The unemployment in the Eurozone hit on Tuesday its highest level since the single currency was born.
An additional 123,000 people were out of work in the euro zone in June, figures from Eurostat showed, bringing the unemployment rate to a record high 11.2 percent across the 17 countries that use the single currency.
The latest figures highlighted the deteriorating state of economic activity across much of the eurozone, exacerbating fears that unemployment will continue to rise as several of Europe’s largest industrial groups shed jobs as they struggle with a sharp drop in revenues.
Yes – this is just the beginning somehow. Nobody knows when the crisis will end.
The automotive industry in Europe in in the red area.
Efforts by PSA Peugeot Citroen and Fiat SpA to end losses in Europe could cost more than 500,000 people their jobs as automakers and parts suppliers grapple with the effects of the European sovereign debt crisis.
And that’s not all. General Motors and Ford are also in the red area.
Earlier this month PSA Peugeot Citroën announced it would shutter an assembly line in Aulnay-sous-Bois, north of Paris. Citing its high labor costs and sharp international competition, the company warned that some 8,000 jobs in France would have to go.
Fiat also warns that the carmaker may need to close another plant in Italy if he does not secure further cost-cutting concessions from its workforce.
“If the uptake levels in Europe remain the same over the next 24 to 36 months, there will be one too many factories in Italy,” Fiat head Sergio Marchionne was quoted as saying by the Corriere della Sera daily.
This comes after Fiat has temporarily suspended production at one of its Italian plants.
According to consultancy AlixPartners, Italy’s car plants – overwhelmingly Fiat’s – are operating at just 53 per cent of their capacity, the lowest level of any country in Europe.
The US automakers in Europe …
General Motors: GM, which posted Thursday a $400 million loss in Europe in the second quarter following a $256 million loss in the prior quarter, has spoken for some time about the need to reduce excess capacity at its European subsidiary Opel-Vauxhall.
True – Talks are currently underway to keep the Bochum plant, which had reportedly been mooted for closure, open until the end of 2016 in a deal.
Opel has also pledged to negotiate with unions to prevent job cuts across the board until 2016, two years beyond the already agreed date of 2014, in exchange for a pay hike freeze.
Talks are to resume in October, IG Metall said – and no one knows what will happened.
And Ford too. Ford said that its European operations could cost the company $600 million this year, but most analysts expect that figure to be closer to $1.1 billion.
Therefore – the blue oval might close at least one of its European car factories.
Industry experts say Ford’s plants in Southampton, England, and Genk, Belgium are the most likely candidates for closure.
Ford is currently using just 63 percent of its plant capacity in Europe.