19.9.2013   

EN

Official Journal of the European Union

C 271/104

1.1

The EESC values the commitment of the European Commission, and in particular its vice-president, Antonio TAJANI, Commissioner for Industry and Entrepreneurship, who has taken steps to verify the state of the automotive industry by listening to the views of all the stakeholders participating in the CARS 21 High Level Group before launching an action plan based on the outcomes of this exercise in order to counter the difficult situation the sector is facing and to facilitate its recovery.

1.2

The action plan set out in the CARS 2020Communication presents views and recommendations that the EESC fully endorses with respect to at least three of its four defining points, namely financial support for research, smart regulation that avoids needless costs for the sector and the development of the sector's international dimension. On the fourth point the EESC supports the Commission's suggestions on anticipating changes, while some doubts remain on restructuring process.

1.3

It is an ambitious strategy that seeks a balance between climate change mitigation and the need for more competitiveness, i.e. an increasingly competitive and sustainable industry to beat the challenge from increasingly aggressive external and internal competition ensuring a socially acceptable way for this transition.

1.4

Achieving this goal means moving towards common economic and trade policies, using all available means at the EU level to implement the recommended measures as a matter of utmost urgency, overcoming the divisions that have hitherto prevented a swift and coordinated response to the crisis and, if necessary, reviewing certain orientations, or even decisions, which could hinder the plan, and therefore the sector's much needed recovery.

1.5

A defining problem of these times is the shortage of available funds to cover the manufacturers' and their component suppliers' ever-growing need for investment in research, development and innovation (RDI) in order to meet the Commission's goals within the next few years. The problem is even more serious for SMEs and other related and often dependent companies operating in this sector.

1.6

The EESC endorses the Commission's decision to avoid technology-specific incentives, i.e. reserved for a particular technology to the exclusion of all others. However, this decision must not mean that incentives for the short and medium term (e.g. methane, LPG, new generation high-efficiency engines), should create obstacles for development in the medium and long-term, e.g. electric or hydrogen-powered vehicles.

1.7

As regards CO2 regulations, the EESC believes that only a life cycle assessment (LCA) approach can help to mitigate the total vehicle environmental footprint.

1.8

The Communication states that the European automotive industry is engaged in a significant restructuring process (possibly involving assembly plant closures), which will have repercussions on employment. It does not however study or give details on the main underlying situation, i.e. Europe's structural overcapacity. Although precise data on its extent is not available, estimates carried out by sectoral analysts indicate that overcapacity is between three to five million vehicles. The EESC urges the Commission to act quickly to carry out more detailed research to provide more precise figures on employment and overcapacity and the cost of any capacity under-utilisation.

1.9

The Commission therefore seems to be taking an excessively backseat approach by only playing a complementary role vis-à-vis businesses, States and regions, bearing in mind that unless there is a shared solution to the problem, another of the Communication's objectives, i.e. enhancing competitiveness on global markets, could be weakened. As a result, the EESC believes that production overcapacity cannot be addressed through isolated solutions, but needs a guide to steer the process itself.

1.10

The EESC regrets that such an important social issue has not been adequately addressed in the action plan and urges the Commission to take on this responsibility by exercising its right of initiative developing guidelines and collecting good practices used in the past that have helped avoiding redundancies. Given the urgency of the situation, the Commission could and, in the EESC's view, should assume the coordination and eventually also financially support a vast restructuring process which, if inadequately managed, could destabilise many European regions and have a heavy impact on employment in the sector. The EESC strongly recommends to closely involve the regional and local authorities to any restructuring plan.

1.11

For this operation to succeed and to maintain the sector's production base in Europe, open and constructive social dialogue needs to be enhanced. This is the only way to ensure the right balance between the different aspects of the action plan, prioritising human capital in terms of re-skilling workers or managing redundancies when job losses become inevitable. This is also true for the linked industries facing the same serious problems.

1.12

In the short term, a European framework would have to be established for social bridging measures in order to avoid EU labour market distortions, capitalising on lessons learned from the 2008-2009 crisis. The role of social partners is essential in this transition period.

