Newly-formed pan-European labour body, Industriall European Trade Union (IETU) is citing the rush by OEMs to accept State aid for emerging market ventures as partly to blame for over-capacity, as well as warning slashing production could hand business overseas.
The Brussels organisation, a result of a merger between the European Metalworkers Federation and chemical, mining and engineering body, EMCEF and textile workers union, ETUF-TCL, maintains the current excess capacity is partly due to OEMs receiving State aid to finance previous moves into emerging markets.
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“Who is talking about over-capacity for the past 20 years and who at the same time accepted State aid from the European Investment Bank to open new capacity?” IETU policy adviser, Wolf Jacklein, told just-auto from Brussels.
“All the major OEMs did it – I don’t know a single one who did not. They went to north Africa, Russia, Poland and Turkey, they all did and the EIB financed big parts of it, that put pressure on production capacity.”
PSA Peugeot Citroen has also spooked labour bodies across Europe – not to mention the French government – with its recent announcement it intends to axe up to 8,000 jobs and shut its Aulnay plant near Paris.
The move has sparked a frenzy of reaction from unions and with suggestions yesterday (2 August), up to 500,000 jobs could be a risk in Europe as OEMs and suppliers drastically downsize, the over-capacity issue has moved to the top of the automotive agenda.
“For us it is obvious the downturn in the automotive market in Europe is something which is an economic cycle, which will go up afterwards,” said Jacklein.
“The problem is if they scrap production capacity now, they will be unable to benefit from the upturn later on. Cutting production is certainly not helping the industry because the upturn – once it comes – will be the benefit for somebody else – probably somebody outside Europe.”
As well as cautioning against the PSA cuts, the IETU policy adviser also cited Fiat, whose CEO, Sergio Marchionne, he maintained, was not investing in research and development to keep up with changing demand.
“What he [Marchionne] will do is finally put into danger the mere existence of Fiat,” said Jacklein.
Despite the IETU’s misgivings concerning capacity, the pan-European labour body nonetheless cautiously welcomed the French government’s recent announcement of improved subsides for electric and hybrid vehicle, transport modes the Brussels organisation has long promoted.
“The measures [of] the French government move in the right direction,” said Jacklein. “The problem is the possibilities are limited – what we need is to develop new products and adapt the industry to new alternative products.
“With this ‘business as usual,’ trouble in the automotive industry will continue.”
