Europe's carmakers ready cuts to emulate Detroit

Europe’s volume carmakers are returning from summer breaks with their sleeves rolled up, ready to shut plants and lay off staff in what many see as an overdue push to cut costs as their US counterparts did three years ago.

With no sign of an end to a European economic crisis that has crushed demand for cars in core Mediterranean markets, French and Italian makers, along with GM’s German Opel unit and Ford’s regional division, face less resistance from politicians and labour unions as they present cuts as an alternative to risking outright collapse.

Governments, including the newly elected Socialists in Paris, no longer have funds to bail companies out, and some union leaders are calculating that cuts now can save more jobs later - though few expect workforces, which have in some cases already been substantially eroded, to take plant closures quietly.

Factory closures are no longer the “taboo subject” they were when the industry faced the first wave of crisis after 2008, said Laurent Petizon, a Paris-based director for consultancy AlixPartners, which advised GM on its state-aided turnaround.

Global No1 GM, which shed four brands, 14 US plants and 21,000 jobs, posted a record profit of $7.6 billion last year, while Chrysler netted $183 million under new parent Fiat after a similar tightening of its belt.

PSA Peugeot Citroen, Renault and Fiat - along with Ford in Europe and GM’s Opel - are struggling to stay profitable and in most cases failing.

Peugeot is leading the losses, and the charge, with plans to cut more than 10,000 French jobs and carry out the country's first car plant closure in two decades.

Fiat, which shuttered one Italian plant last year, has warned it will close another unless it can build vehicles competitively for US export.

Renault has been careful not to rule out cutting capacity. Four months before Peugeot’s announcement, Renault CEO Carlos Ghosn had predicted that any significant restructuring move in Europe would “force all carmakers to do it.”

GM may also order deeper cutbacks after ousting Opel chief Karl-Friedrich Stracke in July. Stracke had reached an outline union deal to extend a moratorium on firings until the likely closure of Opel’s Bochum plant in 2017.

Governments’ own financial troubles have closed the option of further state aid.