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Italy Warns Alcoa of "Consequences" If Shuts Plants
Feb 4,2010 08:53CST
industry news

ROME, Fe. 4 -- Italy's industry minister told the U.S. aluminium giant Alcoa (AA.N: Quote) it would face consequences if it unilaterally decided to go ahead with plans to mothball two Italian smelters, which the government and unions oppose.

"The government will not permit unilateral decisions. Alcoa will suffer all the consequences of a rash choice," said Industry Minister Claudio Scajola on Tuesday, talking to reporters on the sidelines of a business conference.

Hundreds of workers from Alcoa plants at Fusina near Venice and Portovesme in Sardinia staked out talks in Rome on Tuesday among executives, Italy's centre-right government and unions who are trying to save the plants from what Alcoa calls "structured temporary curtailment."

The talks will reconvene next Monday Feb. 8 after the Alcoa executives consult their U.S. headquarters. Italian media said Prime Minister Silvio Berlusconi had called the European Commission chief Jose Manuel Barroso over the EU executive body's ruling that Alcoa must repay state power subsidies.

Alcoa argues that a $300 million penalty imposed by the Commission -- which is under appeal -- would have a "devastating impact" when prices have fallen 60 percent. The firm says it is losing $8 million a month at its Italian smelters.

Berlusconi, who is battling to control rising unemployment and faces important regional elections in Italy in March, wrote to Alcoa CEO Klaus Kleinfeld last Friday asking him to rethink plans to shut the smelters on February 6.

The suspension of the two plants, which employ 2,000 workers, is a political issue when Italy is slowly recovering from its worst downturn since World War II, amid signs its exports are becoming less competitive against Asian competition.

Even Pope Benedict urged Alcoa and carmaker Fiat (FIA.MI: Quote), which plans to shut a factory in Sicily, to safeguard jobs.

Unemployment rose to 8.5 percent in December, the highest since monthly records began in January 2004, and Italy has one of the industrialised world's lowest workforce participation rates at only 22 million people from the 60 million population.


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