Fiat Could Cancel Deal With Chrysler if Labor Costs Aren't Cut

Fiat’s CEO, Sergio Marchionne has told the Globe and Mail and mail that the possible partnership with Chrysler will succeed if the automaker cannot cut labor costs.

Marchionne told the newspaper that the partnership only has a 50-50 chance because of the lack of progress in talks with union leaders. He also stated that Canadian unions have been especially resistant.

“Absolutely we are prepared to walk. There is no doubt in my mind,” Marchionne said in an interview posted on the Toronto newspaper’s website.

In order for the partnership to work, Chrysler’s unions need to agree to labor costs that are equal to that of Japanese and German automakers.

The latest version of the proposed partnership between Fiat and Chrysler states that Fiat would take a 20 percent stake in Chrysler in exchange for the technology to make small cars and access to foreign markets. Fiat would also gain access to the US market.

Fiat and Chrysler have until the April 30th deadline to finalize the deal. If a deal is not reached Chrysler will be forced into bankruptcy. If a deal is reached the U.S. government will provide an additional $6 billion in funding.

Full Story: CNN Money