1.13

Finally, the EESC believes that the EU must strengthen its entire industrial policy, and in particular regarding the manufacturing sector. The Europe 2020 goals are unattainable without a strong and competitive industrial sector to underpin the Union's economic development. Proactive policies are needed to support innovation and development and transform today's problems into tomorrow's opportunities. The automotive industry needs an industrial policy that aims to achieve sustainable growth and not merely to downsize production. There is a need for capital investment and investment in increasingly well prepared and qualified human resources. Technologies, processes and design must all come together to reinstate the European automobile industry at the head of the global automotive market. International competition must be faced by focusing on development and innovation. Possible plant closures will definitely not be enough to solve the problem.

2.1

In order to better understand and assess the action plan on which the EESC is asked to comment, we need to take a look at the work that preceded it and the experience gained and progress made since the first version of CARS 21.

2.2

In January 2005, the then European Commission vice-president and industry Commissioner, Günter VERHEUGEN, set up the CARS 21 (an apposite acronym for Competitive Automotive Regulatory System for the 21st Century) High Level Group.

2.3

CARS 21 was set up to define an EU policy, and therefore legislation, that could bolster the sector's competitiveness against ever-growing competition on the global market. This initiative was all the more appropriate in light of the importance of the automotive industry (1), which employs around twelve million people in Europe (in production plants in 19 Member States), makes R&D investments of over EUR 28 billion every year, has a positive trade balance in the region of EUR 90 billion, and contributes over EUR 430 billion to the Member States' tax revenues, i.e. 4 % of European GDP.

2.4

CARS 21 concluded its work in December 2005 with a document that listed 18 recommendations and set out guidelines which the Commission should have followed when developing its legislative proposals. Regulatory policy should have provided the industry with a favourable and reliable framework based on the principle of ‘smart regulation’ that checks the cost-benefit ratio of each proposal, based on a careful assessment of the impact on the industry and society and recognition of the minimum timeframes needed for each technical innovation required, and the establishment of long-term goals through the systematic involvement of all stakeholders.

2.5

In fact, the application of these recommendations was not always coordinated among all the Commission's directorates and the other EU institutions, but on the whole, the CARS 21 guidelines have proved extremely useful not only for the industry but also for the sector's other stakeholders.

2.6

In 2010, given the need to make vehicles increasingly clean and efficient - and in the middle of an unprecedented crisis of the European market - Antonio TAJANI, vice-president of the Commission and Commissioner for industry, rightly recognised the need to renew CARS 21, introducing a number of changes based on past experience.

2.7

Indeed, the previous version of CARS 21, although well-received, gave rise to some criticism due to its composition which, according to some, did not include all the stakeholders, giving considerable space to manufacturers; but above all it did not involve all the European Commissioners liable to be involved in the sector's legislative policy.

2.8

As a result, efforts were made in the recent version to involve all possible public and private stakeholders: eight Commissioners, nine Member States, and representatives from other institutions such as the EESC and the Committee of the Regions. With regard to the private sector, in addition to European manufacturers, other participants from the sector included the manufacturers of components, repairers, the oil industry, and, moreover, trade unions, environmentalists and representatives from associations and movements that support new motor technologies, amounting to a total of about forty participants in the high level group, assisted by sherpas and experts.

2.9

Work was launched at a first high level group meeting in November 2010, and was developed during a series of working group meetings culminating in a final report, which was discussed and approved in June 2012.

2.10

This initiative was of the utmost importance and it is to the credit of the Commission, and in particular DG Enterprise and Industry, which coordinated the work and demonstrated professionalism and efficiency in producing a report that achieved general consensus among the participants.

2.11

As explained by Commission vice-president TAJANI, the Communication on the CARS 2020 action plan, under consideration in this opinion, is based on these experiences and this report.

