Think the Malaysian government meddles too much into Proton's business affairs? Consider the recent sparring between Renault and the French government. The President of France Nicolas Sarkozy as well as Industry Minister Christian Estrosi have reportedly given the board of Renault, including CEO Carlos Ghosn quite a earful for their decision to move the primary production site of the next generation Renault Clio 4 from its current French location in Flins to Bursa, Turkey. Earlier last year, the French government have provided over 3 billion Euros in state aid to recapitalise Renault. Sarkozy was quoted “We haven’t invested all this money supporting our carmakers just to see all the factories moved overseas.”
After a high powered meeting involving the French President and Industry Minister with the board of Renault, Ghosn reiterated Renaults stance to continue production of the Clio 4 in France, saying it will produce "similar numbers" as that of the Turkish plant, but stopped short of confirming that Flins will continue to be the main production site for the Clio 4. The current Clio is the 3rd best selling car in France, after first placed Peugeot 207 followed by Renault Megane. Following the meeting, the French government later suggested that it should increase its stake in Renault. Currently the French government have a 15% stake in Renault. Industry Minister Estrosi was also quoted saying "When a French car is destined to be sold in France, it should be made in France" as well as "We have decided that the state as shareholder will be on the strategic committee for the future industrial policy of Renault."
Even from a social point of view, Renault's decision is not that bad for the country as the government thinks. The Clio 4 is a pretty basic car European standards, and the high wages of French workers as well as the overly rigid French employee protection laws are adding a lot of cost to the car. And the Clio 4 competes in the compact hatch segment where margins are thin and the increasingly tough EU crash safety and emission as well as end of life cycle regulation is rapidly increasing the cost of the car with each successive generation. Renault intends to move production of low tech models like the Clio to new European Union entrants like Turkey, which has a much lower cost base, while the current Flins plant will be retooled to manufacture higher technology electric vehicles, like the forthcoming production version of the Zoe. electric vehicle concept. The close proximity of Flins to other suppliers of higher end automotive components makes it an ideal location to move the Flins plant "up the value chain." But as usual, government politics is a sum of the lowest common denominator - which more often than not is driven more by emotions and the stupidity of the masses rather than objective review. Sometimes one wonder whether is China really the Communist state or is France the communist state?
The Zoe electric concept was co-designed with L'Oreal Luxury Products and features a "battery quick swap feature." Though the press release did not mention it, the battery swap feature is an obvious reference to Renault-Nissan's EV project partner Project Better Place.
The French government's pressure on Renault has attracted the attention of European Union competition watch dogs in Brussels. EU Competition Commissioner Neelie Kroes has stated to the press that there was an "apparent contradiction" between the French government's latest move and promises it made last year that subsidised loans to national car producers would not affect their freedom to move their operations. Sarkozy's latest move could be interpreted as an attempt of the government to subsidize French company's business operations or an indirect means to protect France from competition, which of course goes against the whole idea of free trade. A classic example of white men telling developing countries to open their markets but continues to protect their own local market.
Actually, France's recent action has been anticipated since last year when the aid package was released to Renault. Back in Feb 2009, The European Union have already warned France against protecting French jobs as a condition for the loan. The EU competition spokesman Jonathan Todd was earlier quoted "There are indications that car-makers will be obliged to maintain their centre of production in France as a condition for government support. If there were any conditions which would mean that aid would be subject to conditions that violated the principles of the internal market then the aid would be illegal."
Just as a reference, when the US Federal government bailed out the GM and Chrysler, the US Federal government did not demand for any seat / stake in the company, but instead demanded a "shake up" of the current management. But of course this is just a reference. France and US can never be compared side by side. There are no two countries within the OECD group that is anymore different. One is a winner takes all, greed is good state that taxes the poor more than the rich, a developed nation whose people can be bankrupted or thrown out of hospital if they do not have medical insurance while the other is a very extreme example of a failed welfare state, whose workers strike more than they work, and protest against any measure by the government to expose them to the outside world and competition.
If left unchecked, the recent actions by the French could set a dangerous precedent where other EU member governments could retaliate with similar actions of their own.
2 comments:
Malaysia is worst!! Many has gone to Thai & Indonesia :(
Just as a reference, the US is just as bad. They set up a so-called "Presidential Task Force on the Auto Industry", headed by Tim Geithner. Some examples of the "prodding" this task force did:
1) Forced an increase in CAFE standards.
2) Lied about the Cash-for-Clunkers success, claiming fuel efficient vehicles were bought at taxpayers expense, contrary to an auto industry report claiming trucks and SUVs were among the top 10.
3) Forced GM to manufacture the Chevy Aveo in US, when GM wanted to import the low cost car from Korea (the government loves labor unions).
The US government is just as "communistic" as France. Slapping an imported tire tax from China when the US Steelworkers Union claimed that a measly 3000 jobs were lost. Likewise, they are just as corrupted as Malaysian politicians.
There is one big difference here though, France and US are trying to preserve auto jobs. The Malaysian government's collusion with Proton only created hardship for all Malaysians by artificially increasing auto prices.
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