When Renault chairman Louis Schweitzer announced his decision to close a profitable auto plant in Belgium last month, he didn't expect to set off the continent's first "Euro-strike."
Nor did he expect a rebuke from the king of Belgium, the president of France, the president of the European Commission, clergymen, and politicians of all persuasions, as well as a consumer boycott of French goods in Belgium, including Renault cars.
Tomorrow, thousands of Renault workers from at least three nations are expected to converge on Renault's Paris headquarters to protest the decision, which will lay off 3,152 workers at the Vilvorde factory, outside of Brussels.
An unexpected decision
It's not the first time a loss-making European corporation has closed a plant. But to European sensibilities, this announcement was particularly abrupt and "brutal." The fallout now threatens Renault's efforts to restructure its auto business, and has sharply reopened a public debate on the future of Europe.
Renault's Feb. 27 announcement created a sensation in Belgium, where foreign carmakers are a key employer. Critics, including King Albert II, blasted Renault for failing to consult with workers before closing the Vilvorde plant, expected by July 31.
European Commission (EC) President Jacques Santer called the decision "a grave blow to the spirit of confidence in Europe" and urged workers to sue the company for violating European labor law. According to two European directives, Renault should have discussed the plan with workers and negotiated compensations before closing the plant.
The French government, which holds 46 percent of Renault stock, called the Renault chairman on the carpet over the "method" of the announcement, but did not criticize the final decision. But key politicians in the Socialist opposition and the ruling conservative coalition renewed calls over the weekend for a referendum on European union.
On Friday, Renault workers in Belgium, France, and Spain shut down lines for an hour to protest the Vilvorde closing - the first time that workers across Europe launched a strike against a single employer. Ford, Volkswagen, General Motors, and Volvo workers also shut down lines in Belgium in support of Vilvorde.
For workers, chanting the slogan "We are all Belgian workers!", Renault is becoming a symbol of the failure of the drive toward a united Europe to create or preserve jobs.
"It's finally here, the 'social Europe' France has been touting for years," editorialized the weekly Le Journal du Dimanche yesterday. "But history will recall that it was not thanks to France but because of her. France, the leading activist for a Europe that is more humane and closer to the people, has somehow managed the tour de force of setting off the first-ever Euro-strike."
Two days after the Renault announcement, representatives of French, Spanish, and Belgian unions met in Paris and approved a plan of action, including Friday's strike. "This move was unprecedented among European unions," says Karel Gacoms, head of the Vilvorde union delegation.
"It was the shock and brutality of this decision that set off a spontaneous reaction, especially in France, where workers reasoned that what's happening in Vilvorde could happen to us tomorrow. Even Spanish workers, who stood to gain from the Vilvorde shutdown, supported the strike," Tony Jamsson, president of European Federation of Metalworkers, told the Monitor.
On the eve of the strike, managers at the Renault plant in Valladolid, Spain, distributed leaflets explaining that Spanish workers would gain work and job security from the Vilvorde closing.
Nonetheless, Valladolid joined other Renault factories on Friday in shutting down work for an hour each shift, and about half of Renault workers across Europe supported the shutdown.
In addition, the Spanish government withdrew a request for $12.5 million in state aid to Renault to modernize its Valladolid plant, after EC officials charged that Renault was taking advantage of European aid to shift production from Belgium to Spain.
A job with Renault used to be the next best thing to lifetime job security, and Vilvorde was one of the most productive Renault plants. Renault has had a plant in Vilvorde since 1926.
But Renault insists that its decision to close was not related to problems at the Vilvorde plant, or a bid to save jobs in France at Belgian expense. Renault is expected to announce losses of nearly $1 billion for 1996 this week, and spokesmen say "drastic" action was needed to reverse this picture, including some 2,700 new layoffs in France.
"This week, we are going to announce losses for the first time in 10 years, and we will need to take drastic measures," says a Renault spokesman. "Since January, the French market has dropped 29 percent. There is a furious price war in Europe. Concentrating production at certain sites will increase our efficiency.
"Our strategy in the future will be to go outside Europe. We plan to build a plant in Brazil by 1999," the spokesman adds.
Analysts say Europe produces from 3 million to 5 million more cars a year than it can sell. In addition, trade barriers against Asian automakers are due to come down at the end of 1999, exposing European carmakers to lower-cost competitors.
"The European auto market is already hypercompetitive, with a surplus capacity of 20 to 30 percent," says Didier Joos de ter Beerst, author of a new EC study on the auto industry to be released tomorrow.
Critics say that if Europe can't solve its car crisis, it will have little credibility to call on voters for the budget cuts and sacrifices needed to create a single currency by 1999.