The automotive industry transition challenges and the labour organizations positions: the case of Portugal

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Although the Portuguese industry is often considered semi-peripheral within the European context. This classification stems from Portugal's position in the global and European economic systems. However, the Portuguese automotive industry is a significant sector within the European automotive landscape. Portugal’s industrial sector is heavily integrated into European supply chains, particularly in industries like automotive, textiles, and electronics. However, it often relies on core European countries (e.g., Germany, France) for advanced technology, capital, and market access. This is also the case for the Portuguese automotive.
Portugal has a strong presence in mid-tech industries, such as automotive components, machinery, which, in the supply companies, are less capital- and technology-intensive compared to high-tech sectors like aerospace or pharmaceuticals. But some of the automotive equipment manufacturers operating in Portugal are technology-intensive, and those companies are dependent on global players for decisions about the car models to be produced. Others have agreements with other global players about joint ventures on innovative products.
Portugal’s automotive sector is highly export-oriented, with significant trade ties to the EU. It plays a crucial role in the country’s economy, contributing significantly to GDP and industrial output. However, the value captured by those firms is often lower compared to core economies, as they tend to focus on intermediate goods or assembly rather than high-value-added activities like R&D or branding. Most of automotive firms in Portugal have capacity to develop and optimize the production lines, often with technology increments, but not to get involved in the product design process, like Volkswagen, Daimler Fuso Trucks and Stellantis. There are exceptions, and one is a bus passenger producer (CaetanoBus).
Portugal is a major player in the production of automotive components, including wiring systems, molds, plastics, and electronics. Companies like Bosch, Continental, Forvia, and Vanpro have a strong presence in the country. There are also companies involved in the production of components for electric vehicles, such as batteries and charging systems, positioning the country as a key player in the future of mobility. The national automotive industry is aligning with the European Union’s goals for decarbonization and the transition to electric vehicles. The country has been investing in EV infrastructure and promoting the adoption of green technologies in the automotive sector, either in terms of investment on the manufacturing premises with renewable energy systems and water requalification, or in terms of market incentives.
The automotive industry is a major employer, providing jobs directly in manufacturing and indirectly through the supply chain. The sector has also a strong involvement of the labour movements since long time. The supply companies have in many cases a strong presence of unions, and most of the equipment manufacturers have their one worker’s councils.
There are some open issues related with recent investment options from those firms, especially related with the electrification transition. The unions (the Federation of Metal and Chemistry workers, FIEQUIMETAL, at the CGTP confederation, and the Union of Industry and Energy, SINDEL, at the UGT confederation) have just positions related with wages and working conditions.
In a text from 2011, the CGTP union published a report on the Portuguese industry with a specific chapter on the automotive sector. There, they have acknowledged that “the evolution towards modular construction in the automotive industry, which seems be a given allied to the predictable increase in the mechanization of work, both act in the precariousness of work in this sector (one due to pressure which causes wages and another by the elimination of jobs which, inevitably, provokes)” (Fiequimetal, 2011: 257). But they also acknowledged the new industrial policy trends on emission regulations, towards electrification and hydrogen powertrain as main technology factors that may shape the sector in the near future. In fact, they approached the national policy supporting the electrification process (CaetanoBus started in 2011 the first electric bus), but were very pessimistic towards the future: “even the creation of opportunities for the national industry could be reveal a fallacy given the existence of an oligopoly in the sector that will tend to exert all pressure towards the satisfaction of their interests, which are not necessarily identical to those of our country” (Fiequimetal, 2011: 280).
This union already proposed several measures to support workers that will be affected by transition in the sector and concluded that there are some “pioneering projects in this area and can function as a kind of trial balloon for larger countries” (idem: 282).
UGT has more influence among service workers, and a minor influence among automotive labour. For that reason, we did not find any position of this central union on the challenges that may occur in this sector.
The workers councils in the sector are much more prominent. The Volkswagen AutoEuropa workers council is the main one in the sector, and one reason is because the OEM is the largest employer and exporter in the Portuguese sector. They also integrate a Workers Councils Coordination Committee of the Industrial Park of AutoEuropa Volkswagen, which includes workers councils from supplier firms that are in that park. This fact is related with the logistics policy of just-in-time adopted by Volkswagen. There are, however, attempts to organize a national Automotive Workers Councils Coordination Committee.
In this paper we will present in further detail the recent trends and challenges of the auto industry in Portugal, particularly those related with the electrification transition. Those trends and challenges are not only related with the market configurations, with the new policies design or with emerging management options but also challenges to the unions and to the workers councils in the automotive sector. We will present some possible changes in the sectoral employment structure, and the scenarios that the labour movement may face in the next years.