Thursday, May 28, 2009

Protectionism at work

While our own government dithers impotently on the sidelines, the German government are taking direct action to protect workers and production for Germany as they bail out GM Europe and effectively take control of the company.

The German government has pledged billions of euros in loan guarantees to the company that takes over GM Europe.

Of course, the German government are not going to pledge billions of euros of German taxpayers cash to support British workers.

Professor David Bailey, a car expert at Coventry University Business School, said that, taking into account suppliers as well as Vauxhall itself, the total number of jobs that could be affected by the takeover is between 15,000 and 20,000.

This is the modern form of protectionism in action - with the German government carefully working around the EU rules to ensure that they protect their industrial base and their workers. Rather than clear, open and transparent rules protection of industry and workers is achieved through horse trading and back room deals done in secret.

The British government has blown its chance again. The deals will be done without them and the victims will be British workers in British jobs. It won't result in the immediate closure of the Vauxhall plants - Vauxhall is, after all, one of the few profitable parts of GM - but ultimately you will see production of the Astra move to Germany.

The crisis at GM was a golden chance for the British government to save the British car manufacturing industry - possibly the last chance. They've blown it.


Mark Wadsworth said...

Yeah, but a 'victory' for German car workers is a disaster for the German taxpayer; and conversley a real victory for UK taxpayers and UK car purchasers, so what's the problem?

I mean, how many £ billion is it reasonable to spend on 'saving' five or ten thousand jobs? What the UK government should be doing is ensuring that UK Vauxhall workers get the best redundancy package possible (or else we'll get the EU Commission on their case). £25,000 each would do nicely, all underwritten by the German taxpayer.

What's not to like?

Stan said...

It's better to spend, say, £6 billion paying people to produce something that brings in £3 billion than it is to spend £3 billion for people to sit on their back sides for 10 years or more.

Eventually, the investment of the German taxpayer will produce income for the nation and wealth for the people. All our policy will produce is another generation or two of welfare dependants.

That's what not to like.