Renault: Slovenia Sucks (Money)
In these times of bailouts, stimuli and protectionism, it’s probably a good time to remind ourselves of the basic tenets of capitalism. In short, let the free market run free and things will adjust themselves. Or so they say. If factory costs are too high, you either cut costs or move to a place that has lower costs. This is why Eastern Europe is so popular for European manufacturing companies. Cheap labor, low overheads and no tariffs due to EU membership. However, as I said earlier, when a free market is allowed to be free, things will adjust. And adjust, they have.
Reuters reports that Renault is fuming at Slovenia because Renault believes that electricity prices and labor costs are way too high in supposedly low cost Slovenia. “A comparison of electricity costs among factories in the Renault group shows that we are among the most expensive…” So seethed Ales Bratoz, Chief Executive of Revoz, Renault’s Slovenian unit.
To make matters worse, the Slovenian parliament had the temerity of rising the minimum net monthly wage by 22 percent to €562 ($766). “As a consequence, labor costs are expected to rise on all other wage levels, as well,” Bratos protested.
Now we know why Renault, in January, threatened to halt Clio production in Slovenia. Or not? We’ll get to that in a second. The cost concerns could cause complications with Renault’s agreement with Daimler where “low costs” were one of the main motivations for the ménage.
Or is this all a smokescreen under which to get a Clio back to France? Without giving Brussels ideas that it’s trying to help itself to lovely French taxpayers’ money? It sure sounds that way. Minimum wage in France is €1,344. And no proud French unionized metal worker would work for minimum wage without setting the plant on fire. Now, let’s check that electricity bill.
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France abandoned the U.S. market, but before they did, I owned two 1969 Simca 1204 GLS, a hatchback and a wagon. This is the car line that was imported by Chrysler and formed the basis for what was to become the Horizon and Omni, the vehicles that began the transverse engine/front wheel drive revolution in America. The Simca was far and away a better car than the contemporaneous VW Beetle: safer, faster, quieter, more stable, more room, better fuel economy. It had comfortable seats, long suspension travel, and I could go down North Dakota's gravel roads at 70 mph straight as an arrow. After the Simca, I never wanted to go back to front engine/rear wheel drive again. I still have all three of my Simcas (one was parts car) parked out at the farm. Slovenia is only marginally an eastern country. It really belongs to the West. Those of us, like myself, who are Germans of Balkan origin, consider Slovenians to be Austrians who speak a Slavic language. Culturally they are much closer to German speaking Austrians than to any Slavs in the Balkans. Even their swearing is more similar to the Germans rather than South Slavs, who are masters of the art.
To make great cars you have to love cars. The french used to love cars, witness the Hispano-Suiza (not Spanish) or Delahaye of yore, but that love became commercialism after WWII, anything for a buck, a Franc (excuse my French). The Brits also loved cars but they got lazy and let the Japanese, first Honda, start manufacturing their prized automobiles. Enter the Germans, who like the Swedes always loved a car, sometimes more so than their wives (old joke), in other words Swedes and Germans have a passion for their autos. That passion translates into a technically superior vehicle, except where software is involved, for some reasons the Europeans have a hard time with it, maybe because the original software language is English. At any rate, if you don't live and breathe cars, you'll never make a great cars. In America, young people used to love cars too, but that came by the wayside, when commercial shops started to do tuning, instead of the kid with his toolbox. Still, some youngsters are quite adept at tuning a vehicle using their PC, read without getting their hands dirty. why would anyone buy a French car, I think because they just want a bargain, or they just don't feel passionate about them, or both. As far as the Slovenes, it is a trade-off between being exploited by the West, in exchange for jobs, or just not being passionate enough about their vehicles. Still the Czechs used to make great machinery, so not making their own cars is definitely not a cultural discrepancy.