EU opposes car subsidies race

Governments urged to avoid "costly trap" of a subsidy competition with US.

    Kroes urged governments to avoid 'the costly trap' of a subsidy race [AFP]

    Rolls-Royce Group PLC in the UK announced on Thursday it plans to cut up to 2,000 jobs next year.

    The world's second largest maker of aircraft engines said it plans to slash 140 jobs at its aerospace assembly and test facility in Derby, England.

    The cuts represent the first part of a larger plan to cut between 1,500 to 2,000 jobs across Rolls-Royce's businesses worldwide in 2009, the engineering company said in a statement.

    Call for loans

    European rivals have called for $50bn in soft loans, with General Motors' German unit Opel struggling for survival, but the European commission has said any aid would have to be targeted and temporary.

    Kroes said countries would simply export their problems to their neighbours by handing out poorly considered subsidies, and the EU had existing mechanisms that could help big car manufacturers.

    "R&D aid or environment aid, for example, would have the double benefit of helping the industry and helping address the problem of climate change," she said.

    Cutting emissions from cars is an important part of ambitious EU goals of curbing overall carbon dioxide output by a fifth by 2020.

    Kroes said a package of proposals from the European commission next Wednesday aimed at tackling the economic downturn would include measures to help small and medium-sized businesses.

    "Small and medium-sized businesses are the lifeblood of our economy, and they clearly need more help... Many of them are failing, not through any fault of their own, and we have to do something more to address that."

    Downsizing abroad

    The US auto industry has also been hit by the financial crisis. US manufacturers failed in their quest for a quick bailout of the big three - General Motors, Ford Motor and Chrysler - whose losses have risen as Americans cut back on buying cars.

    US Democratic congressional leaders demanded executives provide a business survival plan in exchange for their support of up to $25bn in loans.

    Meanwhile in Japan, car manufacturers plan further downsizing to cope with the financial crisis, with Toyota cutting 3,000 temporary jobs and Honda reducing its global production, officials said Friday.

    Japanese manufacturers have expanded rapidly in recent years to meet brisk demand for their fuel-efficient cars but they have not been immune to the global economic downturn, even if they are in a much better position than their US rivals.

    SOURCE: Agencies


    YOU MIGHT ALSO LIKE

    Double standards: 'Why aren't we all with Somalia?'

    Double standards: 'Why aren't we all with Somalia?'

    More than 300 people died in Somalia but some are asking why there was less news coverage and sympathy on social media.

    The life and death of Salman Rushdie, gentleman author

    The life and death of Salman Rushdie, gentleman author

    The man we call 'Salman Rushdie' today is not the brilliant author of the Satanic Verses, but a Picassoesque imposter.

    The Beirut Spy: Shula Cohen

    The Beirut Spy: Shula Cohen

    The story of Shula Cohen, aka The Pearl, who spied for the Israelis in Lebanon for 14 years.