Marelli Announces Closure of Italian Plant Due to Declining Gasoline Engine Demand

21 Sep, 2023

Marelli Announces Closure of Italian Plant Due to Declining Gasoline Engine Demand

Marelli, a prominent automotive components manufacturer, has made the decision to close one of its Italian plants that specializes in producing components for internal combustion engines (ICEs). This strategic move comes as a response to the evolving landscape of the automotive industry, marked by a significant shift towards electric mobility, rendering the existing business model unsustainable.

Situated in Crevalcore, a town within the northern region of Emilia Romagna, the plant in question currently employs approximately 230 individuals. Its primary functions involve the production of plastic components and the processing of aluminum components tailored for use in internal combustion engines.

A union representative, who actively engaged in discussions with the company, succinctly summarized the situation by remarking, "Electrification claims its first victims in Italy." This statement encapsulates the challenges faced by traditional automotive manufacturers as they grapple with the global transition to electric vehicles.

Marelli provided a comprehensive explanation for its decision through an official statement. The company cited several factors contributing to the plant's closure, including a notable decline in new business opportunities stemming from reduced investments by automotive industry players in internal combustion engines. Additionally, escalating costs related to raw materials and energy further exacerbated the plant's financial viability.

Projections for the Crevalcore facility painted a bleak picture, with anticipated decreases in production volumes and revenues over the upcoming years. This trajectory would ultimately result in a capacity utilization rate of no more than 30 percent, rendering the plant financially unsustainable.

To mitigate the impact of the closure, Marelli outlined plans to relocate the plastic component production from Crevalcore to another facility within Italy. Simultaneously, the production of aluminum components would be outsourced to external entities.

The trade unions, following their discussions with Marelli, issued a separate statement emphasizing that additional plant closures loom on the horizon unless the Italian government actively supports the rapid transformation of facilities still reliant on internal combustion engine technology.

Marelli, a company owned by private equity firm KKR, was established in 2019, arising from the divestment of Fiat Chrysler's car parts unit, Magneti Marelli. In light of the impending plant closure, Marelli expressed its commitment to collaborating with trade unions and governmental institutions to minimize the adverse consequences for affected employees.