wac2004ronblum

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Trends in the Automotive

Industry, Global ProductionChains & Challenges for Unions

Ron BlumIMF Auto Department

World Auto Council

June 8-10, 2004

Dearborn, USA


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The Principal Points

World Economic Outlook

Auto Industry Trends

Challenges for Trade Unions

Trade union strategies & responses


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World GDP Growth2002-2003 actual, 2004-2005 forecast (as of April 2004)

S OURCE: International Monetary Fund

2002 2003 2004 2005% % % %

World 3.0 3.9 4.6 4.4 0.6Advanced Econo ies 1 .7 2. 1 3.5 3. 1 0.6

USA 2.2 .1 .6 .9 0.7EU 0.9 0. 1.7 2. (0.1)Japan -0. 2.7 . 1.9 1.9

Developing Countries 4.6 6. 1 6.0 5.9 0.6Af a .5 .1 .2 5. (0. )Developing Asia 6. 7.8 7. 7.0 0.9

ina 8.0 9.1 8.8 8.0 1.0Middle Eas t 4.2 5. 4 4 .1 5.0 (0.2)Wes tern Hemisphere -0.1 1.1 .6 .6 (0.6)

Countries in Transition 4. 1 4.9 4.7 4.7 0.6Cen tr. Eas t Europe 4.4 4 .5 4.5 4.4 0.1CIS 5.1 7.6 6.0 5.2 0.9

Russia 4.7 7. 6.0 5. 1.0

Diff . fro S ep -03 forecs't of 2004


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Global recovery broadens, butMonetary Fund says risks remain

Continued geopolitical uncertainties, including war and turmoil in the Middle East, threats of terrorism

igher and more volatile oil prices

ising interest rates in industrial countries that

could slow economic activityImbalances in global economy trading system,with record U . . trade deficits


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O ther reasons for concernnoted by Monetary Fund

Exchange rate shifts could send dollar dropping,possibly sharply

Concerns about deflation have lessened but stillexists

Possible bubble in residential property prices

Under-utilized capacity remains

Vulnerabilities related to corporate corruptionand inadequate governance


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Auto Industry rends




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Vehicle Sales by Region1997-2003, (1000 units)

1,000

3,000

5,000

7,000

9,000

11,000

13,000

15,000

17,000

19,000

21,000

1997 1998 1999 2000 2001 2002 2003e

NAFTA

W Europe

Japan

Asia-Pacific*

E Europe

S America


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World Vehicle Production by Region1997-2003, (1000 units)

1997 1998 1999 2000 2001 2002 2003e

NAFTA 16,045 16,034 17,617 17,660 15,817 16,715 16,212

W Europe 16,040 16,680 16,426 17,167 17,270 16,965 16,960

Japan 10,976 10,050 9,895 10,145 9,776 10,257 10,286

Asia-Pacific* 7,143 5,398 6,950 7,873 7,937 9,355 11,012

E Europe 2,314 2,377 2,592 2,699 2,636 2,571 2,662

S America 2,656 2,051 1,662 2,040 2,062 1,962 2,007

Other 697 619 602 751 676 631 955

World Total 55,871 53,209 55,745 58,334 56,173 58,457 60,095

* excludes Japan Source: IMF Auto Report 2004


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Vehicle Production by Region1997-2003, (1000 units)

1,

3,

5,

7,

9,

11,

13,

15,

17,

19,

21,

1997 1998 1999 2 2 1 2 2 2 3e

NAFTAW Europe

Japan

Asia-Pacific *

E Europe

S America


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Regional Production & Sales2003 preliminary (1000 units)

0

2 000

000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

20 000

W E u op E E u op NAF A S A J p n A -P

P odu on

R on


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Trend in Industry Employment, 1999-2002Total of top 15 countries with data for the period

in 000s, Source: VDA

4,421

4,353

4,286

4,179

1999 2000 2001 2002


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Change in Industry Employment1999-2002, in 000s

Top 15 countries with data for the period

Source: VDA

German yweden

Aus triaFrance

Canada

SpainNe th erlands

Bel g iumPor tu g al

BrazilUK

Ital yPoland

JapanUSA

-18 -1 -1 - - -


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Share of Employment in Assembly, 1999(Assembly includes engines & bodies)

source: VDA, IMF Auto Report

55

5 5 5

B z l

U K C d g

l U K I

l y

Mx

G

y w

d ld B

l g


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Forecast of Production Increasesby Region, 2004-2009

