The Automotive Sector in Emerging Economies: Industrial Policies, Market Dynamics and Trade Unions
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Rudolf Traub-Merz (ed.) The Automotive Sector in Emerging Economies: Industrial Policies, Market Dynamics and Trade Unions Trends & Perspectives in Brazil, China, India, Mexico and Russia Rudolf Traub-Merz (ed.) The Automotive Sector in Emerging Economies: Industrial Policies, Market Dynamics and Trade Unions Trends & Perspectives in Brazil, China, India, Mexico and Russia Imprint The Automotive Sector in Emerging Economies: Industrial Policies, Market Dynamics and Trade Unions. Trends & Perspectives in Brazil, China, India, Mexico and Russia Edited by Rudolf Traub-Merz Published by: Friedrich-Ebert-Stiftung, Hiroshimastraße 28, 10785 Berlin © 2017 Friedrich Ebert Stiftung Global Policy and Development Hiroshimastr. 28 | D-10785 Berlin | Germany Responsible: Mirko Herberg | International Trade Union Policy Phone: +49-30-269-35-7458 | Fax: +49-30-269-35-9255 www.fes.de/gewerkschaften To order publications: [email protected] Commercial use of all media published by the Friedrich-Ebert-Stiftung (FES) is not permitted without the written consent of the FES. The views expressed in this publication are not necessarily those of the Friedrich-Ebert-Stiftung. Design / Typesetting: pertext, Berlin Cover pictures: Digital sketching of a concept car (dboyfotopages, Duplex, CC-BY-2.0) Montage (BMW Werk Leipzig, Duplex, CC-BY-SA-2.0) ISBN: 978-3-95861-597-7 Contents Foreword Tina Hennecken and Rudolf Traub-Merz → 6 Emerging Economies and the Global Automotive Industry Policies between Import Substitution, Global Supply Chains and the Emergence of Concepts of New Mobility Rudolf Traub-Merz → 8 PART I: THE AUTOMOTIVE INDUSTRY – PROSPECTS FOR EMERGING ECONOMIES Evolution and Challenges of the Automotive Industry in Brazil Contribution to the Debate Fernando Sarti and Robert A. Borghi → 41 Development and Structure of the Automotive Industry in Mexico Clemente Ruiz Duran → 65 Development and Structure of the Automotive Industry in China Chen Yi, He Ying and Guang Xueling → 86 An »Automotive Revolution« in Neoliberal India Evolution, Industrial Structure, Trends and Prospects Babu P. Remesh → 105 Automotive Industry in Russia Between Growth and Decline Rudolf Traub-Merz → 127 PART II: THE ROLE OF TRADE UNIONS Employment, Labour Relations and Trade Union Strategies in the Brazilian Automotive Sector A. Cardoso, F. Augusto Júnior, R. Belzunces dos Santos, R. Viana and Z. Camargo → 148 Employment and Trade Union Policies in the Auto Industry in Mexico Alex Covarrubias V and Jose Alfonso Bouzas Ortiz → 163 Employment, Labour Relations and Trade Union Strategies in the Automotive Sector in China Lu Zhang → 187 Trade Unions and Industrial Relations in the Car Industry in India Pravin Sinha → 206 Let’s Talk about What We Have in Common rather than about What Divides Us Employee Representation in the Globalised Automobile Industry: Trade Unions and Works Councils Georg Leutert → 220 Hopeless and Hopeful Can Global Framework Agreements Reconfigure »Glo-cal« Labour Relations? Indira Gartenberg → 231 Building National Alliances for the Future of the Industry Armin Schild and Inge Lippert → 244 About the Authors → 258 Foreword The global automotive industry has been enjoying strong growth and prof- itability in recent decades. But rather than witnessing a period of stability, the sector has been marked by deep structural changes. Although the in- dustry is dominated by large transnational companies from a few countries virtually all of them outsource substantial segments of their vehicle pro- duction within national economies and across borders to such an extent that supplier industries have expanded to a size not much smaller than the OEMs (original equipment manufacturers) themselves. Today, automotive manufacturing is based on a global chain of supplies of such magnitude that the traditional concept of international trade has been challenged and the question raised of whether national governments still have enough po- litical leverage to regulate investment and production capacities, even if they wanted to. During this period of development of global value chains several emerging economies have identified automotive manufacturing as a strate- gic pillar in their endeavour to catch up with the developed countries. They use economic policy instruments to localise manufacturing capacities and have to decide whether to follow the paths of import substitution or of ex- port promotion. After clothing and textiles, household goods and electron- ics, automotive manufacturing may become the next area in which newly industrialising countries manage to capture large proportions of global producing capacities from the previously dominant North. Trade unions look on at the