Kragujevac: Workers "expected more"

KRAGUJEVAC -- Zastava Kragujevac carmaker workers say they are "not surprised" by the announced start of production of Fiat's Punto car.

However, union representatives are saying that they "hoped to be making more vehicles".

It is the world economic crisis, reports say, that has raised doubt over the actual implementation of some investments in Serbia agreed earlier, including the deal with Italy's Fiat made last spring.

Yesterday, a contract signed in Turin confirmed that Fiat is not giving up on making cars in Kragujevac despite the auto industry's crisis, reports also say.

Zastava Independent Union President Zoran Mihajlović revealed that workers at the central Serbian plant hoped they would produce 20,000 cars a year, which would give jobs to about 1,000 of them.

Mihajlović says that the contract signed yesterday, putting the figure at 15,000 cars, in effects means a continuation of a commercial contract Zastava already has with Fiat.

"Unfortunately, information we have about the basic contract signed between the state and Fiat is vary scant – [the contract] which envisaged a level of investment, and which envisaged that the Punto production be only an interim solution toward the manufacturing of a whole new model," he continued.

"If there has been a postponement, and we hear there has been until about the end of the year, then it changes a lot of things in that protocol we signed with the government, and other things that surely must be put in the contract's annexes, in case that already occurred," this union leader said.

The end-of-2008 postponement Mihajlović was referring to is about the EUR 200mn that Fiat was to invest in Zastava.

The deadline for the Italian company's new model, that was planned to see the light of day in Kragujevac in 2010, has also been extended.

Mihajlović also said that he is "unaware" what guarantees were given that the new model will be manufactured by the end of 2010.

"This is a delay of a whole year, and it will be good if that's all. No one knows what effects this world economic crisis will have on Serbia and on Fiat, so what's going on now is conditioned for the next few months," he was quoted as saying.

The union Mihajlović heads, meanwhile, hopes to learn some details about Zastava's "business plan" as they meet with representatives of the Economy Ministry on Monday.

So far, it has emerged that besides the classic Punto, Zastava also plans to assemble its diesel-engine variant.