By on September 3, 2012

People in Europe had a lot of time to think about their troubled future during their long vacation. Coming back to work, they are “ready to shut plants and lay off staff,” as Reuters observes. Executives and union leaders are said to be in rare agreement over who to emulate: Obama, the UAW, and Detroit. Europeans want their bailout too. Some do, at least.

“Barack Obama said the federal government was ready to help (GM and Chrysler) on condition they carry out the necessary restructuring,” said Laurence Parisot, head of French employers’ organization Medef. “”If we want our companies to be competitive market leaders again in five or 10 years, we have to accept some adjustments.” Likewise, some union leaders “are calculating that cuts now can save more jobs later,” says Reuters.

Those “adjustments “ could be brutal if the U.S.A. is taken as an example. At GM alone, the adjustments did cost four brands, 14 U.S. plants and 21,000 jobs. The fact that employers and employees in Europe start thinking about cutting off the leg to save the body illustrates the level of pain they are going through

“Higher restructuring hurdles, from bankruptcy law to labor protection, also mean European cutbacks will never match Detroit’s for depth or speed” says Reuters.”Still, the U.S. example is too recent and, so far, successful to ignore.”

There is a much bigger hurdle: Not everybody in Europe is hurting: “Two in five European plants are running below 75 percent, deemed the minimum profitable rate, while Volkswagen’s factories are close to full tilt. The laggards are concentrated in Italy, France and Spain,” says Reuters.  Government bailouts are against EU regulations. Those regulations can be changed or flouted – but that needs unanimous consent. So far, the call for government help come from Fiat’s Marchionne and now  from GM-partner PSA. Volkswagen says “let them die” and is getting ready to pick up the pieces. But what if Volkswagen also gets affected?

Germany’s Automobilwoche [sub] reported over the weekend that Volkswagen is getting ready to cut its currently red-hot production by ten percent. Nonsense, says Volkswagen.

“The given scenarios are speculative and factually not correct,” a Volkswagen spokesman told Reuters. He also added that the situation in some markets is “tense” and that the coming months will be “significantly more difficult and demanding.”

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12 Comments on “In Pain, European Carmakers And Unions Turn To Obama For Inspiration...”


  • avatar
    MrWhopee

    Good to hear that some French labor leaders have admitted that things just can’t continue the way it’s always been. All parties have to give up something, or the whole industry won’t survive. Now let’s see if they can get the workers to agree!

  • avatar
    Cammy Corrigan

    I have a major problem with this story.

    Whilst I accept that union leaders acknowledge that cuts needs to be made, what they HAVEN’T explicitly stated is WHERE these cuts should occur. A French union leader might expect some Spanish plants to close and French ones to pick up the slack and vice versa for a Spanish union leader. It’s all very well saying “cuts need to be made”, but it’s where you think those cuts should occur.

    I cannot see France losing any plants without political fallout. What makes this doubly painful, is that Francois Hollande was voted in on a platform of no more job losses and more growth. He’s already scolded PSA for their plans and told EdF off for thinking the same thing.

    My point is this, if what the Union leaders are asking for is a state sponsored cull, then is it the government who will determine where these cuts occur? If so, then won’t political factors come into play? (i.e “You can’t cut the car plant in my constituency! I have a marginal majority at the moment, this will see the end of my tenure!”)

    Personally, I see very little has been solved here. They’re still in a big mess with no plan to clean it up.

    Meanwhile, across “La Manche”, the UK factories are humming along nicely and plans are afoot to expand current factories…

  • avatar
    FJ60LandCruiser

    It’s a dark day for America when European Socialists look to us for economic advice.

    • 0 avatar
      Ron

      Why is it a “dark day for America”?

    • 0 avatar
      raph

      Heh, I would have thought the opposite – my old man used to remark that America’s sure fire strategy for defeating any other power in the world was to export its financial advice.

      Sadly as a I understand it, every country that abandons the gold standard and adopts our fiat currency policy sees a polarization of wealth and a general decline in the standard of living relative to where they once were as government spending goes out of control and inflation does the same.

    • 0 avatar

      Last 60 years America was copied many times by most countries in the world except may be North Korea, Cuba. Socialists in Europe actually copy more brutal capitalism approach to solving problem, no other way around.

    • 0 avatar
      bd2

      What caused the economic crisis was the battle btwn Wall St. and London’s financial sector for fewer regulations and oversight – esp. over financial derivatives.

      Countries with stricter banking/finance regulations such as Germany, Canada and Australia came out of the 2008 crisis much better than the US, the UK, Iceland, etc. and countries like Greece, Spain and Italy are now feeling the effects of letting their banks and borrowing run amuck.

  • avatar
    el scotto

    VW has been exporting to the US for decades. Love us, tolerate us, hate us; if you don’t export to the US, your car company will die. Car companies are becoming, or strengthening, global players.

  • avatar
    oldyak

    The unions have become an entitlement in Europe..much like the U.S.
    Poor quality for great pay(sounds like a government job)and have no intention of giving that up..or their 35 hour work week!
    What a bunch of B.S.
    And now the regular working folks get to foot the bill and support them…..
    my oh my, what a mess.
    You go Obama….
    Yea..You can fix this!!!

    • 0 avatar
      rnc

      The key difference being Germany and all the rest, including the USis co-determination, the union has 45% of the board, they know exactly how the company is doing (what the balance sheet looks like), therefore they know exactly how much they can take, when they have to give back, etc. Also forces German management to realistically plan for the future (ever wonder why German companies do so well?) Imagine if the US had instituted co-determination and what our industry would look like now. The USW and UAW (and every other unionized company) would have been forced to deal with reality, this in turned would have blocked said companies management from using accounting tricks to make numbers look better (kind of like our government (1980-current)and debt “what the hell, we won’t be around when the bill comes due”.) The PGC was created b/c when US industry started dying in the late 60′s-70′s those companies started investing their entire pension contributions into their own company’s stock, thus over-valuing it (executives loved it as a great deal of their compensation was stock and their retirements were funded with 100% cash as annuities at insurnce companies in no way related to the company (exec perks and all). My Great Uncle lost his entire pension this way, company went under, entire pension fund was invested in company stock, no PGC.

    • 0 avatar
      bd2

      The auto unions in Germany and SKorea are stronger than in the US.

      What has been the difference?

      Better management from the top leading to strong export business.

  • avatar
    oldyak

    Hummmm.
    So let me get this straight.
    The unions know how the company is doing and resent modifications to the contract anyway.
    well that’s much better..
    I`m so re-leaved to know that the 45% doesn’t care that they build s___t cars that nobody wants.
    Blame management on poor quality cars..while your workers get high and drunk in the parking lot.
    Volvo made the ugliest cars in the world but their quality and distinctiveness kept them afloat for many many years.
    Build a great car and people will buy it…unless the drunk /hungover line worker screws it up.
    Co-determination! Yea that’s the ticket.


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