Let’s, for one moment, leave aside the row over the £80m EU loan to Ford to boost Transit production in non-EU Turkey – while it closes its plant in Southampton.
It’s an embarrassment for George Osborne, who is a governor of the European Investment Bank, but it is only a small part of the massive restructuring that is now underway in Europe’s automotive supply chains.
The reasons are apparent in a study by credit insurer Euler Hermes, which found that while the automotive industry was holding up well globally with growth of some four per cent in 2012 and 2013, Europe remained depressed and was expected to shrink by six per cent in 2012.
There is a significant shift in both production and consumption towards the new economies and that is having a marked impact within the EU.
In fact, between 2007 and 2011, production rose by 107.4 per cent in China, 74.7 per cent in India, 27.9 per cent in Mexico, 14.4 per cent in Brazil and 14 per cent in South Korea.
In contrast, in Europe the UK was down 16.4 per cent, Spain was down 18.5 per cent, France was down 23.9 per cent, and Italy was down 38.5 per cent.
General Motors expects to lose between $1.5bn and $1.8bn in Europe this year, while Ford also expects to see European losses of $1.5bn.
Both companies have set out plans to rationalise production in Europe as well as cutting inventory. GM has also announced an alliance with French group PSA which will see Gefco handling all its logistics in Europe.
The one exception to the declines in Europe between 2007 and 2011 has been Germany where production grew by 1.6 per cent. “The highly profitable German manufacturers, bolstered by their premium positioning, are offsetting the decline in the European market through their international activities, reflected in particular in their strong growth in China and the US,” said the Euler Hermes report.
And in the UK, a study by KPMG for the Society of Motor Manufacturers and Traders suggested that with the right support the motor industry could grow by nine per cent a year over the next five years.
It’s clear that Europe’s automotive supply chains face a difficult and painful process of change – but it is also apparent that there are opportunities for those who embrace and manage that change.