By Ben Richardson BBC News business reporter in Milan

For many years, Fiat was the cornerstone of the Italian economy

The company, once the heartbeat of the Italian economy, has had to trim down and revamp its business to deal with an increasing dominance of Asian rivals.

Fiat has started to emerge from its slowdown, but not without a human cost.

As Italians vote in general elections on 9 April, many will be asking if the price they have to pay for recovery is too high.

Change of scenery

Mario Ricciardi was a young boy when his family left the southern region of Potenza for Milan in 1964 - one of thousands that moved north to meet the demand for cheap labour.

"Everything was booming," 49-year-old Mr Ricciardi remembered. "My village was only small, but out of the 10,000 people who lived there, only 4,000 stayed.

"It would fill up during the summer holidays, but for the rest of the year it was mainly the old, women and the very young."

We used to do a variety of jobs and were respected as workmen. Then it was just the same thing, day after day on a production line Mario Ricciardi, former carwoker

According to Giuseppe Berta, a professor of contemporary history at Milan's Bocconi University, many of Italy's current problems can be traced back to this period.

Cities such as Milan and Turin, the home of Fiat, experienced rapid growth and industrialisation that inevitably led to clashes between workers and employers, Mr Berta explained.

The population of Turin, for example, surged from 650,000 in 1946, to 1 million by 1961, and 1.25 million in 1981.

At the same time, huge amounts of political clout were accorded to the families that controlled the largest employers, creating bloated companies that were often unwilling to change for fear of losing their influence.

"Even today, there is not a clear enough delineation between the owners and the managers of Italian companies," Professor Berta said. "And this is seen at both large and small firms."

Moving down the gears

By the mid-1960s, Fiat was firmly at the top of Italy's industrial tree, but not very long afterwards, the cracks began to appear.

Between 1970 and 1980, Fiat and other manufacturers like Alfa Romeo were hit by a difficult period of industrial action that exploded with the "hot autumn" of 1969.

This coincided with a drop in global demand and many companies started looking at how to cut costs.

Fiat's Mirafiori plant helped industrialise the city of Turin

One option, called "cassa integrazione", involved funding from the state and saw employees sent home on much lower salaries.

Mr Ricciardi had started working for Alfa Romeo at its plant in Arese on the outskirts of Milan during the mid-1970s, and was put on "cassa integrazione" for two years between 1983 and 1985.

"This created resentment," he explained as diggers in the background slowly pulled down the now-defunct Arese plant. "Some people were sent home, others kept their jobs."

Further rifts occured after Alfa Romeo was bought by Fiat in 1987 and the new owner tried to impose more modern working techniques.

"Before Fiat, we used to do a variety of jobs and were respected as workmen," Mr Ricciardi says. "Afterwards it was just the same thing, day after day, on a production line."

Despite the changes, output at the plant continued to drop until Fiat decided to stop production completely and shift it from Arese to other factories.

A quality future

Carmakers across Europe, including Volkswagen and DaimlerChrysler, have had to follow a similar route, and Fiat's workforce today is just over 46,000, compared with more than 150,000 at its height.

While the cuts have hit some people very hard, others have had an easier time.

Concetta Di Muro settled in Turin as a young girl, after her family also left their agricultural home, and followed her father into Fiat, where she has now been working almost 30 years.

She admits that the changes in working practice have changed the atmosphere of Fiat, and the feeling of camaraderie that permeated the firm during the its earlier years has all but disappeared.

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But she also says the new-look Fiat is a good place to work, a sentiment that is echoed by her 34-year-old son and co-worker Massimiliano.

"The company has taken an interest in me, it has given me training and helped me develop," he explains. "That's vital because the company's future, and our future, is based on the quality of the product we make."

"Some people have found it difficult to adapt to this new way of thinking, and still fight the changes. But if a product is not good enough, then the plant will close down. It's natural selection."

Catch the coat-tails

As stark as Massimiliano's assessment may seem, it is true that Fiat has faced up to many of its difficult decisions.

It has put in place a new management that is headed by the well-respected Sergio Marchionne.

At the same time, analysts have welcomed Fiat's plan to focus on new models like the Punto and export to fast-growing economies.

The company, which also makes trucks and agricultural and construction machinery, had a net profit of 1.4bn euros (�1bn; $1.7bn) in 2005, the first time it has posted a profit in five years.

"Fiat will never again have the influence it did in the past," said Professor Berta. "But if we are honest, it is further along the recovery path than the Italian economy."