Foreign Direct Investment, Investment Agencies and the Restructuring of the European Automotive Components Industry

The motor industry has long been the subject of state regulation and intervention in almost all aspects of the business, and as such the state at national and international level is a key element in the context within which structural change in the industry occurs. Historically, the state has played a key, and direct, role in automobile production, notably since 1945. Not only do state laws on vehicle and petrol taxation have an impact, so too has direct ownership in the form of nationalised companies or strategic holdings in companies. The state fundamentally shapes production via laws on wages, working conditions, union and worker rights and so on. Moreover, the state fundamentally shapes car consumption through its investment policies regarding roads and other forms of transportation network, as well as through its fiscal measures. Through regional policies, national states have sought to influence the location of the automobile industry, both successfully (Volkswagen at Wolfsburg) and unsuccessfully (Chrysler at Linwood). Thus, while customer-supplier relations are a very important force for industrial spatial restructuring, the impact of state intervention in mediating those forces should not be neglected. The purpose of this chapter is to provide an account of one aspect of state intervention as it pertains to the automotive components industry in general, and to the case study sub-sectors in particular, that is, the attraction and support of foreign direct investment.