Fiat Automobiles Serbia to be Officially Founded

Representatives of Fiat and Serbian state-owned car factory Zastava will sign an annex to their agreement founding Fiat Automobiles Serbia in the town of Kragujevac on November 10.

Daily Danas reports that, under the terms of the agreement, Fiat will have a majority 67 per cent stake in the company, with Serbian partner Zastava holding 33 per cent. Fiat is expected to invest €800 million euros in the company, while the Serbian government has pledged €300 million euros.

Fiat signed a memorandum of understanding with the Serbian government for the acquisition of Zastava's plant in May 2008 that presages the establishment of the new company.

Zastava has a long history of cooperation with Fiat. In the 1950s, Zastava started production on the local version of the Fiat Topolino subcompact, Fiat 1300 and Fiat 128 sedans. In the 1980s, Zastava launched production of the Yugo and Zastava 101 subcompacts and licensed Fiat Iveco trucks and utility vehicles.

Technical details of the new company’s work will be agreed in the next two weeks. The first of a series of meetings thereon is reportedly scheduled for today at the Economy Ministry, which will focus on employee numbers.

Under the contract, around 2,400 workers will be employed in three stages over the course of a year. Zastava currently has more than 2,700 employees, and the remaining 300 workers wil be employed by companies that provide Fiat with parts.

The daily reports that the Zastava workers’ union is demanding the transfer of 1,740 employees from Zastava to the new company in the first half of next month. Negotiations with the union begin this week and will last for several days.