For Alfa Romeo to be able to sell cars competitively in North America it will definitely need to start local production. Not only are wage rates actually cheaper here in the U.S., but the dollar’s weakness against the Euro means that it will actually be favorable for Alfa Romeo to export North American manufactured vehicles for sale in Europe.

This is a strategy Alfa Romeo’s parent company, Fiat, and its CEO, Sergio Marchionne, are well aware of. Not surprisingly, reports of jobs cuts in Italy as production of formerly Italian manufactured vehicles is moved to North America.

In fact, people family with Fiat’s plans have revealed to Automotive News that up to 5,000 jobs in Italy will be cut as part of a new plan that includes Chrysler building Fiat and Alfa Romeo cars in North America for sale in Europe.

Chrysler revealed in November that it will build up to 270,000 vehicles per year for the Fiat, Alfa Romeo and Lancia brands in North America (U.S., Canada and Mexico) by 2014.

While the Fiat models will almost certainly be the 500 minicar and its variants, there’s a lot of debate surrounding which Alfa Romeo and Lancia models will be manufactured locally. The most likely options would be a new flagship Alfa Romeo based on Chrysler’s LX rear-wheel drive platform, a new Giulia mid-size sedan to replace the current 159 sedan sold overseas, and possibly a new crossover model sharing its underpinnings with the platform in the 2011 Jeep Grand Cherokee.

From next year onwards, several Chrysler models are expected to rebadged as Lancias and sold in Italy. For the rest of Europe they will remain Chryslers. These include the new 300 sedan, a facelifted Sebring and the Voyager Minivan. Additionally, some Dodge products are tipped to rebadged as Fiats and sold in Europe as well.

[Automotive News, sub req’d]