Ammann: I think you have to look at the European industry in total, and then within that, where is Opel. European industry in total is very challenged right now. Demand is very low. Capacity is too high. That results in a very difficult pricing environment. And by our reckoning, none of our competitors are really making money in the European market. So you have an industry in total that’s losing a significant amount of money, and … we’re losing our share alongside that, if you like.
Fundamentally, what has to happen is a realignment of capacity, on the one hand, or supply and demand on the other. We are taking actions to right size our capacity equation in Europe. Others of our competitors appear to be taking some of the same actions at this point in time. I think our assessment is that the industry environment in Europe has gotten bad enough, if you like, that it’s become clear that a fundamental restructuring needs to occur.
Now in many ways, that’s similar to what happened here in North America in the 2008 and 2009 timeframe. But I don’t think it’s going to be as clean and as quick as what we went through here. I think it’s going to be messier. I think it’s going to be more complicated. And I think it’s going to take longer. But our sense is we’re at the point where there’s a much greater realization today than we’ve seen at any point in recent years that the European industry must restructure. We’re certainly doing our part of that. We expect our competitors will likely do the same. That will hopefully result in a more stable, better match between supply and demand. If we take that with any kind of economic recovery out in the long term in Europe, we’ll be back to a much more sustainable picture.
MacDuffie: One topic that’s been a bit of a flashpoint in Europe is Fiat CEO Sergio Marchionne’s view that the industry really needs to, in a co-ordinated way, take out capacity. I know he talked about Europe doing that in the steel industry at an earlier point in time. Volkswagen, in particular, seems to have pushed back and said, “Hey, wait a minute, we’re doing well. We’re not necessarily going to promise to take out capacity just because other companies are doing poorly.” They have said some pointed things about that.
It’s part of the larger problem of Europe – a lot of different countries having to think about difficult coordination at a time of crisis when they’re mostly used to operating on a national basis. Do you have any views on how realistic or feasible it is to think of a Europe-wide coordination of capacity reduction?
Ammann: One view I have is I’m not going to become a third party in the Fiat/Volkswagen back and forth. But to answer the question: As I said earlier, things are bad enough now for everybody. It seems to us that there’s a greater momentum, a greater realisation, if you like, that there has to be a more fundamental restructuring. Is everybody going to hold hands and do it together in a unified way? I’m not sure I see that happening. But I do see greater pressure and a great necessity for a number of the players to act in the marketplace. As I said, it’ll be probably messier and more complicated than what we saw in the U.S. restructuring. But I believe we’re at a point where it does need to happen, and we’re starting to see some signs of progress.
MacDuffie: If I could just ask you one more Europe question. Some of what’s been in the news, some of the announcements out of Opel are a plan to reduce white collar and staff and executive employment and the like. Usually the overcapacity issue tends to be framed around closing factories and reducing blue collar employment. So I imagine a lot of people, in a sense, are watching and sensitive to this issue of where does reduction come. I just wonder what your sense is about those two different parts, because you can’t cost-cut your way to prosperity; you’ve got new product out there and you need to market it. What’s your sense about those different parts of your strategy for turning Opel around?
