Spain was once Europe’s low-cost car production centre but its 11 car factories are now under threat from lower cost countries in eastern Europe and Asia, says Automotive News Europe.
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Ford, Opel and Volkswagen are re-evaluating their production strategies for the next generations of models now built in Spain and some car lines could be shifted to eastern Europe or Asia after 2007.
High production costs, difficult relations with labour unions and aggressive challenges from eastern Europe are causing car makers to reconsider their commitment to Spain.
The country is the third-biggest European car making centre after Germany and France but production is declining. The number of units built in Spain this year has fallen 12.42% to 1.4 million by the end of August, according to ANFAC, Spain’s national carmakers association.
Ford and Mazda already have decided to transfer some production out of Spain and Opel may soon do the same. Volkswagen brand chairman Wolfgang Bernhard is considering the future of the carmaker’s plant in Pamplona, industry sources say.
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By GlobalDataStarting in 2008, Ford plans to build the next-generation Ka minicar in partnership with Fiat at the Italian carmaker’s factory in Tychy, Poland.
The current Ka is built at Ford’s plant in Valencia. Mazda, which is 33.4% owned by Ford, likely will shift production of the 2 small car’s replacement from Valencia back to Asia – its Demio predecessor came from Japan.
The general secretary of the Spanish metalworkers union UGT at Ford’s Valencia plant, Gonzalo Pina, says the plant may get addition work to keep Valencia’s 7,600 employees busy. He says those models could include more derivatives of the Focus, which is built at the plant, and even a small Volvo.
Without any replacement models, the loss of the Ford Ka and Mazda 2 production would mean a cut of 120,000 units at Valencia and about 200 lost jobs.
At General Motors, there is a bidding war over production of the next-generation Meriva small minivan between Opel’s factory in Zaragoza, Spain, and its plant in Gliwice, Poland.
Unless union representatives can persuade Opel management to change its mind, it is expected to transfer production of the Meriva successor to Gliwice by 2009. Employee representatives in Zaragoza have until October 10 to present Opel managers an offer designed to keep the next Meriva in Spain.
If they don’t succeed, Zaragoza could lose 3,000 Opel jobs and an additional 2,000 at related supplier facilities, says the UGT.
Volkswagen subsidiary Seat and Renault both are cutting production in Spain. Seat will cut 600 employees working on its Altea and Toledo production lines at its Martorell factory, near Barcelona. The plant’s production is expected to be less than 390,000 units in 2005. Earlier this year Seat said its initial target was 446,000 vehicles. The plant has capacity to build more than 550,000 units a year.
Renault’s Valladolid plant is making production cuts due to slow sales of its Modus small minivan. Valladolid has cut daily production from 900 units to 500 units until April next year. The decision represents the third production cut since the introduction of the small minivan late last year, when a daily target of 1,300 units was established.
Volkswagen is analysing the future of its Pamplona plant where production has been disrupted by several strikes in the past few years. Industry sources say the plant’s future is under threat as it’s the only VW plant in Europe that produces a single model, the Polo, with a total production of 234,000 units last year built by 4,400 people. A VW source says “Bernhard is carefully looking at the future of this plant.”
“In the mid- and long-term, Spain is in a dangerous situation because eastern European countries have less than one-quarter of the labour costs, they have more modern plants, they are closer to the biggest markets and they represent the biggest growth markets,” says the head of the Spanish office of the Arthur D Little consultancy in Madrid, Javier Echeverria.
The cost per hour for a worker in Spain is about €16.85, compared with less than €3 in eastern Europe, says a partner at the Madrid office of consultants Accenture, Jose Luis Sancho Llerin.
