Somewhat lost in the discussions of the U.S. auto industry's problems are similar problems that are beginning to crop up in Europe.
With labor issues already appearing at VW, Seat and Mercedes, the latest signs of unrest come from auto parts and tire company Continental. The company announced earlier this week that it planned to close its Hanover, Germany, tire plant by the end of 2006, cutting 320 jobs in the process.

Now Continental's works council and German trade union IG BCE are threatening to terminate their agreements with Continental if the company doesn't abandon its plans for the Hanover facility.

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So far, job cuts in western Europe?s auto industry have been fairly benign compared to, say, GM?s North American plans, focusing on the easy targets of early retirements and natural attrition. But this has to be just the tip of the iceberg.

Europe?s manufacturers face the same problems as GM and Delphi - high labor costs relative to their competition, strong offshore competitors, a stagnant domestic market and rising materials costs. We can expect the same problems for auto workers in western Europe, as jobs continue to move to cheaper labor markets in eastern Europe, Russia and elsewhere. Porsche?s request to its board to allow the company to make foreign acquisitions and investments could well be intended to give the company the flexibility to explore lower cost manufacturing options.

We?re only seeing the beginning of a widespread restructuring of the auto industry.


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