Car industry crisis pushes Peugeot-Fiat merger

Workers rightly fear for their jobs as another round of ‘cost-cutting’ looms.

Proletarian writers

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With global car markets glutted, carworkers face being thrown out of work as the world’s auto giants merge and slash costs in a ruthless battle to come out on top.

Proletarian writers

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The crisis of global overproduction in the car industry, sharpened by the race to dominate in the transition to electric and hybrid vehicles, has triggered the latest gigantic merger, that between the France-based PSA (Peugeot, owner of Vauxhall) and Fiat Chrysler.

If the deal goes ahead, the new alliance will be the world’s fourth largest in terms of sales, treading hard on the heels of Volkswagen, Toyota and the Renault-Nissan-Mitsubishi lash-up.

With relations between Renault and Nissan troubled after French state interference, it seems likely that there will be further jostling for third place going forward. The new alliance is set to arrive with a workforce of 400,000 and total sales of 8.7m vehicles (mostly in Europe and the USA).

The merger will have to be subjected to the anti-monopoly scrutiny of regulators in both Europe and the US, and Peugeot’s links with the Chinese firm Dongfeng are likely to upset US regulators, given the current trade war escalation.

However, given the saturation of western markets, the ability to make headway in engagement with the Chinese car market, the largest in the world, is an increasingly urgent priority for all major players.

Workers at PSA plants in Britain are justifiably anxious about the long-term future of their jobs. In response, the union Unite is clamouring for guarantees that British plants will stay and jobs be protected, arguing that substantial domestic sales of both Fiat and Vauxhall cars make it logical to keep production here.

However, given that the whole point of such mergers is to gain competitive advantage over rivals by cutting out waste and duplication and slashing labour costs, any such guarantees will be of doubtful credibility.

The director of Germany’s Centre for Automotive Research, Professor Dudanhoeffer, recalled recently that when PSA took over Opel in 2017, PSA boss Carlos Tavares promised there would be no lay-offs. Yet now “there are almost eight thousand fewer people on board and the development centre in Russelheim was partially sold”.

Referring to the current merger proposal, the professor predicts that, globally, “ten thousand people will be cut at the plants”, concluding grimly: “The workers and unions are the losers of the merger, the shareholders the winners.” (New technology threat motivates FCA/PSA merger; expect more global upheaval by Neil Winton, Forbes, 22 December 2019)

The capitalists’ answer to capitalist crisis, from austerity and unemployment to ever wider wars, always come at the expense of the workers, although it is they who created their employers’ vast wealth in the first place.

Workers have a right to full and secure employment, housing, heathcare, education, and a dignified, cultured life. If our unions won’t fight for those basic rights, we must build new unions that will. If the ruling class can’t guarantee our rights under the current order, workers must become the ruling class and build a society that can.