The automotive industry and european integration

A. J. Jacobs

The Automotive

Industry and

European Integration

The Divergent Paths of

Belgium and Spain

The Automotive Industry and European

Integration

A. J. Jacobs

The Automotive

Industry and

European Integration

The Divergent Paths of Belgium and Spain

ISBN 978-3-030-17430-9 ISBN 978-3-030-17431-6 (eBook)

https://doi.org/10.1007/978-3-030-17431-6

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A. J. Jacobs

Department of Sociology

East Carolina University

Greenville, NC, USA

v

I would like to thank the Brussels Centre for Urban Studies at Vrije

Universiteit Brussel for the research fellowship that laid the foundation for

this book. In particular, I must recognize Bas Van Heur and Elvira

Haezendonck for their efforts during my stay in Brussels in 2017. Whereas

Dr. Van Heur guided my path, it was Dr. Haezendonck who unselfishly set

up my initial meetings with auto company officials. I also want to acknowl￾edge the center’s Elena Solonia for her friendly logistical support, and

Stefan DeCorte, Michael Ryckewaert, and Michel Van Meeteren for shar￾ing their wisdom on the topic.

Next, I would like to recognize Andreas Cremer, Jo Declercq, Francis

Luyckx, Ivo Van Hauten, Isabelle Van Looy, and Eric Van Landeghem for

their invaluable insight, and Ezequiel Aviles-Munoz, Ivan Borovcanin,

Mio Bosnic, Mark DeMey, Ron Dubois, Pepe Perez, Michael Retour,

Marivi Ricart, Rafael and Lola Salas, Claudia Torres-Rivas, and Paul Waley

for their assistance in gathering information. Similarly, I want to offer spe￾cial thanks to Marcus Ballenger at Palgrave for believing in my project,

and Jacqui Young and Jazmine Robles for their editorial assistance.

Finally, I send extra hugs to Shuko and Ruiko for their never-ending

patience and support!

