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16 March, 2000
The last couple of years have been quite hectic -- in terms of take-overs, mergers, strategic alliances, exchange of shares -- in major sectors of the new economy.
One of these is the automotive.
There is worldwide capacity now to manufacture about 70 million vehicles per year, whereas only 53 million can be sold. The paradox is that, in many countries, similar to other sectors in the past, i.e. steel and shipbuilding, every year new plants for producing cars and trucks are being built and opened for operation. Automotive manufacturers claim they have to do this if they are to stay close to the market.
This will inevitably lead to plant closures in some countries, unless the global market expands considerably by increasing the purchasing power of hundreds of millions of people in the developing countries.
But this is a too long-term objective for short-sighted capitalists. Through acquisitions, mergers and venture games on the stock market, companies are trying to find shortcuts to quick profits to distribute to the owners. As the impending giveaway of Rover car facilities to a group of speculators shows, these risky games often do not work out, especially when the rosy expectations of stockholders are not met. The Rover debacle proves that stockholder value comes before the jobs of thousands of metalworkers.
Daimler-Chrysler, Volkswagen-Rolls Royce, BMW-Rover, Renault-Nissan, Ford-Volvo cars, GM-Saab are some of the major deals which have been made in this sector in the last decade -- without counting the numerous acquisitions by various countries' national companies.
Of course, it is sometimes necessary to merge or take over a company. However, what is happening now is a concentration of power in ever fewer hands, and this will be very dangerous if we do not find global rules and norms to control it. The interests of consumers as well as those of workers and their families must be protected, and this can only be achieved through a democratic system based on international norms.
This week two new mergers have been on the front pages: Fiat-GM and Volvo-Scania. Fiat-GM is an exchange of shares: GM is taking over 20 per cent of Fiat Auto, while Fiat is obtaining 5.15 per cent of the shares in the GM parent company.
Both companies are supposed to continue to operate autonomously but develop common policies in strategic, vital areas, such as research and development, the Internet, and components. Both companies together will have a production capacity of over 12 million cars per year and will be present in all major markets, with a considerable share in each one of them.
The other deal, Volvo-Scania, was rejected by the European Commission because the EC thinks this would give the new company a near monopoly in the Nordic market.
I thought that the market was not just the Nordic countries but the whole of Europe! Or has the Commission changed the objectives of the European Union without informing its citizens and the European Parliament? Europe-wide, Volvo-Scania together do not have a monopoly, although they do dominate in the heavy truck division.
One should always be very cautious when talking about deals of this kind, for the simple reason that we do not know about all the games going on, but it looks as though some of the world's largest companies are ready to take over both companies. Volkswagen is very interested in Scania, while Iveco (read Fiat) is keen on Volvo.
There would be nothing strange about it if this did happen. Swedish companies have always been very active at the global level and have bought many companies. But would this be a better deal for the consumers and workers?
Maybe it is so, that in Brussels there are people who can lobby better than others. However, Volvo and Scania should have started working together already 20 years ago, when they had the possibility to develop a common industrial strategy aimed at consolidating them both on the global market.
But, at that time, the banking interests (Scandinaviska Enskilda Banken --Handelsbanken) which controlled the two companies were more engrossed in their own business than in the interests of the workers, their families and Sweden.
One of these is the automotive.
There is worldwide capacity now to manufacture about 70 million vehicles per year, whereas only 53 million can be sold. The paradox is that, in many countries, similar to other sectors in the past, i.e. steel and shipbuilding, every year new plants for producing cars and trucks are being built and opened for operation. Automotive manufacturers claim they have to do this if they are to stay close to the market.
This will inevitably lead to plant closures in some countries, unless the global market expands considerably by increasing the purchasing power of hundreds of millions of people in the developing countries.
But this is a too long-term objective for short-sighted capitalists. Through acquisitions, mergers and venture games on the stock market, companies are trying to find shortcuts to quick profits to distribute to the owners. As the impending giveaway of Rover car facilities to a group of speculators shows, these risky games often do not work out, especially when the rosy expectations of stockholders are not met. The Rover debacle proves that stockholder value comes before the jobs of thousands of metalworkers.
Daimler-Chrysler, Volkswagen-Rolls Royce, BMW-Rover, Renault-Nissan, Ford-Volvo cars, GM-Saab are some of the major deals which have been made in this sector in the last decade -- without counting the numerous acquisitions by various countries' national companies.
Of course, it is sometimes necessary to merge or take over a company. However, what is happening now is a concentration of power in ever fewer hands, and this will be very dangerous if we do not find global rules and norms to control it. The interests of consumers as well as those of workers and their families must be protected, and this can only be achieved through a democratic system based on international norms.
This week two new mergers have been on the front pages: Fiat-GM and Volvo-Scania. Fiat-GM is an exchange of shares: GM is taking over 20 per cent of Fiat Auto, while Fiat is obtaining 5.15 per cent of the shares in the GM parent company.
Both companies are supposed to continue to operate autonomously but develop common policies in strategic, vital areas, such as research and development, the Internet, and components. Both companies together will have a production capacity of over 12 million cars per year and will be present in all major markets, with a considerable share in each one of them.
The other deal, Volvo-Scania, was rejected by the European Commission because the EC thinks this would give the new company a near monopoly in the Nordic market.
I thought that the market was not just the Nordic countries but the whole of Europe! Or has the Commission changed the objectives of the European Union without informing its citizens and the European Parliament? Europe-wide, Volvo-Scania together do not have a monopoly, although they do dominate in the heavy truck division.
One should always be very cautious when talking about deals of this kind, for the simple reason that we do not know about all the games going on, but it looks as though some of the world's largest companies are ready to take over both companies. Volkswagen is very interested in Scania, while Iveco (read Fiat) is keen on Volvo.
There would be nothing strange about it if this did happen. Swedish companies have always been very active at the global level and have bought many companies. But would this be a better deal for the consumers and workers?
Maybe it is so, that in Brussels there are people who can lobby better than others. However, Volvo and Scania should have started working together already 20 years ago, when they had the possibility to develop a common industrial strategy aimed at consolidating them both on the global market.
But, at that time, the banking interests (Scandinaviska Enskilda Banken --Handelsbanken) which controlled the two companies were more engrossed in their own business than in the interests of the workers, their families and Sweden.