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

Bertel Schmitt
by Bertel Schmitt
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.”

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  • Oldyak Oldyak on Sep 03, 2012

    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!!!

    • See 1 previous
    • Bd2 Bd2 on Sep 04, 2012

      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.

  • Oldyak Oldyak on Sep 03, 2012

    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.

  • Inside Looking Out For midsize sedan it is too small. It basically is a compact car.
  • Stodge I test drove the 200S and damn, its suspension was so firm, I was convinced it didn't actually include suspension at all. It hurt my spine and hip, it was that firm.
  • MRF 95 T-Bird If Mopar had only offered sport hatch versions of the 200 and or Dart they might have sold more of them for folks who wanted some more versatility without having to go for a small utility Compass Patriot or new at the time Renegade or Cherokee.
  • El scotto I started driving in the late 70's. The cars high school kids could afford and wanted were very very worn out muscle cars. Oh Lordy those V-8's bring back some happy memories. Oh there some outliers in my crowd, a VW Bug and a Dodge Scamp with slant six; neither car would die. In 10 years their will be young people wanting very used Teslas or Dodge's with hemis. B&B, I say that if someone is excited about their EV, Hybrid, or Hemi welcome them to the club of people who like cars.
  • El scotto Farley and Billy Ford need to put on some jeans, flannel shirts and PPE. They should (but never will) walk the factory floors and ask "what is wrong?", "what could we be doing better?"Let me caveat that. Let Jimmy and Billy explain that any constructive criticisms will be non-attributable. Oh they can use platitude like making the house level again or setting the ship on the right course.Sadly I suspect than many, many Power Points will die in vain in the executive suites in Dearborn. At least three if not four very expensive consulting teams will be hired to review Ford's QC problems. Four consulting teams will mean four different solutions. None them will be put in action. Ford will still have huge QC problems.