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Close Antwerp? Let the bidding begin

I'm unsure whether General Motors will close its assembly plant in Antwerp, Belgium, as company sources today say it will. But I'm absolutely, dead certain that whatever GM decides, it won't shut any European plant quickly.

Nothing shows the difference between North American and European auto industry practices than manufacturing capacity decisions.

Last year GM reorganized under U.S. bankruptcy law and closed plants to whack excess capacity. So did Chrysler. Toyota cut some shifts, didn't open a new plant and will close its half of the California plant GM dumped. Others downsized. Government aid was plentiful, aimed at rescuing GM and Chrysler as smaller, leaner companies.

Net result: North America shed about 3 million units of excess capacity.

In Europe, industrial countries based their aid on rescuing home-market jobs, ignoring excess capacity.

Net result: Virtually no capacity reduction.

Europe is awash in expensive, unneeded auto plants. As Fiat and Chrysler CEO Sergio Marchionne explained last week in Detroit, “You don't need to close auto plants in Europe. Often you're paid not to.”

Marchionne claimed the last German auto plant to close was before World War II. Technically, I think he's wrong there. But if he thinks the Trabant and Wartburg plants don't count because they closed a few days before East Germany rejoined West Germany in 1990, I'll give it to him because I get his main point.

It's exceedingly hard to close an auto plant in Europe. Despite the European Union label, in crunch time individual EU members act in intense self interest. As in: “Hey, close a plant in some other country. We'll pay you not to close ours.”

Even if GM announces plans to close Antwerp, that could change. Based on past history in Europe, it's more than even money that GM will eventually get enough discreet sweeteners and implied threats from various governments that it will decide to keep Antwerp partially open, trim bits and pieces at several other plants and cut less overall capacity than it first planned to.

And it's a really good bet that Europe will keep carrying too much capacity for anyone to get healthy.

Europe is a prime example of capacity bloat, but it's a structural problem everywhere. Globally, about 30 million units of auto manufacturing capability -- call it a third of the capital-intensive plants out there -- sits idle.

The auto industry is a critical part of the industrial base of every country it operates in. Every government sees its auto sector as a strategic asset.

So any market-driven decision by auto company executives to cut capacity is likely to be trumped by politicians eager to preserve local jobs.

So GM may indeed announce Antwerp is a goner. Anyone willing to bet that's the end of it?

Jesse Snyder was managing editor of Automotive News Europe from 2001 to 2007.

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