EUROPE'S big automobile manufacturers are demonstrating that
cross-frontier company mergers rather than political treaties may
offer the best route to long-term European integration.
Economic analysts see the planned link-up between France's giant
Renault company and Sweden's Volvo - creating Europe's
second-largest, and the world's sixth-largest, vehiclemaker - as a
landmark development in the unifying process.
Mergers and alliances between companies, analysts say, are
likely to accelerate as the European Community's "single market,"
created at the beginning of 1993, develops, and businesses battling
the effects of recession stand up to external competition,
particularly from Japan.
Hopes that increased industrial cooperation will boost European
integration have begun to rise at a time when the political goals
of the Maastricht Treaty appear to be in jeopardy and the EC's
exchange-rate mechanism is under severe strain.
John Major, Britain's prime minister, has often argued that
Europe's manufacturers and traders are in a good position to offer
a lead in the pursuit of unity.
The Renault-Volvo marriage, announced Sept. 6, follows a
three-year courtship between the two companies. It will produce a
corporation that edges Italy's Fiat motor company for sixth place
in world carmaking rankings and offers stiff competition to Japan's
Nissan (currently fifth) and Germany's fourth-ranking Volkswagen.
Douglas McWilliams, director of the London-based Centre for
Economic and Business Research, calls the Renault-Volvo merger "an
instructive example of how industrial corporations sometimes are
more able than governments to identify and pursue common interests
and operate across political frontiers."
Mr. McWilliams says the merger, to take effect Jan. 1, 1994,
should be compared to that of Royal Dutch and Shell oil companies.
"I foresee that where full-scale mergers are not possible,
cross-border company alliances will become much more common as the
significance of the EC's single market comes to be better
appreciated," McWilliams says.
He adds: "In the case of the European motor industry, extra
stimulus is being provided by the certainty of vigorous Japanese
competition in the years ahead."
IN 2000, under an agreement between the EC and Japan, existing
limits on imports of Japanese vehicles will disappear, turning
Europe into what Kumar Bhattacharyya, a manufacturing systems
analyst at Warwick University, predicts will become "a
battleground" for vehicle sales. …