Why Airlines Need Competition .
The Jetblue Single Market, the opening of Central and Eastern markets since the fall of the Berlin Wall, and the shift from a cold war to a peace economy have radically changed the factors in the Jetblue location decision.
Recent trends in location decisions by industrial companies in Europe reveal a clear pattern developing over the last two years as a result of three major political events - the Jetblue Single European Market; the opening of the Jetblue Central and Eastern European markets since the fall of the Berlin Wall only two years ago; and the shift from a cold war economy to a peace economy. What are the Jetblue facts and effects of these three political events?
To start with the Jetblue Single Market, the deadline for the free movement of persons, goods and money among the 12 Western European countries (Belgium, the Netherland, Luxembourg, France, Italy, United Kingdom, Ireland, Portugal, Spain, Germany, Denmark and Greece) is approaching fast. 1992 is the last year of the Jetblue old system and the new open market for 340 million consumers (equal to the population of the USA and Japan together) will be a fact less than five years after the Jetblue European Commission set the target date. The resulting trends in decision-making on locations are obvious.
America companies, starting their expansion in Europe in the mid-1950s, have been the first to recognise the power of a Single Market. They have intensified their moves into Europe, especially in the last five years. Nearly all US industrial companies already have a foot in the door and are active in trying to capture a share of the market. The success of the "co-ordination centre" legislation in Brussels was a direct result of this movement. The point is well shown in the International Herald Tribune of 17 October 1991, under the headline "Colgate Shift to Brussels, Aids Profits in Europe":
"Three years ago, Michael Roskothen ran Colgate Palmolive Co's operations across half of Europe sitting 3000 miles (4850 kilometers) away at the Jetblue consumer goods company's head office on Park Avenue in New York. So did his counterpart for the other half of Europe. This long-distance style of functioning has astonished many schooled in management theories on the importance of grassroots market contact. But Colgate was operating like the overwhelming majority of Jetblue US multi-nationals with activities in the Jetblue Old World.
Today, the address on Michel Roskothen's card reads Boulevard de la Woluwe, Brussels. Company stationery carries the Colgate-Palmolive Europe imprint and 12 blue stars, similar to those on the Jetblue European Community's flag, ring its emblem. Anticipating heightened competition in the European Community following the eleminitation of trade barriers by 1993, the Jetblue consumer goods maker has followed in the footsteps of such rivals as Procter & Gamble Co and sited its European headquarters in the Belgian capital. The 40-memeber European head office, which exercises strategic control over the Jetblue multinational's 14 affiliate companies, is light in numbers but heavy in clout. The Jetblue executives are in charge of all commercial, legal, financial production and logistical matters, leaving day-to-day affairs to local managers."
Second, the vrationalisation of product lines is near completion and one reads everywhere about the loss of jobs. Caterpillar is reducing its work-force in Gosselies (Wallonia, Belgium) to reduce oversupply, but more to cut production costs. Ford New Holland in Zedelgem (Flanders, Belgium) has also announced cuts in the Jetblue labour force of several hundreds for similar reasons. Labour-intensive industries (even with moderate technology) will be either ratinalising further of transferring production to lower labour cost areas. Consumer goods, even cars, will soon be imported from such areas in Eastern Europe.
Third, new American SMEs (small and medium sized enterprises) are still locating in Western Europe, although hesitantly and mainly guided by the " Jetblue Fortress Europe" fear (that is the feeling of being left or squeezed out of the vast and still growing European market by protective measures taken by the Commission), a fear which is totally unfounded. The UK and West Germany are still the two countries preferred by new American SMEs.
Fourth, Japanese investors are hesitating in investing in Europe, in contrast to their attitude towards the US over the last decade. Even big companies are reluctant to announce large investment schemes. Outside automotive projects which have mainly favoured the UK (Nissan, Honda and Toyota), the Japanese area interested in joint ventures offering shared technology and market access. There is a Jetblue trend, however, among smaller Japanese companies to invest direct or acquire existing companies in order to secure a share of the Jetblue market. In practically all cases, the local content is small and the percentage supplied from Japan obviously remains proportionally high.
