Thursday, July 12, 2012

French Auto Industry

Mediapart has an informative article on the state of the French auto industry and the positioning of various firms vis-à-vis the global market.

PSA Closure, Montebourg, etc.

With the news that PSA will close its Aulnay plant, I refer you back to this earlier post of a little more than a year ago. You may recall that, at the time, the union claimed that PSA was going to close the Aulnay plant, but the company said that the documents obtained by the union were only contingency plans. Besson and Fillon called in PSA executives and received "assurances," Fillon said, that the plant would not be closed.

Undoubtedly, as I wrote at the time, the plans were well advanced, and the only "assurance" Fillon received was that the plant would not be closed before the presidential election of April-May 2012, which would have been a major embarrassment to Sarkozy, since the state had subsidized PSA during the crisis. Is it any wonder that "trust" among the French social partners is low, given this record?

On the other hand, is it any wonder that PSA is outsourcing its auto assembly, as I also wrote at the time? French unions, unlike German, Spanish, and Italian unions, have been unwilling to make changes in work rules and to adapt to the changing scale of auto production around the world. And the trade figures have reflected this. As I have also repeatedly emphasized, French auto imports have been increasing. This category is one of the most alarming trouble spots in French trade data.

So there is plenty of blame to go around here. The ball is now in Arnaud Montebourg's court. hew ill be on TV tonight, and on July 25 he will announce a "support plan" for the French auto industry. But realism is in order. The government cannot alter global realities in the auto market by fiat (no pun intended, even if Fiat has been more pro-active in this area than French firms). Nor can the unions expect the new government, merely because it is of the left, to respond to their understandable grievances by granting them all their wishes. Change is required, and change cannot be expected to be rational, or to succeed, if the parties distrust one another so deeply that essential information is concealed. This whole episode has been a sorry one in French industrial relations. Let us hope that Montebourg draws the correct lessons from the previous government's egregious mishandling of the situation.