted a workforce of 43,000, with 10,000 based in Italy. Today, the Italian workforce has dwindled to 7,300, while the global headcount has grown to 50,000.
Marelli has also announced that 167 workers at its Argentan facility in France, which manufactures parts for combustion engines, will be affected.
Sergio Manni, a maintenance worker at Crevalcore, expressed his dissatisfaction with how Marelli is handling the transition to EVs: “I’m not upset with the EV transition. It’s the way Marelli is dealing with it: firing and closing, zero ideas.”
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Many of the workers at Crevalcore are in their 50s, which makes them too young to retire and often too old to easily secure new employment. Francesco Simeri, who is facing his second company crisis in a decade, described the situation as akin to “watching the same horror movie again.”
As the 2024 EU elections draw near, the turmoil in Crevalcore, and similar cases across Europe, may force politicians to confront the tension between climate policies and people’s well-being.
Giovanni Sanfelice, the husband of Samira Chouri, said he welcomes the shift toward green transport but believes the EU isn’t managing the transition well. “You need to offer workers a solution; otherwise, you sentence us to death,” he said. “The EU is building a house starting from the roof.”
Italy, the EU’s third-largest economy, is home to Stellantis, its primary carmaker, and boasts the second-largest automotive parts industry in Europe, according to ANFIA, which supplies numerous automakers worldwide. However, 40% of Italy’s companies specialize in combustion technology, and over 70% have exposure to it, putting the nation in a precarious position as the world moves toward electric vehicles.
The small size of these companies and their reliance on combustion technology make Italy one of the most vulnerable countries in Europe during this transition.
“Small size means little money to invest in converting production,” explained Francesco Zirpoli, a management professor at Venice University and the scientific director of its Center for Automotive and Mobility Innovation (CAMI).
Although Italian parts manufacturers have the skills to transition to EV-oriented production, the primary threat comes from the country’s shrinking car industry. Italy’s auto production has plummeted from over two million units in the 1990s to fewer than one million today. This decline has made businesses cautious about investing in Italy.
Governments have several tools at their disposal as they navigate the green transition. Around 37% of the EU’s 800 billion ($845 billion) post-pandemic recovery fund is earmarked for climate-friendly investments. Italy is set to receive approximately 200 billion in grants and low-cost loans through 2026, making it the largest beneficiary in absolute terms.
In 2022, Rome allocated 8.7 billion to support the local automotive industry. However, no major measures have been implemented thus far, except for incentives aimed at boosting car purchases.
As the Italian government grapples with the transition to green energy, the turmoil in Crevalcore and similar cases across Europe may force politicians to confront the apparent contradiction between people’s welfare and climate policies. Climate think tank ECCO estimates that Italy needs to invest an additional 7-13 billion per year to meet Europe’s decarbonization goals.
Italy’s reluctance to embrace the green economy has already hindered the penetration of fully electric vehicles in the country, potentially exacerbating the challenges of transitioning to EVs. In the first nine months of 2023, electric vehicles accounted for only 3.9% of Italy’s new car registrations, compared to 15.2% in Europe as a whole.
Our Reader’s Queries
What city is famous for manufacturing automobiles in Italy?
Turin has long been synonymous with the automobile industry, serving as the hub of F.I.A.T. and the epicenter of Italian and global automobile design and manufacturing. It’s no surprise that the industry has always been at the forefront of the city’s economy and identity.
Why is Italy famous for cars?
The Italian automotive industry has consistently showcased remarkable engineering prowess, propelling them to the pinnacle of success. Without a doubt, Italian-made cars embody the essence of exceptional design, engineering ingenuity, and creative flair.
How much money does Italy make from cars?
Italy’s automotive industry is a significant contributor to the country’s economy, providing employment to over 278,000 people. Recent data from February 2021 revealed that the industry generated a turnover of 106.1 billion in 2020, accounting for 11% of the country’s manufacturing turnover and 6.2% of its GDP. This highlights the importance of the automotive sector in Italy’s economic landscape.
What is the outlook for the automotive industry in Europe?
Car production in the EU saw a significant boost in the second quarter of 2023, with a 9.5% increase compared to the previous quarter. The steel association EUROFER has revised its forecast for the growth of production in the EU automotive industry in 2023, now predicting a 7% increase compared to the previous forecast of 6.4%. This positive trend is a promising sign for the industry and suggests a bright future ahead.