Acknowledgments

vii

Part I Overview and Background 1

1 The Beginnings of the European Union and Overview of

the Book 3

2 Car Production and the Four Phases of European

Integration, 1958–2017 19

Part II Foreign Carmaker Assembly Plants in Belgium 51

3 Introduction to Part II: The Early Belgian Car Industry 53

4 Ford Motor in Belgium 63

5 General Motors in Belgium 89

6 A History of Renault Haren-Vilvoorde 121

7 The Multiple Roads to VW’s Audi Brussels in Forest 139

Contents

viii Contents

8 Volvo and Other Foreign Carmakers in Belgium 157

9 Conclusion to Part II: The Future of the Belgian Car

Industry 175

Part III Foreign Carmaker Assembly Plants in Spain 181

10 Introduction to Part III: The Early Spanish Carmakers 183

11 Ford Motor in Spain 193

12 General Motors in Spain, 1925–2017 225

13 Renault Valladolid and Palencia 249

14 A History of VW’s Spanish Car Plants, Part I: 1940–1989 283

15 A History of VW’s Spanish Car Plants, Part II: 1989–2018 317

16 PSA Peugeot Citroen’s Car Plants in Spain Part I:

1951–1989 345

17 PSA Peugeot Citroen’s Car Plants in Spain Part II:

1989–2018 369

18 Conclusion to Part III: The Future of the Spanish Car

Industry 397

Part IV Future of the Car Industry in an Expanding or

Brexit EU 403

19 EU Expansion, Brexit, and Near-Term Prospects for

European Car Plants 405

Index 445

ix

Table 2.1 European Union accession dates and potential members 21

Table 2.2 Passenger car production in EEC and Eastern Bloc, 1973–1989 28

Table 2.3 Passenger car production in Three Areas of Europe,

1989–2001 37

Table 2.4 New passenger car plants announced/launched in the EU,

2001–2019 39

Table 2.5 Major passenger car plants closed in Western Europe,

2001–2019 41

Table 2.6 Passenger car production in Three Areas of Europe,

2001–2017 43

Table 3.1 List of Belgian plants assembling foreign cars, 1922–2019 56

Table 3.2 Belgium’s foreign car plants light vehicle production,

1989–2016 58

Table 3.3 Belgium’s foreign car plants employment, 1989–2016 59

Table 9.1 Active and former foreign car plants in Belgium, 1989–2019 176

Table 10.1 List of Spanish plants assembling foreign cars, 1920–2019 187

Table 10.2 Spain’s foreign car plants light vehicle production, 1989–2016 189

Table 10.3 Spain’s foreign car plants employment, 1989–2016 190

Table 18.1 Active and former foreign car plants in Spain, 1989–2019 400

Table 19.1 Passenger car production in Three Areas of Europe,

1989–2017 406

Table 19.2 Labor costs among Expanded EU auto-producing nations,

2017 410

Table 19.3 Changes in number of major car plants in Expanded EU,

2019–2030 412

List of Tables

PART I

Overview and Background

© The Author(s) 2019 3

A. J. Jacobs, The Automotive Industry and European Integration,

https://doi.org/10.1007/978-3-030-17431-6_1

CHAPTER 1

The Beginnings of the European Union

and Overview of the Book

Introduction

In the year that the Berlin Wall fell, 1989, Western Europe’s (WE’s) 11

auto-producing nations built 14,906,050 passenger cars. Meanwhile,

state-led automakers in the former Eastern Bloc nations of Central-Eastern

Europe (CEE)—Czechoslovakia, East Germany, Hungary, and Poland—

produced 703,305 cars. Another 445,409 were assembled by state-run

firms in the ex-Socialist Southeastern Europe (SEE) nations of Bulgaria,

Romania, and Yugoslavia. In 2017, however, WE built 12,271,100 cars,

or 17.68% less than in 1989. In contrast, CEE nations produced

4,147,740 in 2017 and in SEE to 632,865, for respective gains of 489.75%

and 42.09% as compared with 1989. Moreover, unlike in 1989, all the cars

assembled in CEE and SEE in 2017 were produced by private Western

European, American, Japanese, and Korean companies.1

Enhanced global competition, a major enlargement of the European

Union (EU) into the former Eastern Bloc, significant labor cost discrep￾ancies, European Commission-approved State subsidies promoting

growth in Eastern European regions, and a related cost-cutting frenzy by

global automakers have been among the many factors shaping these dis￾similar growth paths. These factors, within the context of another expected

1Ward’s (1956–2018); OICA (1999–2018); Jacobs (2017); ACEA (2018). Whereas

Czechoslovakia encompassed the current nations of Czechia and Slovakia, Yugoslavia tra￾versed today’s Bosnia and Herzegovina, Croatia, Kosovo, Montenegro, North Macedonia,

Serbia, and Slovenia.

4

EU expansion into SEE and a probable British exit (Brexit), likely will

again dramatically reshape the European car production map over the

next ten years.2

Whereas numerous works have chronicled the post-1989 eastward shift

of the European car industry, none have examined concurrent disparities

in growth trajectories among WE nations.3 For example, while annual car

output in France, Italy, and Belgium was at least 50% lower in 2017 than

it was in 1989, final assemblies expanded by roughly 20% in Spain during

this period. The bulk of the former declines occurred after 2001 when car

output contracted by 724,212 and 68.41% in Belgium, and by 2,614,028

and 17.56% overall, in WE. In the interim, car production expanded by

80,320 and 3.63% in Spain.

This book helps to fill this gap by comparing/contrasting the historical

development of foreign car plants in Belgium and Spain. In the process, it

reveals how European integration, high wages, labor strife, and the near

demise of General Motors (GM) and Ford led to the closing of three car

plants (Ford, GM-Opel, and Renault) and the major downsizing of a

fourth (Volkswagen or VW) in Belgium between 1989 and 2017. It then

chronicles how lower relative wages; more pliant government and labor;

and the expansionist plans of VW, Renault, and PSA Peugeot Citroen

(PSA) stimulated growth in Spanish car production during this same period.

The discussions, findings, and future projections presented in the

chapters to follow (summarized below) draw upon the author’s 25 years

of research on the auto industry and car-producing regions. This has

involved the following: (1) research questions grounded in scholarly lit￾erature; (2) historical analyses car production data, particularly for nations

in WE, CEE, SEE, North America, and East Asia; (3) historical reviews of

more than 150 car factories in these regions of the world, including con￾tent reviews of hundreds of newspaper articles, annual reports, and related

academic works, and the compiling of annual vehicle production and

employment; (4) tours and/or in-person site visits of 60 car factories; (5)

the collection of employment and other sociodemographic data on the

regions in which these plants were situated as well as photographs docu￾menting existing development patterns; and (6) in-person meetings and

off-site communications (phone, email) with hundreds of government

2 See, for example, Havas (2000); Lung (2004); Carrillo et  al. (2004): Domanski and

Lung (2009); Galgoczi et al. (2015); Jacobs (2017); and Pavlinek (2017). 3Belgium (2017–2018); Spain (2017–2018).

