"We will see. We are currently talking to the unions and explaining to them how big the gaps are in our competitiveness," Carlos Tavares told German trade newspaper Automobilwoche.
 
"We have a competitiveness problem in western Europe and France."
 
The European market's prolonged decline is even starting to make previously impervious car makers, such as Volkswagen, feel vulnerable. "We're bracing for more negative surprises in 2013, perhaps also in 2014," Christian Klingler, VW's sales chief, said at the Paris auto show last week.
 
Tavares pointed out that Renault's cooperation with Nissan had given the company hard data on productivity levels at Nissan factories in Sunderland in Britain and Barcelona in Spain.
 
"These factories are really top," the Renault CEO said, adding that discussions were under way on whether Nissan could make production capacity available to Renault. . . . 
 
A Renault spokeswoman declined to comment on the report, but Chief Executive Carlos Ghosn said on Friday that the French car maker could disappear "in its current form" if it is unable to be competitive in its home market.
 
However, Ghosn also said that Renault had no plans at this stage to cut jobs in France.
 
And here's what Ford Will Trim Staff in Europe recently reported concerning Ford's European situation:
 
Ford Motor Co. plans to lay off "a few hundred" salaried workers at its European auto unit, and reduce the number of contract employees in the money-losing region to lower expenses.

The Dearborn, Mich.-based auto maker is offering voluntary buyouts to salaried workers in the U.K, Germany and other regions of Europe and cutting expenses on outside contractors as well as purchased services . . .

Ford has forecast a full-year loss of more than $1 billion in the region and is working on a wide-ranging plan to restore profitability to Europe. It is introducing three all-new models in Europe and has said it is working on cost-cutting efforts.

Ford is considering closing one of its five Western Europe assembly plants, but it would likely face strong resistance from unions and governments. . . .

The problems in Europe are "structural in nature," rather than the result of a cyclical downturn in the industry, Ford finance chief Bob Shanks then said.

Ford pledged to take actions to slash costs and production capacity in Europe, despite the political and labor opposition to closures that make it difficult to shrink operations there. It has suggested a downsizing in Europe could over time have positive results similar to those Ford has seen in North America, where the company restructured and now is producing near-record profits."

Summing Up

The auto industry is a prime example of what happens when strong debt induced demand over time reaches an unsustainable level. Eventually the bubble bursts, in other words, much like the housing situation.

Manufacturing capacity was put in place for artificial debt driven demand which has now disappeared. As a result, debt restructurings will require capacity restructurings as well.

And this bubble bursting impact is neither restricted to the auto industry nor to Europe. It's a worldwide problem in search of a solution. And the "unwind" solution will take time.

Simply put, the only lasting solution is for the private sector winners to produce globally competitive cars that consumers choose to buy.

Because in the end, consumers will reign supreme. Not governments. And not manufacturers that aren't able to offer competitive products and services.

And certainly not unions and those subsidizing and enabling governments that TEMPORARILY make it harder for the marketplace to operate and let consumers decide which individual private sector companies will survive and thrive. And which won't.

Wherever they may be located and whoever they may be.

Thanks. Bob.