spectacle of the automotive industry’s glo- balisation with concern, but also hope. Car factories have always been ven- ues for strong union organisation, but outsourcing poses a major challenge to membership and bargaining power. Relocation of production across borders, however, provides opportunities for union capacity-building in the countries receiving the investment. Unions have to build up transna- tional forms of solidarity to organise industrial relations along global val- ue chains. But just when emerging economies appear to be unstoppable in their endeavour to become the new centres of automotive manufacturing a new round of technological innovations is around the corner. The electrification of the power drive, the networked car and autonomous driving may have the power to shuffle the cards anew and to bring new actors, products and markets into the global automotive business. Foreword 7 In order to discuss the current challenges and the future potential in es- tablishing domestic capacities the Friedrich-Ebert-Stiftung (FES), through its offices in Brazil and Russia, organised an international workshop on the »Development of the automotive sector in emerging economies and its im- pacts on industrial relations and trade union strategies«, held in Sao Paulo on 4 and 5 November 2015. The discussion was conceptualised within the framework of country reports that featured key car markets, namely Chi- na, India, Russia, Brazil and Mexico. Participants were enthusiastic about the quality of the reports and the debates emanating from them, so the FES decided to upgrade the reports and publish them as an electronic book, which can be easily downloaded. We are grateful to all who have contributed to this project and helped to shape this book with their presentations and inputs. Tina Hennecken & Rudolf Traub-Merz* 1 * Tina Hennecken is FES Country Representative for Mozambique and former FES Project Di- rector, Brazil; Rudolf Traub-Merz is Consultant and former FES Country Representative for Russia. Emerging Economies and the Global Automotive Industry Policies between Import Substitution, Global Supply Chains and the Emergence of Concepts of New Mobility Rudolf Traub-Merz 1 Introduction The automobile industry is one of the biggest industrial sectors in the world. If one includes the economic activities up- and downstream of actual man- ufacturing the sector’s global value added stands at around 5–10 per cent.1 Worldwide there are around 500 million registered passenger cars. Their number continues to grow and by 2030 this will triple (Bartel et al. 2015: 6). Automobile manufacturing has undergone numerous rapid upheavals during the over 100 years of its existence. The major ruptures have been marked by shifts in production and demand and technological inventions and innovations in production methods. Within a few years of the end of the Second World War the automobile had grown to become the most im- portant mass consumption good, assumed the role of a status symbol in blue-collar households and supplanted bicycles, motorcycles and trams – a process sometimes aided and abetted by automobile manufacturers, such as General Motors2 – and finally also rail transport as the main means of mass transportation. 1 If one also includes in upstream activities the whole energy industry for the supply of fos- sil combustion materials the automobile industry would probably be the biggest economic sector in the world. For the automobile producing countries it is one of the most important sectors in manufacturing industry. In Germany in 2012 761,000 or 13 per cent of all employees were working in assembly plants in the manufacturing sector. If one includes the 1 million or so employees in Germany’s supply industry the automobile industry (not including energy) accounts for around 30 per cent of manufacturing industry (cf. Bohrmann et al. 2015: 6). 2 In 1950 GM was found guilty of conspiracy in the USA. GM had bought up electric trams in order to destroy them and to convert public transport to GM buses (cf. Snell n.d.). Emerging Economies and the Global Automotive Industry 9 In the meantime, emerging economies, after a few decades’ delay, are copying the »auto-model« of the industrialised countries. Demographic profiles, industrial manufacturing and growth markets are shifting to »the South«. Automobile manufacturing is one of the driving factors in the ef- fort to catch up with the »industrial North«. The embrace of automobile transport and its leaps forward have oc- curred in different regions at different times. While the first countries and cities in the industrialised zones took measures as early as the 1970s to re- strict individual motorisation and its strains, other countries had only just begun to convert their urban centres to prioritise the automobile. The global risk of climate change has