Coronavirus Raises Stakes As Auto Unions Ready For A Fight

The coronavirus crisis has forced carmakers to speed up layoffs that must be matched with hefty payouts and deft negotiation to retain the support of powerful trade unions vital if Europe's auto industry is to manage a shift to low-emission vehicles.

Because of the COVID-19 pandemic and a broader economic slowdown, demand for light vehicles is expected to shrink by 36 million globally by the end of 2022, consultants AlixPartners found. 

For this year alone, this is equivalent to a market the size of Europe disappearing, AlixPartners said. 

The contraction increases an existing threat to jobs from electric cars, which are quicker and easier to build than those with combustion engines and which have German and French government backing as the countries strive for a green recovery.

"Once the consensus between labour leaders and management has broken down, it is extremely difficult to implement restructuring in Europe," Stefan Bratzel, a professor at the Centre of Automotive Management in Bergisch Gladbach, Germany, said.

He cited the conflict between German labour leaders and General Motors that meant it took 10 years to close its Opel factory in Bochum, Germany, which was announced in 2013.

"The brand was weakened by this paralysis," he said.

A spat over the pace of restructuring has already led Volkswagen's labour representatives to flex their muscles, leading to the ouster of Chief Executive Herbert Diess as head of the company's core VW brand.

Labour representatives have half the seats on VW's board of directors, meaning they have sway over decisions on contracts and pay.

Joerg Koehlinger, head of German union IG Metall's central district, on Wednesday said the depth of the recession faced by the auto industry has heightened tensions.

"I fear that this will soon lead to massive conflicts about employment, locations, wages and working conditions," he said adding that IG Metall will defend its workers.

The global pandemic has weakened demand for vehicles when carmakers were already struggling to retrain staff to make cleaner cars.