EU automotive sector in crisis

Posted on 28 Jan 2013 by The Manufacturer

Contrasting UK automotive strength against sector crisis in Europe: Tony Burke, assistant general secretary at Unite, the union blogs for The Manufacturer magazine.

Tony Burke, Assistant General Secretary at Unite the Union
Tony Burke, Assistant General Secretary at Unite the Union

Last week, trade unions from across Europe met in Brussels to discuss the current crisis in the European automotive and supply chain sector – just as David Cameron was directing the UK to the EU exit door.

The two biggest unions in the EU auto sector, Germany’s IG Metall and Unite took part in IndustriALL’s automotive sector conference alongside unions from France, Belgium, Austria, Czech Republic, Poland, Portugal, Spain, Italy, Sweden and Finland. IndustriALL is the recently formed manufacturing union federation, who’s European Sector is based in Brussels.

The conference, dealt with the problems related to agency workers, skills and apprenticeships, European Works Council’s and Ergonomics while plenary sessions debated the crisis in the EU auto sector, competition between different EU countries to produce new models and heard a keynote speech from Stephen Girsky GM Vice Chairman and interim president of GM Europe.

According to Unite’s figures, presented to the conference car sales in Europe plunged to a 19 year low in 2012 as the EU economic crisis took a heavy toll on vehicle demand. The number of cars sold in the EU in 2012 fell by 8.2% to 12.05 million vehicles, the lowest since 1993. Sales in December 2012 were hit hard, falling by 16.3%, – according to the latest figures from the European Automotive Association.

In contrast in the UK in 2012 sales rose by 5.3%, while sales in Germany declined by 2.9%, Spain by 13.4%, France by 13.9% and Italy by 19.9%.

Record exports last year lifted UK car production to its highest level since 2007. The UK produced a total of 1.46 million vehicles in 2012, up 9% on 2011, with 1.21 million of those exported to overseas markets. December’s 2012 UK car output climbed to 101,740 vehicles, up 6.2% on the previous year.

And despite recent job losses announced at Honda in Swindon and at Fords, it was clear that many UK commentators believe the outlook for 2013 remained positive, with demand in many faster-growing global markets offsetting the continued weakness in European economies. This continued growth is expected to be driven by new vehicle production plans in place at Nissan, Jaguar Land Rover and other UK car makers. Indeed Garel Rhys, president for the Centre of Automotive Industry Research at Cardiff University, said “UK output could rise to 2.2 million as early as 2015”.

In his keynote speech, Stephen Girsky told delegates there was a resurgence in consumer demand in the USA for cars and although the US economy was recovering slowly, employment growth is happening.

He warned that there would be new players on the automotive scene in the future in both the USA and in Europe – companies who had lower cost bases and more flexible workforces.

He explained GM’s attitude to dialogue with US unions, “Dialogue, in our view is important. GM do not ignore its labour partners, they have to be listened to. “But there has to be trust and respect on both sides”.

He pinpointed that one of GM previous failings was that of poor communication with its workforce but that had changed – He said both sides worked  on the basis of  “no surprises”.

For the final panel session, I joined Stephen Girsky, union officials from Germany and France, EU officials and employers for a lively debate on Girsky’s comments and the conference declaration.

As is normal with declarations of this sort they tend to include everything – including the ‘kitchen sink’. Nonetheless there are many good ideas for a way forward to help resolve the current crisis.

Unite’s view in the debate was that the decision by David Cameron to name 2017 as a date for an EU “in or out” referendum would cause uncertainty and investors in the UK would think twice, a point that was agreed by fellow panel members and delegates.

Unite also made it clear that the EU auto and supply chain needed sustainable growth, new trade agreements with faster growing markets for vehicles – with equal access to those markets and an EU wide interventionist industrial strategy to build growth rather than the downward spiral of austerity which was damaging the sector.

A number of delegates, (including Unite delegates), argued that ongoing austerity, wage freezes, uncertainty and ‘variable wages’ would not encourage consumers to purchase new cars.

Importantly, Unite argued, there now needs to be ‘informal and formal social dialogue’ between car manufacturers, unions and government’s across Europe on how to handle the crisis in the sector and how we handle structural change – as other industries in the EU had done.

And as Stephen Girsky commented, “we need a stable eurozone”.

Whether that will happen we shall see!