Auto part maker Marelli to shut Italy plant over waning petrol engine business

The company logo of Marelli is displayed at the factory in Ora Town, Japan

MILAN (Reuters) - Auto parts maker Marelli said on Tuesday it would shut one of its Italian plants producing components for internal combustion engines (ICE), as the business had become "unsustainable" due to the transition to electric mobility.

The plant, located in the town of Crevalcore in the northern region of Emilia Romagna, currently employs around 230 people. It manufactures plastic components and processes aluminium components for ICEs.

"Electrification claims its first victims in Italy," said a union representative who participated in talks with the company.

Marelli said in a statement its decision was caused by "the lack of new business due to the reduction of investments by automotive players in internal combustion engines", as well as rising prices for raw materials and energy.

It said volumes and revenues at the Crevalcore facility would have dropped further in coming years, bringing its expected rate of capacity utilisation to no more than 30%.

Marelli said it planned to move Crevalcore's plastic component production to another plant in Italy while aluminium production would be externalised.

The unions, which met the company on Tuesday, said in a separate statement that many more closures would follow if the Italian government did not support a prompt transformation of plants still linked to ICE technology.

Marelli, owned by private equity firm KKR, was created in 2019 after Fiat Chrysler, now part of Stellantis, sold its car parts unit Magneti Marelli.

The company said it was working with unions and institutions to minimise the impact for affected workers.

(Reporting by Giulio Piovaccari, editing by Gavin Jones)