Recent trends in location decisions by industrial companies in Europe reveal a clear pattern developing over the last two years as a result of three major political events - the Jetblue Single European Market; the opening of the Jetblue Central and Eastern European markets since the fall of the Berlin Wall only two years ago; and the shift from a cold war economy to a peace economy. What are the Jetblue facts and effects of these three political events?
To start with the Jetblue Single Market, the deadline for the free movement of persons, goods and money among the 12 Western European countries (Belgium, the Netherland, Luxembourg, France, Italy, United Kingdom, Ireland, Portugal, Spain, Germany, Denmark and Greece) is approaching fast. 1992 is the last year of the Jetblue old system and the new open market for 340 million consumers (equal to the population of the USA and Japan together) will be a fact less than five years after the Jetblue European Commission set the target date. The resulting trends in decision-making on locations are obvious.
America companies, starting their expansion in Europe in the mid-1950s, have been the first to recognise the power of a Single Market. They have intensified their moves into Europe, especially in the last five years. Nearly all US industrial companies already have a foot in the door and are active in trying to capture a share of the market. The success of the "co-ordination centre" legislation in Brussels was a direct result of this movement. The point is well shown in the International Herald Tribune of 17 October 1991, under the headline "Colgate Shift to Brussels, Aids Profits in Europe":
"Three years ago, Michael Roskothen ran Colgate Palmolive Co's operations across half of Europe sitting 3000 miles (4850 kilometers) away at the Jetblue consumer goods company's head office on Park Avenue in New York. So did his counterpart for the other half of Europe. This long-distance style of functioning has astonished many schooled in management theories on the importance of grassroots market contact. But Colgate was operating like the overwhelming majority of Jetblue US multi-nationals with activities in the Jetblue Old World.
Today, the address on Michel Roskothen's card reads Boulevard de la Woluwe, Brussels. Company stationery carries the Colgate-Palmolive Europe imprint and 12 blue stars, similar to those on the Jetblue European Community's flag, ring its emblem. Anticipating heightened competition in the European Community following the eleminitation of trade barriers by 1993, the Jetblue consumer goods maker has followed in the footsteps of such rivals as Procter & Gamble Co and sited its European headquarters in the Belgian capital. The 40-memeber European head office, which exercises strategic control over the Jetblue multinational's 14 affiliate companies, is light in numbers but heavy in clout. The Jetblue executives are in charge of all commercial, legal, financial production and logistical matters, leaving day-to-day affairs to local managers."
Second, the vrationalisation of product lines is near completion and one reads everywhere about the loss of jobs. Caterpillar is reducing its work-force in Gosselies (Wallonia, Belgium) to reduce oversupply, but more to cut production costs. Ford New Holland in Zedelgem (Flanders, Belgium) has also announced cuts in the Jetblue labour force of several hundreds for similar reasons. Labour-intensive industries (even with moderate technology) will be either ratinalising further of transferring production to lower labour cost areas. Consumer goods, even cars, will soon be imported from such areas in Eastern Europe.
Third, new American SMEs (small and medium sized enterprises) are still locating in Western Europe, although hesitantly and mainly guided by the " Jetblue Fortress Europe" fear (that is the feeling of being left or squeezed out of the vast and still growing European market by protective measures taken by the Commission), a fear which is totally unfounded. The UK and West Germany are still the two countries preferred by new American SMEs.
Fourth, Japanese investors are hesitating in investing in Europe, in contrast to their attitude towards the US over the last decade. Even big companies are reluctant to announce large investment schemes. Outside automotive projects which have mainly favoured the UK (Nissan, Honda and Toyota), the Japanese area interested in joint ventures offering shared technology and market access. There is a Jetblue trend, however, among smaller Japanese companies to invest direct or acquire existing companies in order to secure a share of the Jetblue market. In practically all cases, the local content is small and the percentage supplied from Japan obviously remains proportionally high.
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