GLOBALISATION was meant to be a good thing. World markets would become ever more efficient and the benefits of technology would mean more efficient production and better products would flow around the world.
And that has happened. Plenty of Europe’s car production and machine tooling now takes place in eastern Europe. China and the Far East are building ever larger numbers of vehicles for their domestic markets and export. Capital, finished goods, business services and labour are moving round the world with ever increasing fluidity.
Now, though, when times are getting tough, it appears globalisation and its supposed benefits are being forgotten about and governments are becoming increasingly protectionist.
France has decided to support its own car factories, with grants to be contingent on Peugeot and others bringing production back home.
The US government bail-out for GM and other companies is similarly ring-fenced for domestic factories only. GM’s operations in Europe must find their own solution.
As a result, the car maker is trying to bounce the German government to bail out its four Opel factories there. The noises coming out of GM Europe are becoming ever louder.
At the start of the year, the Vauxhall owner was insistent it did not need any public sector support.
Last year, when the British government agreed to stump up substantial financial support for the new Astra, the group’s Ellesmere Port plant looked to have a secure future. So much so, Vauxhall turned down the opportunity to get involved in the Daily Post’s campaign calling on the Government to rescue the car industry.
Now all that appears to have changed. GM Europe president Carl-Peter Forster yesterday told a gathering of motoring journalists in Geneva that, unless there is support from the UK, both Luton and Ellesmere Port would have to close. That’s a big change of tune.
And yet Mr Forster’s remarks are no surprise. Car sales have fallen dramatically in the past few months, with the inevitable consequence that cashflow is becoming harder and harder to manage.
Measures like production breaks, sabbaticals and pay freezes are not enough. Yet the car-maker has already cut every piece of fat out of the business, so if it’s to have a future the government must step in as soon as possible.
Jaguar Land Rover sounded similarly desperate and yet Lord Peter Mandelson didn’t put his hand in his pocket to help them. It would amount to a big change of heart if he was now to back Vauxhall.
THE 1,200 job cuts announced last week by RSA Insurance look pretty deep. One-in-eight UK staff are to go.
You could forgive the company’s workforce for puzzlement about the timing of the announcement.
After a decade or more of unremarkable performance, RSA has managed to turn in a decent set of profit figures. Margins are improving handsomely, so why cut costs?
The fact is that this round of cost cutting should have happened much earlier.
And, with insurance premiums rising, the future looks a lot rosier for those staff left behind, which is not something everybody can say these days.
A newly-revived RSA will make an attractive takeover target.