3.1

The action plan set out in the Communication is based on four pillars:

3.2

Investing in advanced technologies and financing innovation

The Commission intends to:

3.3

Improving the internal market and implementation of smart regulation

The Commission intends to:

3.4

Enhancing competitiveness on global markets

The Commission intends to:

3.5

Anticipating change and softening the social impacts of restructuring

The Commission intends to:

4.1

The EESC welcomes the Communication, which not only confirms many of the CARS 21 recommendations in its action plan, but also undertakes to continue dialogue with CARS 21 participants to ensure that the implementation of the plan's recommendations is monitored and evaluated at regular intervals, and updated if necessary.

4.2

In connection with the above, the EESC underlines an important lack in the Communication: the problem of production overcapacity is not tackled with the due attention but it is simply included in the more general restructuring process. Dimensions and data of this problem are highlighted hereby.

4.3

AlixPartners (5) estimates that ‘About 40 car plants in Europe last year were running below their financial break-even point of 75 to 80 percent capacity use …’ and that about ten are below 40 percent. In other words, between 2007 and 2012, car sales in Europe fell by 3.5 million, i.e. a fall of about 23 %, rising to 34,6 % for commercial vehicles. The situation is even more critical for the motorcycle sector, where registrations fell by 46 %, about twice as much as for four-wheeled vehicles.

4.4

It should however be added that sector analysts disagree about overcapacity levels, with estimates ranging from three to five million vehicles depending on the data collection criteria applied. The EESC believes that despite the complexity of such an exercise, the European Commission must take on the task of more detailed research in order to provide more precise figures.

4.5

Furthermore, production overcapacity is the first causal link in a chain that has a major impact on the automotive industry's competitiveness: production overcapacity – high fixed costs – price war – reduced profits and aggravated financial situation – plant closure – overall investment cuts, especially in R&D – risk of reduced long-term competitiveness. As a result, the EESC asks the Commission not to underestimate the fact that overcapacity also has a bearing on the action plan's third pillar, i.e. enhancing competitiveness on global markets.

4.6

There is no question of taking a simplistic approach to this issue since the situation varies from one country to another and from one manufacturer to another. Although average production capacity in Europe for 2012 has been around 70 %, there are wide variations between countries: 80 % in the United Kingdom and Germany; 70 % in Spain; 60 % in France; and just above 50 % in Italy (source: The Economist). Variations between different car manufacturers depend on a number of factors. One of these is the level of exports since manufacturers that have high levels of exports to non-EU countries (e.g. BMW, Audi, Daimler) are in a better position, whereas those that rely more on the domestic market are in difficulty.

4.7

Another factor is the differentiation between manufacturers and the segment where they specialise. A Roland Berger study shows that the utilisation rate of plants varies according to the segment. The utilisation rate of manufacturers or makes specialised in the economy segment (Dacia\Logan, Chery, Hyundai, Chevrolet) is 77 %, whereas in the generalist mid-range segment (PSA, Renault-Nissan, Toyota, Suzuki, Fiat, Opel, VW) it is 62 %, and in the premium\high-end segment (BMW, Mercedes, Audi, Lexus, Infinity, DS) it is 83 %.

4.8

As a result, production overcapacity cannot be addressed in isolation by individual manufacturers and national or regional governments. The EESC believes, on the contrary, that a guide is required to steer and coordinate the process itself, and that this role can be carried out by the Commission.

4.9

The plan does not mention any funding to be added to previously allocated and available funds. The goal announced by Commission vice-president TAJANI at the closure of CARS 21 to raise Horizon 2020 financing for green vehicles from EUR one to two billion does not feature in the Communication. Thus, as things currently stand, even the possibility of new EIB interventions is no more than an aspiration based on the recent EUR 10 billion capital increase.

4.10

The entire automotive industry supply chain, which is expected to undertake significant RDI activities to achieve the technological leap that will enable it to produce increasingly ‘greener’ cars by 2020, would also need more EU funds to boost their own investments, which have become more difficult in a European market that does not seem able to recover from the recession in the near future.

4.10.1

In this context, the EESC takes a favourable view of the implicit reference to the principle of technological neutrality vis-à-vis the different types of propulsion (internal combustion engines, electric, hybrid powertrains and fuel cells), which should underpin EU support for R&D and innovation activities aimed at developing ‘a diverse portfolio of fuels necessary to meet the climate change objectives’.

