European Unions Block Money-Losing Carmakers From Downsizing

Which doesn't make them any more viable

Wim Dries was at a public swimming pool with his kids in February when a message over a loudspeaker summoned him to take an urgent call. On the line was the head of Ford Motor's (F) factory in Genk, Belgium, who said he was being held by workers opposed to a plan to close the plant. "He was surrounded by a group of strikers and the tension was high," says Dries, the city's 40-year-old mayor. After Dries offered to send police to the factory, "things cooled down," and the workers let the manager go, he says.

The labor trouble at Ford, which aims to shutter two other European factories, shows the resistance automakers face to their efforts to stanch losses in the region. PSA Peugeot Citroën is fighting one of its unions in court in Paris to shut a factory and cut 11,200 jobs. Labor is also fighting General Motors' (GM) plans to close a German plant. And at Daimler (DAI), workers angry over cost cuts at its Mercedes-Benz unit spurred union representatives on its board to push through a shorter-than-expected contract extension for Daimler Chief Executive Officer Dieter Zetsche, according to a person familiar with the matter. "These are very sensitive political subjects, and it's the sector where the unions are the best organized," says Jürgen Pieper, a Bankhaus Metzler analyst in Frankfurt.