Crisis in automotive industry affects thousands of workers

The global economic crisis has caused a major decrease in demand within the automotive industry. Temporary unemployment, the suspension of night shifts as well as no contract renewal for temporary and fixed-term workers are some of the measures that the main car manufacturers in Belgium and their subcontractors have announced in recent months. The automotive supply industry also employs a significant proportion of the sector’s workforce.

Impact of drop in demand

As a result of the significant decline in demand for cars in Europe, car manufacturers have had to adapt their production, resulting in severe consequences for employment. For instance, the US car manufacturerGeneral Motors (GM) announced the suspension of night shifts at its manufacturing plant in Antwerp, Flanders at the end of 2008. Between 300 and 400 workers were affected by this measure and have been made temporarily unemployed. Despite these cost saving measures, along with increased efforts by European governments and the workforce to save GM’s European brands, Opel and Vauxhall, their future remains unsure to date.

Ford, the other ailing US car manufacturer, also stopped production for one month at the end of 2008, which left about 5,000 of the company’s workers and at least 1,000 additional workers employed by subcontractors facing ‘economic or temporary unemployment’ (chômage technique). Since then, Ford announced further production stoppages in February and April 2009, without excluding additional days of economic unemployment for its workers in May.

Automotive industry in Belgium

The automotive industry is an important economic sector in Belgium including four major car manufacturers – GM, Ford, Audi and Volvo which employ a total of about 16,000 workers at their plants. Furthermore, the car industry is an important customer for other industry sectors, such as metalworking, glass, plastics, textiles and electronics. Many companies, including a great number of small and medium-sized enterprises (SMEs), depend on the car industry as subcontractors. According to estimates of the Multisector Federation for the Technology Industry (Fédération belge multisectorielle de l’industrie technologique/Multisectorfederatie van de technologische industrie, AGORIA), some 84,000 workers are directly or indirectly employed by the automotive industry in Belgium. Therefore, the announcement of GM and Ford, along with the considerable drop in demand for cars, will have significant employment consequences not only for the automotive industry but also for other sectors of the economy. The vehicles retail and reparation sector, for instance, employs around 86,000 workers. This, in addition to the car manufacturing industry, accounts for a total of 170,000 workers, corresponding to almost 2% of the Belgian population who could be affected by the crisis.

Reactions of social partners

According to a spokesperson of AGORIA, the car manufacturers will certainly suffer from the global economic crisis, even if it is difficult to assess the impact on employment at this point. However, the spokesperson emphasised that a distinction should be made between car manufacturing and the retail and reparation sector: ‘If a constructor closes one of its plants, this will have no impact on retail because 85% to 90% of our products are exported.’ Moreover, the federation does ‘not believe in the complete closure and bankruptcy of a car manufacturer such as GM or Ford’. From the point of view of the automotive retail and reparation sector, the situation is not yet worrying. The sale of new vehicles has remained high since 2006 and the number of car registrations continues to rise, while the main part of a dealer’s activity remains the repairing of cars. However, according to the Belgian Confederation for the Retail and Repair of Motor Vehicles (Confédération belge du Commerce et de la Réparation automobile et des secteurs connexes/Belgische Confederatie voor de Autohandel en Reparatie en voor de aanverwante sectoren, Federauto), a decline in car registrations of about 25% is expected for 2009.

Moreover, the trade unions fear a new wave of restructuring. The Confederation of Christian Trade Unions (Confédération des Syndicats Chrétiens/Algemeen Christelijk Vakverbond, CSC/ACV) highlighted: ‘We asked the public authorities to take measures to avoid as much as possible workers being the victims of important restructuring processes such as what happened some years ago at Volkswagen (VW) or Opel’ (BE0701049I, BE0109301F). At the time, in November 2006, Volkswagen relocated the production of the Golf model to Germany, which involved the loss of 3,200 jobs at its Forest plant in the Brussels region. Meanwhile, in April 2007, Opel made 2,200 workers redundant at its Belgian site in Antwerp to reduce costs and avoid overproduction.

Up until now, no plant closure has been announced and car manufacturers have been trying to limit the negative consequences of the crisis through measures such as temporary unemployment. However, workers in car manufacturing are fearful of another ‘Renault case’ – that is, where the French manufacturer did not hesitate to close its Belgian plant in Vilvoorde in Flanders without further notice in 1997 (BE9703202F).

Government measures to help sector

Belgium’s federal government announced measures to help the sector by granting reductions on labour taxes for the companies affected. To be effective, this measure had to be accepted by the social partners, who defined the implementation means in the 2009–2010 intersectoral agreement (BE0901019I).

Commentary

The Volvo manufacturing plant in Ghent in Belgium’s Flemish region is still running at full speed. This exception is due to the construction of new car models, such as the new four-by-four XC60 model, which will be exclusively manufactured in Ghent. Nonetheless, Volvo, being part of the Ford motor company, is not safe and a reduction in production from 240,000 to 200,000 cars had already occurred in 2008.

Emmanuelle Perin, Institute for Labour Studies (IST), Catholic University of Louvain (UCL)