The European Union is currently experiencing turbulent times, times that could reshape how we reference the region. With tighter borders looming on the horizon, and a possible exit of the union by Britain, automakers are pushing back and voicing concerns.
Currently, the EU countries abide by Europe’s Schengen Free-Travel agreement, allowing for the free flow of goods, people and services between borders, no questions asked. As the refugee crisis worsens, leaders are being pressured to close up some free travel.
Opel in particular raised concerns over implications to the automaker’s business.
“A breakdown of Schengen would be horrific for us,” Opel Chief Executive Karl-Thomas Neumann told Reuters.
Opel relies on the transport of goods and components from factories in Germany, Spain, Poland, Britain and Italy, Neumann said.
Some EU and country leaders fear the basic tightening and regulations occurring now, to control refugees, may pave the way for an entire collapse of the agreement.
“We have huge logistics operations in southern Europe, any disruption would have an immediate impact on the bottom line,” Neumann said.
Opel has pledged to turn a profit in 2016, and strives to build on the momentum the 2016 Astra started in late 2015. Any logistical hiccups could have major implications on Opel executives’ goals and timelines.
General Motors posted an adjusted loss before interest and tax of $800 million for the Opel brand, a significant improvement from the $1.4 billion loss in 2014.
Comments
Companies will always have freedom of movement with Europe. Even before Schengen Opel, and other car makers, were able to transport with ease within Western Europe. Even if UK leaves, a free trade pact will occur quickly and only effect one quarter.
When every car and truck and train is stopped at a border crossing for inspection, this slows down transport of parts considerably.
Consider Corsa manufacturing in Spain. Parts from Germany have to pass two borders, which goes smoothly today as crossing from one US state to another, but would slow down and cost more when the truck has to stop at each border. Think! Some refugee from a war zone in Libya, Iraq or Syria might hide inside.
Engines from the Szentgothard plant in Hungary would have to cross even more borders.Either Hungary – Austria – Germany – France – Spain or Hungary – Slovenia – Italy – France – Spain. Possible Croatia first.