4.10.2

In line with the abovementioned technological neutrality, the Commission's commitment to developing infrastructure to facilitate the market penetration of vehicles powered by alternative fuels, without a priori preferences between electric energy, hydrogen, sustainable biofuels, methane (natural gas and biomethane) or LPG is particularly positive. To this end, the Commission has put forward an alternative fuels strategy and a legislative proposal indicating minimum refuelling/recharging infrastructure requirements. Unfortunately, in apparent contradiction with the plan's objective to promote the extension of these structures, a recent proposal for a directive (Energy taxation) penalises not only diesel but also alternative fuels such as methane and biomethane, thereby compromising their market deployment.

4.10.3

The Commission's position on ‘technological neutrality’ nevertheless also raises two issues:

4.11

Cars are a significant source of CO2 emissions. The Committee believes that a more accurate way of measuring automotive CO2 emissions would be to use life cycle assessments, which take into account all the emissions created during a product's life cycle from raw material production to product end-of-life.

4.12

Nevertheless, while confirming commitments to lowering CO2 emissions, the Communication says nothing about the timeliness of the Commission proposing a review of Directive 1999/94/EC on fuel economy labelling, with mandatory indication of absolute CO2 emission values for all passenger car models. This initiative would all the more timely since the regulation establishing new limits of 95g of CO2/km for passenger cars, as recommended by the EESC in one of its recent opinions (6), is currently under discussion.

4.13

Another interesting announcement concerns a new European green car initiative under Horizon 2020 (as follow-up to the European Green Cars Initiative (EGCI) Public-Private Partnership), which will therefore involve private funding.

4.14

At the same time, it will not be sufficient to just develop new technologies, if the appropriate training for the workforce is not ensured in parallel. Indeed, new technologies will imply new skills and competences needed from the workers. Those are not currently available within this sector, and partly need even to be developed within the education system. This requires on the one hand sustained efforts from the employers active in the sector to introduce new programmes for apprenticeships, but on the other hand also cooperation with the education and training institutions as well as research and higher education systems to offer new training curricula.

4.15

It is appropriate to reiterate the commitment to legislate in accordance with the principle of smart regulation, which should be the basis for framing legislation for this sector, applying parameters such as cost-benefit ratios, lead times (7) and the impact on the industry's competitive position on global markets.

4.16

It is also very appropriate to develop guidelines for financial incentives for clean vehicles, which should be based on objective and available data such as CO2 emissions, avoiding market fragmentation due to uncoordinated measures.

4.17

With regard to effectiveness in time, consumer attitudes to new technologies must be taken into account, especially with respect to electric power. To date, outcomes are poor, and in any case below expectations. As a result, we have to ask ourselves whether it would not make more sense to aim for short and medium-term environmental goals by investing more in research on new generation high-efficiency engines.

4.18

With regard to electric powertrains and their future development, we must bear in mind that there are considerable variations and differences in estimates, depending on the parameters considered. A comparison of different forecasts reveals multiplication factors that range as far as from one to ten (8).

4.19

FTAs were given a lot of attention in CARS 21 discussions, following the industry's criticism of the agreement with South Korea (9). The need to study the cumulative impact of these agreements also emerged, in light of the need for close coordination between industrial and trade polices in Europe, with a view to the total elimination of non-tariff barriers to EU exports. The EESC therefore supports the Commission's decision to launch a study of FTAs that have already been concluded or are being formulated, such as the agreement with Japan. The study will assess the cumulative impact of these agreements on the automotive industry's competitiveness.

4.20

More generally, the EESC welcomes the Commission's efforts to implement a trade policy designed to maintain a strong industrial base for the sector in Europe by using and refining available instruments, ranging from the review of the UNECE agreement to the development of a new regulation on the international harmonisation of vehicles.

4.20.1

However, the European automotive industry also faces challenges in domestic markets, where changes in demand and mentalities will affect its capacity to succeed in the future. This needs to be addressed as well, alongside the competitiveness on global markets.

