Another Challenging Area Of European Unification: The European Auto Industry

Tuesday, November 06, 2012 08:43
Another Challenging Area Of European Unification: The European Auto Industry

Tags: Economic Outlook | U.S. economy | world economy

Part of creating a unified Europe is the need to unify the auto industry across the continent. President Obama’s example in rescuing the US auto industry is being cited as the example to follow.

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Although the rescue of GM, Chrysler, and Ford involved job cuts and other painful adjustments, the three US automakers are now reporting healthy North American profits and job growth.
Automakers in Europe remain hobbled by unused production capacity because national governments are reluctant to close plants. They are bowing to union pressure to protect jobs and the unions are also fighting to protect existing compensation levels and work rules.
But the industry is suffering from lack of profits and needs restructuring. The hurdles keeping factories from being closed are limiting the amount of restructuring that can be done in Europe.
Plants are continually seeking financial support from national governments and many more are facing closure.
Provincial concerns also limit a pan-European solution. But Europe is still facing many other problems so addressing the issues of the auto industry is likely to be put off until it reaches a point where it can no longer be ignored.
These factors could also prove to be favorable for the US auto industry over the next few years.


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