The Automotive Industry and European Integration

The Divergent Paths of Belgium and Spain

A. J. Jacobs

• Publisher: Palgrave Macmillan
• Year: 2019
• ISBN:
  9783030174316
• Topic: Business
• Subtopic: International Business
• Index: Business

This book chronicles the divergent growth trends in car production in Belgium and Spain. It delves into how European integration, high wages, and the demise of GM and Ford led to plant closings in Belgium. Next, it investigates how lower wages and the expansion strategies of Western European automakers stimulated expansion in the Spanish auto industry. Finally, it offers three alternate scenarios regarding how further EU expansion and Brexit may potentially reshape the geographic footprint of European car production over the next ten years. In sum, this book utilizes history to help expand the knowledge of scholars and policymakers regarding how European integration and Brexit may impact future auto industry investment for all EU nations.

Part IOverview and Background

© The Author(s) 2019

A. J. JacobsThe Automotive Industry and European Integrationhttps://doi.org/10.1007/978-3-030-17431-6_1

Begin Abstract

1. The Beginnings of the European Union and Overview of the Book

A. J. Jacobs¹

(1)

Department of Sociology, East Carolina University, Greenville, NC, USA

A. J. Jacobs

End Abstract

Introduction

In the year that the Berlin Wall fell, 1989, Western Europe’s (WE’s) 11 auto-producing nations built 14,906,050 passenger cars. Meanwhile, state-led automakers in the former Eastern Bloc nations of Central-Eastern Europe (CEE)—Czechoslovakia, East Germany, Hungary, and Poland—produced 703,305 cars. Another 445,409 were assembled by state-run firms in the ex-Socialist Southeastern Europe (SEE) nations of Bulgaria, Romania, and Yugoslavia. In 2017, however, WE built 12,271,100 cars, or 17.68% less than in 1989. In contrast, CEE nations produced 4,147,740 in 2017 and in SEE to 632,865, for respective gains of 489.75% and 42.09% as compared with 1989. Moreover, unlike in 1989, all the cars assembled in CEE and SEE in 2017 were produced by private Western European, American, Japanese, and Korean companies.¹

Enhanced global competition, a major enlargement of the European Union (EU) into the former Eastern Bloc, significant labor cost discrepancies, European Commission-approved State subsidies promoting growth in Eastern European regions, and a related cost-cutting frenzy by global automakers have been among the many factors shaping these dissimilar growth paths. These factors, within the context of another expected EU expansion into SEE and a probable British exit (Brexit), likely will again dramatically reshape the European car production map over the next ten years.²

Whereas numerous works have chronicled the post-1989 eastward shift of the European car industry, none have examined concurrent disparities in growth trajectories among WE nations.³ For example, while annual car output in France, Italy, and Belgium was at least 50% lower in 2017 than it was in 1989, final assemblies expanded by roughly 20% in Spain during this period. The bulk of the former declines occurred after 2001 when car output contracted by 724,212 and 68.41% in Belgium, and by 2,614,028 and 17.56% overall, in WE. In the interim, car production expanded by 80,320 and 3.63% in Spain.

This book helps to fill this gap by comparing/contrasting the historical development of foreign car plants in Belgium and Spain. In the process, it reveals how European integration, high wages, labor strife, and the near demise of General Motors (GM) and Ford led to the closing of three car plants (Ford, GM-Opel, and Renault) and the major downsizing of a fourth (Volkswagen or VW) in Belgium between 1989 and 2017. It then chronicles how lower relative wages; more pliant government and labor; and the expansionist plans of VW, Renault, and PSA Peugeot Citroen (PSA) stimulated growth in Spanish car production during this same period.

The discussions, findings, and future projections presented in the chapters to follow (summarized below) draw upon the author’s 25 years of research on the auto industry and car-producing regions. This has involved the following: (1) research questions grounded in scholarly literature; (2) historical analyses car production data, particularly for nations in WE, CEE, SEE, North America, and East Asia; (3) historical reviews of more than 150 car factories in these regions of the world, including content reviews of hundreds of newspaper articles, annual reports, and related academic works, and the compiling of annual vehicle production and employment; (4) tours and/or in-person site visits of 60 car factories; (5) the collection of employment and other sociodemographic data on the regions in which these plants were situated as well as photographs documenting existing development patterns; and (6) in-person meetings and off-site communications (phone, email) with hundreds of government and industry officials (anonymity always has been protected, and no one is directly quoted in this book).⁴

The next sections of this chapter provide a brief overview of the events leading up to the creation of the European Economic Community (EEC) in 1958, the precursor to the EU. This discussion is continued in Chap. 2. The remainder of this introduction then offers short synopses of the book’s forthcoming chapters as well as some notes on frequently used terms.

The First Steps Toward a European Union, 1946–1951

As has been well-documented in countless works, World War II (WWII) left Europe in physical, social, and economic ruins. Fearing that Europe’s massive problems could serve as a crucible for the spread of Soviet-style socialism, in May 1947, the American Government began devising a strategy to rebuild Western Europe. Concurrent to this, Winston Churchill was esta...