A. J. JACOBS

5

and industry officials (anonymity always has been protected, and no one

is directly quoted in this book).4

The next sections of this chapter provide a brief overview of the events

leading up to the creation of the European Economic Community (EEC)

in 1958, the precursor to the EU. This discussion is continued in Chap. 2.

The remainder of this introduction then offers short synopses of the book’s

forthcoming chapters as well as some notes on frequently used terms.

The First Steps Toward a European Union,

1946–1951

As has been well-documented in countless works, World War II (WWII)

left Europe in physical, social, and economic ruins. Fearing that Europe’s

massive problems could serve as a crucible for the spread of Soviet-style

socialism, in May 1947, the American Government began devising a strat￾egy to rebuild Western Europe. Concurrent to this, Winston Churchill

was establishing the United European Movement, whose intent was to

create a quasi-United States of Europe.5

America’s sentiments were crystallized in then-U.S. Secretary of State

George Marshall’s historic speech at Harvard on June 5, 1947, in which

he laid the foundation for what would become the Marshall Plan. Reading

from a draft crafted by his special assistant Charles Bohlen, Marshall

declared that since Europe was unable to produce or acquire its immedi￾ate needs for food and other essentials, other nations, particularly

America, had to help finance its industrial reconstruction. This was

because he believed that the economic vitality was the only way with

which to create the stable politico-social institutions and conditions nec￾essary to foster peace, democracy, and prosperity in the region. He prom￾ised that although the American Government would offer economic help,

it would not dictate or lead in the drafting of any European recovery

program. Instead, he stated that several, if not all European nations,

should collaboratively devise a future course for the area, and then col￾lectively support this agenda.6

To consider the feasibility of implementing these ideas, on June 22,

1947, America’s President Truman established three working committees:

(1) the Council of Economic Advisors to study the potential impacts of

4 See, for example, Jacobs (1999, 2004, 2009, 2013, 2016, 2017). 5Kalijarvi (1947); Hogan (1989); Gilbert (2012); OECD (2018a). 6OECD (2018a).

1 THE BEGINNINGS OF THE EUROPEAN UNION AND OVERVIEW…

6

economic relief to European nations; (2) the Krug Committee, to study

America’s ability to finance the Marshall Plan; and (3) the Harriman

Committee, to examine the broader aspects of such assistance.7

Also responding to Marshall’s call for action, on July 3, 1947, Britain

and France extended invitations to 22 nations for a conference to access

interim needs and to formulate a comprehensive European recovery plan.

Leaders from the following 16 nations agreed to attend the July 12, 1947,

meeting: Austria, Belgium, Czechoslovakia, Denmark, Greece, Iceland,

Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal,

Sweden, Switzerland (with Lichtenstein), and Turkey. Czechoslovakia,

Denmark, and Sweden declared that they would appear merely as observ￾ers, the latter two in order to protect their political and economic neutral￾ity. The USA was also scheduled to present a report on conditions in

occupied Germany’s Bizone, the American and British sections of the

country established on January 1, 1947.8

Although invited, the Soviet Union (USSR) bypassed the conference in

protest of the ideals of the Marshall Plan. Bowing to the Soviets, Albania,

Bulgaria, Finland, Hungary, Romania, and Yugoslavia also formally

declined to attend. The Kremlin also pressured Czechoslovakia and Poland

to rescind their acceptances. On the other hand, Franco’s dictatorial Spain

was not invited.9

At the July 12, 1947, conference in Paris, the U.K., France, and the 14

other pro-Western attending nations agreed to establish the Committee

for European Economic Co-operation (CEEC). The CEEC was to include

technical and economic committees comprising all participant nations.

The goals were to draft a program which at the very least set a course for

advancing the most key sectors of the economy: food and agriculture; coal

and steel; power generation; and transportation infrastructure.

Representatives of the 16 nations continued to meet in Paris through

September 22, 1947, when the CEEC formally requested $22.4 billion in

aid from America over a four-year period. This was to include the follow￾ing: $15.82 billion from the USA; $5.97 billion from the other nations of

the Americas; and $3.12 billion from the World Bank. Foreshadowing the

future, the report also called for the reduction in trade barriers and even￾tually the establishment of (1) a European customs union (free trade zone)

7Kalijarvi (1947), p. 3. 8Kalijarvi (1947); Hogan (1989); Gilbert (2012); CVCE (2018). 9 Ibid.

