EU to help auto industry adapt to change

Five German car manufacturers are under pressure after the European Commission said it is investigating their involvement in a potential cartel.

The European Commission has announced a new partnership with the automotive industry aimed at better anticipating and coping with recent developments in the sector, including intensified international competition and increasing regulatory pressure to reduce the environmental impacts and security risks related to car use.

Employment Commissioner Vladimír Špidla unveiled, on 5 November 2007, a new partnership with the European Automotive Manufacturers’ Association (ACEA), the European Association of Automotive Suppliers (CLEPA) and the European Metalworkers Federation (EMF), aimed at monitoring changes in employment and skills needs in the sector and developing best practice on how to restructure in a “socially responsible” manner. 

The partnership also aims to ensure better use of existing support instruments at EU level, including the European Social Fund, which can be used to support investment in training and re-training of workers, the European Regional Development Fund, to encourage economic and social re-conversion at regional level, and the European Globalisation Adjustment Fund, to help workers being made redundant to re-enter the labour market quickly. 

The initiative comes as a series of closures and restructuring announcements have shaken several EU member states over the past year, making thousands of workers redundant, as was the case a year ago in Belgium, when German car manufacturer Volkswagen announced the laying off of 4,000 workers at the Vorst (Brussels) car manufacturing plant (EURACTIV 22/11/06) as a result of globalisation pressures. 

"12 million European families depend on the automotive sector for their livelihoods," said Employment Commissioner Vladimír Špidla, adding: "We need to ensure competitiveness and employment in this strategic industry while sustaining further progress in safety and environmental performance at a price affordable to the consumer." 

However, carmakers stressed that the accent must remain on competitiveness: "The partnership declaration firmly states that improving competitiveness is a first priority for industry, unions and regulators alike," said Ivan Hodac, secretary-general of the European Automotive Manufacturers' Association (ACEA)

To be competitive, he underlined that the industry needs "a sound business environment". "The European automotive industry is one of the most regulated sectors in Europe. It is of utmost importance that regulation does not unnecessarily add to production costs, increase bureaucracy and hamper flexibility," he said, criticising the Commission for making too many "administrative choices that are politically driven without a sound, transparent and methodical assessment of the potential impact on competitiveness and employment levels in the European economy". 

European Metalworkers Federation (EMF) general secretary Peter Scherrer urged the Commission and employers in the car industry to stop considering restructuring as mere "crisis management". 

"The restructuring exercises we have witnessed in some companies have entailed an enormous waste of accumulated know-how, skills, inventiveness and dedication to this industry," he said. 

He underlined that better anticipating change requires "an effective social dialogue at company and sectoral levels" – something he says will also mean "a serious adjustment to the way companies disseminate the information they have in their possession regarding the future of a company or the sector, as well as a major review of the restrictive way we understand the concept of 'consultation'". 

The automotive industry accounts for approximately 3% of EU GDP and provides work for more than 12 million Europeans. 

Despite the fact that global demand is growing strongly, the main growth is taking place in central and eastern Europe or outside the EU, in Russia, India and China.

The western European market is struggling with relatively flat demand, increased imports from outside Europe, and excess production capacity, putting pressure on employment in traditional production locations.

The industry is also confronted with tough safety and environmental regulations, high raw material prices and unfavourable exchange rates in relation to the main competitors (USA and Japan). 

In 2005, a high-level group, 'CARS 21', bringing together commissioners, ministers, MEPs, industry representatives and trade unions, was set up to improve the regulatory framework of the car industry and prepare it for the competitive challenges of the next decade (EURACTIV 12/12/05). 

Based on the group's report, the Commission presented, in February 2007, a new "strategy for the long-term viability of European car industry", which broadly left out the social challenges related to globalisation, but promised to convene a "restructuring forum" on the automotive industry in order to help companies anticipate competitive challenges at an early stage and respond to them in a socially responsible way. 

The first specific automotive restructuring forum, devoted to better anticipating change in the sector, was held on 17-18 October 2007. 

  • 26 Nov. 2007: Next 'Restructuring Forum', focusing on the adaptation of small businesses to change. 
  • Jan. 2008: Commission expected to present detailed proposals for cutting CO2 emissions from cars. 

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