23 January 2013

Car Plants Struggle In Europe

It's no secret that there is an over capacity in car plants in Europe. Drastic decisions need to be made. Two cases are in the forefront right now.

GM Opel: GM want to stop making cars in Bochum Germany by 2016 but continue running it as a parts distribution centre. Obviously this will affect job numbers. GM wants workers to accept a turn around plan by February 2012 or they will be forced to shut Bochum by the end of 2014. GM Europe will lose 1.5 billion US$ this year alone.

It seems GM feels isn't getting the speedy co-operation it needs. A works council   and union representatives describe the threat to close sooner as unacceptable.

My take: GM has decided to finish car production in Bochum. It is losing too much money. So why so long to close it? It needs to asap. I normally sympathise with workers losing jobs. However, Germany has avoided any pain in this regard while factories have closed elsewhere. Companies have been scared to stand up to Germany. GM are, and its time to accept that is has to happen even in 'not in our backyard' Germany.

Renault: This is a brand that needs to act to regain a healthy balance sheet again. It too is getting frustrated trying to get worker concessions in order to improve competitiveness. It said it wouldn't close factories if the above was achieved. Renault has now said if those needed measures cannot be achieved, two plants would be closed.

My take: Another example of a company desperately needing to become more competitive and feeling a lack of will from Unions. An aide to Industry Minister said it resembled blackmail. It could also be called spelling out what will need to be done if this situation is not resolved soon.

Overall: Desperate times need desperate measures. Buying time is not an option when there is no sign of improvement for the foreseeable future. There are difficult times in Europe but a lack of will in changing things is not an option.

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