Italy's Fincantieri Drops Layoff Plans

ROME -(Dow Jones)- Italian state-owned shipmaker Fincantieri SpA has agreed to scrap its planned slashing of 2,551 jobs at the government’s request, the Italian Industry Ministry said Friday.

The company has “retired its draft strategic plan,” the Industry Ministry said in a note.

Fincantieri had planned to cut a third of its work force as part of a plan to respond to a sharp drop in orders by targeted reductions in capacity.

The company has numerous shipyards scattered across the country but its plans to shut some of them and merge their operations with neighboring yards caused riots in the past two weeks.

Fincantieri Chief Executive Giuseppe Bono met with labor union chiefs and Industry Minister Paolo Romani along with a host of ministerial representatives in Rome Friday. The parties agreed that there are “critical points that need to be addressed with defined projects,” the ministry said.

The company will be tasked with reformulating proposals to boost efficiency, while it has also been asked to consider new markets and even new products in a bid to boost output volumes, according to the government-brokered deal.

Fincantieri counts the Indian, Italian and U.S. navies as well as the Carnival cruise line among its clients.

The government, reeling from recent elections where conservative candidates fared poorly, is keen to avoid industrial conflict and high-profile job losses.

While Italy’s official jobless rate is now below the euro-zone average, the actual employment rate for adults is below that of Spain.

-By Christopher Emsden, Dow Jones Newswires