(1000 units), Source: CSM

918 1,055

4,461

6711,190

208

W E u F Am e C&E E u Othe

Total = + 8,500


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Growth in the Asia-Pacific regionled by Chinas auto sectors

C omme c aVe c es

assen eC a s

0

500

,000

, 00

2 ,000

2 , 00

3 ,000

3 , 00

4 ,000

4 , 00

2 0 0 3 2 0 0 1

1 9 9 9

1 9 9 7 1 9 9 5

1 9 9 3

1 9 9 1

h o u

a n

d

u n

Produc on n Ch na199 0-200 3


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Projected Capacity of China's Major Auto Groups, 2003 v. 2007

(1000 units)

4

6

1

1

1 4

1 6

1

S A I F A W D

F B e i

j i n g G e e l y

G u a n g z

h o u h a n

g ' a n

O t h e r

J i n b e i

2003

2007

Source. IMF Auto Report 2004


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Projected Capacity of Auto TNCAlliances in China, 2003 v. 2007

(1000 units)

0

200

00

600

00

000

200

00

600

00

V W

D C - H y u n - K i a

- M i t

G M - F i a t - S u z

- I s u z T o y o t a R e n -

N i s F o r d

- M a z H o n d a P S A

2003

2007

Source. IMF Auto Report 2004


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Chinas car assembly capacityoutpaces project domestic demand

(1,000,000 units)

3.03.7

4.5

6.4

1.8 2.2 2.6 2.93.1

2.6

2003 2004 2005 2006 2007

capacitydemand

Source: IMF Auto Report 2004


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C allen es for Trade Unions



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The restructuring & integration of production chains impact assembly andsupplier workers alike ...

Mergers & acquisitions and strategic company alliancesmay provide economies of scale, but they can lead to theloss of jobs as well .

The industry continues to be squeezed by the powerfulvehicle producing companies .

Impacts are often greatest on workers in ExportProcessing Zones, many of whom are women .

Outsourcing and sub-contracting of work from oneemployer to another causes challenges all acrossproduction chains, from the local to the regional and

global levels .


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O ther challenges from restructuringare also occurring through ...

employers continued attempts to shift from permanentto temporary workers, which puts downward pressure onconditions for all workers

pressures and stresses of change related to increaseddemands for flexibility in the form of:

modification of production processes,

introduction of new technologies,expanding operating hours .

and from employers unrelenting cost-cutting & agrowing trend of opposing unionization and union-won

benefits .


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Corporate-driven globalisationhas intensified our challenges

Trade & investment liberalization aims to deregulatemarkets, unhinder movement of capital & roll backgovernment protections .

Ruinous competition to attract investments can play off workers & communities against one another, depletepublic resources, deny workers their rights, reduce living

standards, and lower environmental protections .ownward pressures are exerted on the purchasing power

and social wage of workers, even as their productivitycontinues to increase and under-utilized capacity exists .


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other challenges fromcorporate-driven globalisation

The resulting increased inequalities of income and wealthdistribution, and the weakening of social protections, have

severe consequences worldwide .The WTO, the proposed FTAA, NAFTA & other suchagreements, are designed to meet the demands of transnational companies, not the needs & rights of

workers & farmers, or protection of the environment .Excessive emphasis on export promotion, and lack of broader policies for domestic development, worsenexisting global imbalances .


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Trade union strate ies & responses


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Autoworkers and their trade unionshave the strategies and instrumentsto respond ...

and we must continue to effectively implement and we must continue to effectively implementand use and them:and use and them:

Or anizin and collecti e bar ainin both havecritical roles to play .B uildin and stren t enin industry -w ide unionstructures to link workers across production chainsat the national, regional and global levels .Mobilizin for addin a social dimension to

lobalization as formulated in the IMF ActionProgram, along with with our civil society allies


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Trade unions have potent means toengage transnational auto companies ...

Uniting workers in supplier & assembly sectors, puttingmore emp asis on or anizin supplier w orkers andpressuring employers to end supplier squeezing .

Ne otiatin & implementin International Frame w orkA reements with global auto companies as an effectivemeans to link assembly and supplier workers and helpensure employers respect core labor standards .B uildin & stren t enin World Company Councils& industry -w ide coordination to help forge networksand connections to defend and advance worker and

trade union rights and interests .


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Solidarity is a necessity in theface of globalization

L abor needs the strength and instrumentsto reign in competition in the global labor market

International union power depends oncross border solidarity, and on

global union structures and instrumentsfor exercising it .


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S OL IDARITY

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