Reuters (London) - European countries must work together to reform the continent's automotive industry and cut production capacity if it is to emulate the recovery of the U.S. auto sector, the head of Ford in Europe said on Tuesday.
"The U.S. auto industry has realigned itself since the recession and is now leaner and stronger and the same needs to happen in Europe where there is up to 35 percent over capacity," Stephen Odell, Ford Europe's chief executive said in a speech at the Society of Motor Manufacturers and Traders' (SMMT) International Automotive Summit in London on Tuesday.
"Pan-European reform is needed because during the recession European countries protected their own national champions."
U.S. carmakers have seen profitability pick up in recent months after a four-year sales decline, helped by cuts to production capacity and jobs. But the global automotive industry is far from returning to the heady days of a decade ago.
"The recovery in the European economy is going to be very, very slow and the same will be true in the auto industry," said Odell. "Overcapacity is the big issue and I don't see that changing soon."
Weak consumer spending across Europe and in the U.S. as well as supply disruptions from the recent earthquake in Japan have hit carmakers, who are increasingly relying on emerging markets like China and Russia to fuel growth.
Odell also voiced concerns over "creeping legislation" from the European Commission, which recently published proposals to limit city centres to electric vehicles by 2050.
The EU's transport proposal aims to halve fuel traffic in urban centres by 2030 and see all petrol and diesel-powered cars banned by 2050.
"If even part of this white paper becomes policy we will have to talk about how we lay off thousands and maybe millions of people," said Odell, who added that the British government has "major concerns" about the proposals.
UK INVESTMENT
Britain's business minister Mark Prisk said he hoped suppliers of parts to carmakers would invest in the UK after Germany's BMW and Japan's Nissan Motor Co Ltd disclosed plans to invest hundreds of millions of dollars in their British auto operations this month.
"Most of the primes (top global carmakers) are here in the UK so hopefully the supply chain will follow," Prisk told reporters. "We're meeting companies to try and make that happen -- we're focused on getting the overall investment up rather than just getting one new prime here."
The British government is pinning its hopes on manufacturing and exports to help the economy recover from the banking crisis, but announcements by carmakers this week have so far been more about maintaining the status quo rather than ramping up output or new plants.
Although the UK car industry is now largely foreign-owned, it still employs more than 700,000 people and accounts for more than 10 percent of exports -- worth around 25 billion pounds a year.
Prisk also said there was a shortage of British people going into engineering jobs and urged youngsters to rid themselves of images of "smoke-stacked northern factories" and sign up for manufacturing jobs.
Paul Everitt, the SMMT's chief executive said there had been talks between the British government and industry about redeploying skilled engineers from the defence and aerospace sectors -- which is seeing a slowdown -- to the automotive industry to help fill the gap.
