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Euro Auto going badly

Editorial Staff

Where will the axe fall next? Renault's plans to cut 6,000 jobs are not the first cuts in the European car industry.

Volkswagen of Germany has told its workers that, if they want to join a protest scheduled for this coming Friday, that's OK - even if they are supposed to be on shift. Watchers of industrial relations in Germany shouldn't be overly surprised by this: after all, German workers may be renowned for productivity and quality but they are also famous for going on strike when factory closures are under consideration - and then wondering why the decision to close it is made.

This time the argument is over how much of VW should be owned by the Lower Saxony government. Currently, it's 23%. Porsche owns 30% and the rest is largely in public ownership. Porsche want to put in place efficiency and cost cutting measures. That means more work from less people. Saxony doesn't want the unemployment that this could cause. And because under German law any shareholder holding at least 20% can veto decisions, that puts Saxony in the position where it can tell Porsche what to do with its investment.

The European Commission has already ruled against Germany saying that the provision acts in restraint of the free movement of capital. But Germany says it's already changed the law and that's good enough. So on Friday, VW in Germany will stop producing cars for a while as staff go out for a walk and to protest against the EC demanding a change in the law.

They should look down the road: Renault today announced that the global slowdown in demands for new cars is so severe that 6,000 employees are to lose their jobs. And recently, TATA, which bought Land Rover announced that Range Rover production was to be cut to three days per week.

Closer to home, in one sense at least, is the announcement that Bentley Motors is to cease production for several days, then return on a short week - and some 50 contract staff won't be coming back. About 15% of production will be cut although the company hopes to widen its markets with new outlets including a new dealership in Bucharest. Bentley is VW owned.

It's not the only reduction in UK car production: Toyota is cutting an entire shift from the production of its Auris super-mini. In June, Nissan's Washington plant in the North East of England added 800 new jobs and a full shift to meet demand for vehicles produced there. Nissan and Renault are to all intents and purposes a merged entity from a management perspective although there is little cross-over in the product lines.

Earlier this year, Nissan dismissed reports that UK production of the Micra was to be ceased and then announced that a new "cross-over" model would be built there.