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Several auto makers in Western Europe are entering a phase of tense
relations with their work forces as companies plan to cut jobs in the region
while speeding up investment in faster-growing markets.
The increased tensions could complicate, but aren't likely to stop, efforts
by Western auto makers to cut costs and move jobs to lower-wage areas amid
intense competition from auto makers based in Asia.
In Germany, the powerful trade union that represents assembly workers at
Volkswagen AG is balking at the company's plans to extend working times at its
traditional western Germany plants without a corresponding wage increase,
following heavy losses at Volkswagen's U.S. and Chinese businesses. The union
yesterday called for workers to join a demonstration scheduled for today at the
company's Wolfsburg headquarters.
In Britain, two trade unions have launched a campaign for a public boycott of
PSA Peugeot Citro?n SA in response to the French auto maker's decision in April
to close its Ryton factory near Coventry, England, eliminating roughly 2,200
jobs there.
And in Portugal, warnings by General Motors Corp. about the competitiveness
of its commercial-van factory in Azambuja, near Lisbon, have provoked strike
threats this week by an umbrella organization that represents GM's unions across
Europe.
Meanwhile, jobs and investment continue to flow to areas outside Western
Europe, where overall demand for new cars has risen only 0.7% this year. Just
last month, Volkswagen signed a contract with Russian officials to build an
assembly-and-production plant in Kaluga, southwest of Moscow.
This week, GM -- which has been losing market share in North America and is
in danger of being overtaken by Toyota Motor Corp. as the world's top-selling
auto maker -- broke ground on a $115 million auto plant in St. Petersburg,
Russia. In an interview on the sidelines of the event, GM Chief Executive Rick
Wagoner described Russia as one of several developing markets where GM sees room
for big growth. Mr. Wagoner, who is pushing ahead with plans to cut more than
30,000 jobs at GM's North American operations, noted that sales of GM
automobiles in Russia have risen roughly 40% this year. By contrast, GM's sales
in Western Europe have fallen slightly more than 2% this year, according to the
European Automobile Manufacturers Association.
"If we can keep growing where the opportunities are to grow...someone's going
to have to hustle pretty hard to catch us," Mr. Wagoner said.
The president of GM's European division, Carl-Peter Forster, added that
"Russia is our growth market. And that's why we're very keen on developing it."
In addition to announcing last month that it would eliminate roughly 900 jobs
at its Ellesmere Port manufacturing plant in the United Kingdom, GM is expected
to announce a decision soon on the fate of its Portugal commercial-van factory
in Azambuja. The company has said the plant, which employs 1,100 people, is
operating at a cost disadvantage of roughly £¿00, or about $625, per vehicle,
compared with "other possible locations."
Talks between GM's management and union leaders this week failed to resolve
the auto maker's concerns. The chairman of the GM European Employee Forum, Klaus
Franz, said Monday his group views GM's comments about the Portuguese plant as
the start of a "step-by-step" process of "abandoning car production and
engineering in Western Europe" and warned of a "long-lasting conflict with
different types of action all over Europe," should GM shutter the factory.
A GM spokesman yesterday declined to respond to Mr. Franz's statement.
Not all European auto makers are making cuts at their traditional sites.
France's Renault SA is betting that improvements in quality and higher sales
outside Europe will help it to avoid job cuts, as it seeks to raise its
operating-profit margin to 6% by 2009 from the 2005 level of
3.2%.