EU industry boss offers more words than deeds for car sector

BRUSSELS Thu Nov 8, 2012 4:32pm IST

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BRUSSELS (Reuters) - Europe's industry boss on Thursday pledged urgent, coordinated action to prop up the region's ailing carmakers, but critics said the strategy lacked substance.

The European Union's car sector has shed thousands of jobs as the economic downturn has eroded demand and forced plant closures.

Last month, Ford Motor Co (F.N) announced it would shut a Belgian factory employing more than 4,000 workers, the third time this year a mass-market carmaker had announced plans to close a plant in Europe.

European Union Industry Commissioner Antonio Tajani made a promise on Thursday of "urgent action to address this sector's current difficulties and restructuring in a co-ordinated way".

Tajani promised to gather industry leaders, workers' representatives and top politicians to address issues such as overcapacity, investing in new technologies, and state aid.

The plan was "the first fruit of the Commission's strategy for a new industrial revolution", he said in a statement, adding it aimed to ensure the EU car sector moved "even further ahead in safety and environmental performance".

However, how much EU institutions could do, or spend, to help the industry innovate was unclear.

The industry commissioner can coordinate long-term EU strategies, but it is down to individual member states to deal with near-term plant closures on their own patch.

The 2014-2020 draft budget for the European Union has set aside a total of 80 billion euros ($102 billion) for research and development funding, including 7.7 billion euros for transport.

Tough negotiations over the multi-year budget are likely to reduce all funding.

Other parts of the Commission's action plan include investing in skills and training through another pot of money, the European Social Fund, as well as measures to promote a greener car fleet, with a view to cutting emissions and fuel use, as well as retaining a cutting edge.

The communication makes no mention of targets beyond the draft policy announced so far when the Commission proposed tougher 2020 emissions standards for cars.

"There is not enough emphasis on the benefits of smart regulation," Greg Archer, vehicles programme manager at campaign group T&E, said. "There is relatively little that is new."

DIVISIONS

Those working in the estimated 12 million direct and indirect jobs the European car industry still provides are divided over how the goals so far should be implemented.

The European Aluminium Association (EAA), for instance, keen for light aluminium to be used more extensively, questions the Commission's methodology to share out the task of achieving average 2020 emissions to 95 grams of carbon per kilometer (g/km) across the EU fleet.

The EAA and makers of lighter vehicles have favored a footprint approach, based on the area of the vehicle between the wheels, which is practice in the United States.

They argue it shares out the emissions reduction work more fairly and more cost-effectively.

German manufacturer Daimler (DAIGn.DE) says the Commission's existing method of using a calculation based on mass is better.

The Commission was in general "committed to supporting the manufacturing industry", said Hartmut Baur, senior manager for environment, energy and transport policy at Daimler.

But differing policies from the many departments of the Commission could be a problem.

"We face legislation which sometimes is contradictory and has negative impacts," he said.

Some in industry, as well as campaigners, have demanded new regulatory targets in the name of planning certainty and a spur to innovation, but Daimler said it was too early to set goals beyond 2020.

"We need first to be able to assess the role of electric vehicles," he said. "A revision with a concrete 2025 target should be made not before 2016/2017." ($1 = 0.7840 euros) (Additional reporting by Philip Blenkinsop; Editing by Rex Merrifield and Toby Chopra)

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