Globalization comes home to roost in a struggling European auto sector, but this time management is threatened, along with remaining workers.
Call it pragmatism or pure hypocrisy, but the Association of European Automakers – ACEA – is protesting trade negotiations to open markets. This is the so-called globalization that many – if not all – of its parent automaker companies previously used to break or weaken unions as they moved jobs away from their operations at older manufacturing sites. Now, globalization is coming home to what is an impoverished European roost as the EU opens up formerly protected markets to developing countries. Management is now in danger of losing their lucrative jobs.
The outcry came when ACEA President Sergio Marchionne, CEO of Fiat, which controls Chrysler whose UAW workers, but not management, suffered deeply when the North American Free Trade Agreement starting in 1994 moved jobs to cheap plants in Mexico, protested the numerous similar ‘free trade’ agreements moving forward in Europe.
Marchionne was speaking for all European automakers – including Ford and General Motors – when he said in essence to European Trade Commissioner Karel de Gucht at a conference in Brussels that European automakers need protection because they create jobs, a fact well known in China, India, Japan and Korea judging by their government policies.
“Recognition of the importance of strategic sectors must determine our trade policy and approach to trade negotiations. Manufacturing creates high wages, fosters research and development and helps maintain a trade surplus. In short, manufacturing industries are key to sustaining economic growth and prosperity in Europe,” Marchionne said.
His public position was actually more nuanced, or more hypocritical, depending on your point of view. “Globalization is disruptive, but it can also be transformative, offering new opportunities to sell, to source and to grow”, Marchionne said in what could be a politically correct statement. “The test ahead of us is to adapt to new competitive realities while preserving and strengthening the values that are the foundation for the European Union.”
How this all works out remains to be seen, and just what are the core values of the EU remains a mystery to many workers there and observers here. What is clear is that the EU is heading for its fifth straight year of auto sales declines, and 2012 might see an even greater drop in auto sales than those incurred in 2008-2009.
The ACEA President said that other countries know the importance of a strong automotive sector as an engine for growth. “It makes zero sense for Europe to use the auto industry as a bargaining chip to give away in return for doubtful benefits for other sectors,” he maintained.
The power of auto making was obvious to the U.S. State Department after World War 2 when it rebuilt the German and Japanese auto industries at the expense of domestic automakers – whose factories as the arsenal of democracy won the war. Returning GI auto workers found prosperity for a time, but ultimately their progeny were out of luck as globalization and ongoing U.S. government policies worked against U.S. manufacturing jobs under a ‘free trade’ ideology encouraged – or bought – by multinational corporations. .
Unfortunately, critics maintain, that the U.S. lost the real war and is still losing the fight for jobs at home due to the resulting loss of manufacturing jobs. With long-term U.S. unemployment at post-Great Depression highs, it is tough to embrace ‘free trade’ as an ideology.
Surface transportation trade between the United States and its North American Free Trade Agreement (NAFTA) partners Canada and Mexico increased by 14.3% in 2011 compared to 2010, valued at $904 billion in 2011, according to the Bureau of Transportation Statistics (BTS) of the U.S. Department of Transportation. The 14.3% increase in trade was the third largest year-to-year increase for the years covered by these data. The $904 billion in U.S.-NAFTA trade was the highest amount since NAFTA went into effect in 1994.