A. J. JACOBS

7

and (2) a stable international economic and monetary system in Western

Europe, similar to what would become known as the European Bank and

Euro currency.10

In the meantime, and over Soviet protests, on August 29, 1947, the

Americans, British, and French agreed to allow the restarting of industrial

production in Germany under the following conditions: (1) Germany’s

recovery was not given priority over the democratic Western European

nations; (2) Germany was to remain demilitarized; and (3) any plan

devised did not enable Germany to again become an aggressor nation.11

As the British- and French-dominated talks proceeded slowly, however,

conditions in WE continued to deteriorate. By the autumn of 1947,

Britain had defaulted on its $4 billion loan from America and the French

and Italian economies were staggering toward bankruptcy. Moreover,

unable to acquire them from their historical source, Germany and Western

allies turned almost exclusively to America for the durable/capital goods

(tools, buildings, machinery, and equipment) and manufactured products

they needed to jump-start their economies. The result was massive trade

deficits with the USA: $1 billion for Britain; $956 million for France;

$431 million for the Netherlands; and $350 million for Italy in 1947.12

Meanwhile, by early 1948, East-West relations had become so frayed

that it was clear that Europe was now divided into two political-economic

and geographic blocs: Democratic Capitalist Western Europe and

Totalitarian Socialist Eastern Europe. This chasm was crystallized further

on March 17, 1948, when Belgium, Britain, France, Luxembourg, and

the Netherlands signed the Treaty of Western Union (Brussels Pact). Both

a military and economic alliance, the pact was thought to be the first step

toward closer ties among the respective nations. These objectives were

reinforced on April 3, 1948, when after passing both Houses of the

American Congress by large majorities, U.S.  President Harry Truman

signed into law the Foreign Assistance Act of 1948 and its accompanying

Economic Cooperation Act of 1948. In all, the American Government

approved up to $15 billion in aid to help finance the Marshall Plan’s

reconstruction of Europe.13

10 Ibid.

11 Ibid.

12Hogan (1989); Gilbert (2012). 13USA (1948); Hogan (1989); Gilbert (2012).

1 THE BEGINNINGS OF THE EUROPEAN UNION AND OVERVIEW…

8

Within two weeks of the act’s enactment, on April 16, 1948, the conference

of 16 European nations signed a treaty establishing the Organisation

for European Economic Co-operation (OEEC). Headquartered in Paris,

the OEEC’s founding purposes were to (1) supervise the allocation of

Marshall/Economic Recovery Plan aid and (2) establish a permanent col￾laborative organization to help carry out Europe’s reconstruction.

Thereafter, the OEEC also hoped to serve as a vehicle for promoting

international collaboration, economic growth, and barrier-free trade

within Western Europe (create a common market). In addition to the

aforementioned 16 nations, the Anglo-American Zone A within the Free

Territory of Trieste also became an original member of the OEEC. This

lasted until October 5, 1954, when it was repatriated into Italy and Trieste

Zone B (south of the Dragonja River) was incorporated into Yugoslavia.14

In the interim, on May 5, 1949, ten of the conference of 16 nations—

Belgium, Denmark, France, Ireland, Italy, Luxembourg, the Netherlands,

Norway, Sweden, and the U.K.—ratified the Treaty of St. James in

London. This established the Council of Europe in Strasbourg, France,

the forerunner to the European Parliament. Eighteen days later, on May

23, 1949, the Bizone and the French occupation zone were merged to

create the Federal Republic of Germany (West Germany), which was then

welcomed into the OEEC. Over the next two years, culminating on May

2, 1951, Greece, Turkey, Iceland, and West Germany also joined the

Council of Europe; Austria, Portugal, and Switzerland did not.15

Reacting to the changing context in the West, the USSR forged a bloc

of its own. Formalized on January 25, 1949, as the Council for Mutual

Economic Assistance (CMEA or Comecon), the so-called Eastern Bloc

initially encompassed the USSR, Bulgaria, Czechoslovakia, Hungary,

Poland, and Romania. The newly established German Democratic

Republic (East Germany) became the USSR’s sixth satellite nation in

1950. Somewhat similar to America’s goals with the OEEC, the Soviets

hoped to use the CMEA as a vehicle to promote economic growth and

further its ideological agenda. This was considered particularly important

at the time, following Yugoslavia’s 1948 declaration of its independence

from any Soviet-controlled alliance and its President Tito’s request for

American financial aid.16

14 Jacobs (2017); CVCE (2018); OECD (2018b). 15Gilbert (2012); CVCE (2018). 16Wolchik and Curry (2011); Jacobs (2017).

A. J. JACOBS