US-Italian company Power Train which produces engines and gear for Fiat cars will shut down its plant in Termoli, southern Italy for a week at the end of June, the company spokesman said on Saturday.
"The plant in Termoli will be closed for a week starting from June 24. About 3,000 employees of the plant and related companies will be temporary laid off," he told Reuters.
Power Train is a joint venture between Fiat and General Motors, where each holds 50 per cent.
A source familiar with the situation said halting production at the Power Train plant was related to Fiat's plans to cut output.
"When Fiat suspends car production there is no need for more engines," the source said.
Fiat which is struggling with sagging sales in Europe and at home announced in May a new round of temporary layoffs in June aiming to cut production by 14,700 cars. That move will send home more than 19,000 workers over three weeks.