Chrysler 2012 Annual Report Download - page 102

101
Report on Operations
Management of Production Levels
During 2012, auto markets in both North and South America showed significant signs of improvement. In Europe, by contrast, demand
contracted for the fifth consecutive year with particularly negative consequences for Fiat Group manufacturing activities in Italy.
In Brazil, the Group made use of overtime and also reached an agreement with trade unions to establish shift rotas that were adequate
to meet the needs of certain production areas.
For Chrysler Group, vehicle production continued to expand in 2012 in response to strong customer demand and in line with the
2010–2014 Business Plan announced in 2009. The increase was facilitated by the implementation of additional shifts at the Belvidere
and Jefferson North assembly plants in the U.S., as well as increases in production rates and overtime hours at most manufacturing
facilities. Correspondingly, the Chrysler Group hourly workforce across North America also increased by more than 6,000 employees
compared with the previous year.
With the exception of Italy, there was a year-over-year decrease in production stoppages – implemented through the use of temporary
benefit schemes, where possible, or mechanisms established through collective bargaining or company policies – as well as in the level
of restructuring and reorganizations.
In Italy, extensive use of temporary layoff benefit schemes enabled the Group to manage production declines and to undertake
restructuring and reorganization activities related to investment in new production without resorting to permanent redundancies.
The persisting crisis in the European auto market resulted in a realignment of production levels in Poland. During the year, Fiat Group
companies in Poland continued to use flexibility schemes initiated in 2011. The significant drop in production volumes associated
with the negative trading conditions and outlook had a direct impact on the Fiat Auto Poland plant in Tychy, where in 2013 it will be
necessary to scale back from three to two shifts and realign the distribution network to current demand levels. This resulted in the
announcement of 1,450 redundancies and the Group reached an agreement with trade unions on December 20th that established the
conditions for selecting which employees would be affected, in addition to determining incentives for voluntary redundancy that vary
based on years of service.
In other European countries, there were no significant restructurings or reorganizations and no significant production stoppages were
required.
Suppliers
Suppliers make an important contribution to the strategic development and
competitiveness of the business. Fiat Group maintains a continuous and active
dialogue with suppliers to ensure a strong, mutually beneficial partnership. The
Group actively promotes responsible behavior and sustainable development
throughout the supply chain and seeks to establish long-term relationships with
suppliers who meet the highest standards in quality, price and reliability, as well
as sharing the Group’s values and approach to sustainability.
Group Purchasing, which oversees purchasing activities for the Group worldwide,
managed approximately €44 billion in purchases in 2012 through a supplier base
of approximately 2,700 companies.
The process for screening, selecting and managing suppliers is based on objective
assessment criteria that ensure impartial treatment and equal opportunity.
To ensure the selection of suppliers is aligned with the Group’s sustainability
policies, the procedures also require verification that prospective suppliers
conform to specific standards for environmental and social sustainability. New
contracts with suppliers contain clauses requiring adherence to the Fiat Group
Code of Conduct and specific Sustainability Guidelines relating to human rights and
working conditions, respect for the environment and ethical business practices.