Troubled automotive plastics supplier Ergom is being acquired by Fiat, its most important customer, for the symbolic price of one euro. The acquisition is expected to be completed in the autumn.
Ergom is said to be heavily loaded with debt, although no figure is available. According to one Italian newspaper, part of the debt is due to failed investments by company president Franco Cimminelli in the football business. But the company has also been hit in recent months by industrial action, with knock-on effects in disrupted supply that Fiat says caused it “grave damage, both economic and to our image.” According to the Financial Times, a strike at Ergom cost Fiat 33 million euros in profit in the second quarter this year.
Founded in 1972 in Borgaro, not far from Fiat’s Mirafiori plant in Turin, Ergom is now a strategic supplier to the car company. Local newspapers say Fiat cannot afford to let it go under. It is understood to employ over 4000 people at sites around the world. Ergom also supplies PSA, Renault, Ford, General Motors and other car majors. Products include instrument panels, bumpers, and fuel systems.
Fiat Auto managing director Sergio Machionne, who has been credited with Fiat’s recent turn-around, had hinted earlier this year at the possibility of creating a plastics and rubber centre of excellence. Whether by design or fortune, it looks like the plan is now being put into action.
