Berlusconi warns Alcoa over plant closures

April 13, 2010

By Guy Dinmore in Rome

Silvio Berlusconi, centre-right prime minister, on Friday warned Alcoa, the US aluminium producer, that it risked damaging its relations with the Italian government if it went ahead with its decision to shut down two smelters in Italy.

Mr Berlusconi’s public statement reflected the government’s alarm at rising job losses across Italy following lay-offs announced by car-maker Fiat and Finmeccanica, a major defence conglomerate.

Official statistics released on Friday showed unemployment reaching its highest level in over five years at 8.5 per cent of the workforce, although those numbers mask the true jobless level by not including those on “temporary” lay-offs.

In a letter to Klaus Kleinfeld, Alcoa chief executive, Mr Berlusconi urged the US giant not to act on its decision to shut down two smelters by February 6 and to wait for the outcome of Alcoa’s appeal to the European Commission over electricity subsidies.

Shutting down the two plants in Sardinia and near Venice “would lead to a serious social crisis in disadvantaged areas of the country and could alter relations between the Italian government and the multinational”, Mr Berlusconi said.

Protesting Alcoa workers earlier on Friday forced Sardinia’s airport in Cagliari to close operations.

Alcoa said last November it would temporarily idle operations at the smelters with a total capacity of 194,000 tonnes a year after the European Commission ordered it to pay back most of the state aid it had received in Italy since 2006 in the form of electricity price subsidies.

Mr Kleinfeld, in Davos for the World Economic Forum, had no immediate comment on Mr Berlusconi’s intervention. An Alcoa spokesman reiterated that its decision had been “driven by EU actions” and that it needed the backing of the EU to address the situation.
“Price subsidies that result in artificially low energy prices for selected companies waste taxpayers’ money and distort competition in the single market. Aloca will have to pay back most of the illegal subsidies,” Neelie Kroes, competition commissioner, said last November.

The two smelters employ about 1,000 workers and provide an additional 1,000 indirect jobs. Alcoa in its last quarterly results made a provision of $250m in charges related to the EC ruling. Alcoa has been operating in Italy for over 30 years and has six facilties across the country.

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