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Globalisation impacts European car industry

While the recession may be over and our economy may be slowly but surely on the mend, there is no doubt that the repercussions of the financial crash are still being felt far and wide.

It is at times like these when an ‘I scratch your back, you scratch mine’ approach to business could well pay dividends, with blocs such as the European Union (EU) pulling together to ensure as many member states ride out the tough times as unscathed as possible.

One industry that has found itself hard-hit over recent years has been the car manufacturing sector. However, it would appear that this has not been solely down to the financial crash.

Laszlo Andor, EU commissioner responsible for employment, social affairs and inclusion, explained the industry is going through major structural changes as a result of globalisation and the dissolution of international boundaries when it comes to conducting business.

While Europe may be able to lay claim to some of the leading car manufacturers in the world, the fact of the matter is, production rates have plummeted.

The figures speak for themselves

Official figures suggest that in 2012, EU countries were responsible for one quarter (26%) of global passenger car production, churning out 15.1 million units. This is a dramatic drop from the 34.1 and 35.9% stakes held in 2005 and 2000, respectively.

There are many factors responsible for such a shift in production trends, for which one of the key reasons is the rise in the influence of and demand from emerging economies. In the decade up until 2012, the market share for BRIC countries – that is, Brazil, Russia, India and China – experienced a surge from 8.4% at the turn of the century to 33.5% in 2010.

Put simply, globalisation has made it possible for manufacturers to feed growing demand all over the world, meaning the shift in consumption is inevitably going to impact producers.

Support for the individual

With many workers being affected by this restructuring, it follows that the bloc’s authorities should look to support these individuals employed by the sector wherever possible, with the commissioner highlighting the importance of “EU solidarity” at times such as this.

For example, the European Commission (EC) has proposed €1.9 million (£1.6 million) of support from the European Globalisation Adjustment Fund – also known as the EGF – to help 285 workers made redundant by the car manufacturer Grupo Santana in Andalucia, as a result of the dwindling industry in Spain. The next step will see the proposal submitted to the European Parliament for approval by the EU’s council of ministers.

Should it come to fruition, the idea is that the money can help those employees who have been made redundant to readapt their current skills, either via vocational or on-the-job training, in such a way as to help them seek new employment. These skills might even be used to help these individuals to consolidate their own businesses.

Illustrating the need for skills that are finely tuned to cope with globalisation is the growth in demand for interpretation and translation services, as businesses both large and small seek the expertise of language professionals in order to expand into international markets. If there was ever a time to capitalise on being bilingual, this is it.

Looking to the future

There is no doubt that the explosion of international commerce and globalisation has completely transformed the worldwide business landscape.

However, while more open trade may create commercial opportunities that were simply not an option a few short decades ago, it may also pose a threat to local growth and employment – particularly for smaller companies, individuals who are maybe less skilled and those operating within weaker sectors that are perhaps more exposed or vulnerable to unstable market conditions.

It is for this reason that president of the EC Jose Manuel Barroso first launched the EGF, which has received 118 applications since its inception in 2007. Its approach was soon revised in response to the ensuing economic crisis.

Aiming to provide support to those who encounter difficulties in adapting and restructuring themselves around the international business landscape is as important as supporting the growth of cross-territory commerce itself. Support such as that provided by the EGF is vital to ensure that globalisation is more a business help than a hindrance to as many individuals, businesses and sectors as possible.

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