After a year of the lowest car sales since 1994 and factories operating at ten percent below the profit margin, European automobile manufacturers are being forced to restructure companies by cutting payrolls and closing factories just to survive. But with political resistance to cutbacks, strong unions, and strict labor laws, the question is whether companies can do it fast enough to survive.

In the 2009 recession, France and other European countries spent billions bailing out car companies. Instead of using that money to downsize factories and cut payrolls, it was used to subsidize salaries and offer consumers incentives to buy new cars. With automobile manufacturers back in the same position, they are once again turning to the government for help. But for a recovery plan to work, European leaders need to reconsider a free trade agreement with South Korea. Automobile executives say that these agreements are significantly hurting the industry by allowing Korean automakers to gain a jump in the market share.

The European automotive industry is key to the strength and competitiveness of Europe. The sector not only provides direct employment to more than 2.3 million people but also supports another 10 million jobs indirectly.

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