4.21

A strategy for a successful and sustainable automotive industry in Europe must involve not only investing in new technologies and innovation together with smart regulation and improved internal market, but especially its firm place in the overall EU industrial policy and giving the workforce same importance and attention as all the other aspects.

4.22

In order to maintain an industrial base in Europe, businesses have to be able to adapt their production capacities swiftly to new technologies and market developments and need a skilled and continually updated workforce. As a result, the establishment of a European Automotive Skills Council in 2013 for the automotive industry will be very welcome. The Council will involve all stakeholders, also in order to make recommendations to the political authorities on developing skills in the sector and education and training needs in the light of expected changes. Continuously developed qualification makes the workforce employable and is the best answer which all the stakeholders should aim to; special attention should be paid to the SMEs and their specific problems in this area.

4.23

Anticipative measures to prevent the negative employment consequences of restructuring should fully use social dialogue in general, but mainly to explore the European Works Councils' right to participation and consultation in restructuring situations and its potential to play an active role in presenting alternative solutions. Proper communication between the suppliers and final producers should ensure that if production plants are shut down as a last resort, it will not have a domino effect on regional economies that depend on the automotive industry, bearing in mind that the closure of assembly plants will have repercussions for the upstream and downstream production chain.

4.24

As we have seen in para. 4.2 -4.8 the Communication, however, seems to avoid the issue in that it makes a general reference to a ‘restructuring’ process without any mention of the causes. In fact, this part of the document fails to refer back, in particular, to the ‘the long-standing structural issue of overcapacity’ mentioned on page 6, which is the reason why some manufacturers have announced production plant closures. Indeed, the EESC thinks that there would be a need to study to what extent overcapacity is a temporary imbalance in production capacity that depends on traditional geographical distribution, and demand in Europe, and is influenced by factors such as consumer purchasing power, product policy, austerity, and other public policies.

4.25

In other words, the action plan does not address the reasons for the restructuring process, nor does it assess its magnitude. However, it mentions the situation merely to suggest that it should intervene to soften the social impact, while entrusting the industry with responsibility for the restructuring process, and restricting the Commission to a complementary role alongside the Member States and local authorities. In this way, it does not propose to coordinate restructuring measures, and does not even suggest guidelines for Member States to follow in the measures they adopt.

4.26

This is why the EESC believes that given the level of unused production capacity, it will not be enough for the Commission to play a complementary role alongside other stakeholders.

4.27

The CARS 2020 Communication also offers some interesting pointers which deserve to be developed. On page 21, it mentions that the Commission intends to ‘re-launch the inter-service task force to study and follow up the main cases of automotive plant closures or significant downsizing. The task force has been active and highly efficient in past cases in the automotive industry’ (referring to the cases concerning VW Forest and MG Rover). The EESC asks for a specific study to be provided on these outcomes in order to establish best practice guidelines for the current situation.

4.28

The EESC suggests to explore alternatives for restructuring processes following examples that worked in the past and/or are proposed today. e.g. Opel’s Bochum plant. There, a wide variety of measures has been agreed upon by the unions and employers’ representatives, involving also external stakeholders in order to reach a socially acceptable solution in view of the closing of the plant planned for the end of 2016.

4.29

There is a need, however, to develop a perspective for a long term industrial policy for the sector. This must be paramount with respect to any short-term decisions on adjustment of production capacity. Just shutting down capacities does not improve the overall capability of the sector to face future challenges, and has tremendous consequences for the whole supply-chain. Instead, it is necessary to work towards a transformation of the sector, and new policies for products better in line with the expectations of the consumers, offering opportunities to make this industry a sustainable one for the 21st century.

4.30

Otherwise the risk exists that in such a situation of long lasting depressed sales levels and consequent profit losses, companies specialised in the generalist mid-range segment could decide to offload the burden of reduced production by closing plants in Western Europe and by shifting production to their remaining plants, most of them opened recently, in new Member States or outside Europe, in order to take advantage of lower wages and working conditions.

4.31

Finally, the Commission has shown a laudable commitment to monitoring compliance with state aid and internal market rules, as well as urging Member States to use the ESF and EGF, but in view of the foregoing, this is far from enough.