In Pain, European Carmakers And Unions Turn To Obama For Inspiration

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.”