Regulating cross border restructuring in the Automotive Supply Industry – any Role for European Works Councils?
Publication Type:Conference Paper
Source:Gerpisa colloquium, Paris (2011)
Keywords:automotive suppliers, Cross-border restructurings, European Works Councils
For more than a decade the European automotive supply industry has been in a process of a deep structural change. Due to (1) growing competitive pressure within the industry, (2) high dependence on the automobile manufacturers (OEMs), (3) substantial reorganisation of supplier-OEM-relations and (4) rapid innovation cycles the industry has seen a major consolidation with mergers and acquisitions as well as bankruptcies. Internal restructurings and cross-border relocations of production characterise this industrial sector. Mass redundancies and plant closures in some of the Western European high wage countries go hand in hand with business expansion in Eastern Europe. The recent economic crisis may accelerate the ongoing restructuring processes. Moreover, the electrification of the powertrain will have profound effects too. It will create demand for certain product groups while reducing demand for others. This, in turn, will lead to a complex internal competition inside the country/division-matrix of large suppliers.
The article examines the response of the employee side to these developments. More specifically, it investigates the role of the European Works Councils (EWCs) in restructuring processes and analyses the conditions under which EWCs can function as effective bodies of cross-border interest and labour regulation.
Drawing on a typology of internationalisation of companies, the article first attempts to characterise the internationalisation strategy of selected first tier automotive suppliers: Do supplier companies differ in their approach to shift production to low cost countries? If so, is this a question of product groups/sub markets, of the companies’ home country institutions or a result of the company-specific corporate governance?
Second, the article analyses the role of the EWCs in coordinating employee response to cross-border restructurings and production relocations: How effective is the coordination of employee representatives inside EWCs? To what extent do interests of the home country locations dominate these bodies?
Third, the article tries to identify systematic causes for effective or ineffective coordination of EWC activities and the ability to somehow influence the outcome of cross-border restructurings. It is argued that compared to their counterparts of the OEMs, EWCs of large suppliers additionally have to cope with the organisational complexity of their companies, which tends to impede the emergence of effective coordination mechanisms.
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