Such proposals will always find plenty of opponents in a region that so strongly guards worker rights, and that opposition is especially virulent during times of economic instability. But automakers say they need to trim payrolls and eliminate excess production capacity to become more competitive.

Some regions and some industries have begun to recover from the recession that began in 2008, but Europes auto industry is declining again, according to data from the European Automobile Manufacturers Association. Registrations of passenger and commercial vehicles for February dropped 11.3 percent and 9.7 percent, respectively, compared to the same month of 2011. First quarter registrations of passenger cars were off by 7.7 percent year-to-year.

This trend came after ACEA reported in 2011 that the industry appeared to be recovering. It has yet to release production figures for all of 2011, but it did report that 2010 levels were 11 percent better than in 2009, though still 8 percent below pre-recession figures. Now the association warns that sales in 2012 will be flat at best and very well could fall.

The fact is that, today, very few manufacturers make money in Europe, ACEA President and Fiat Chief Executive Officer Sergio Marchionne said in February. This is not sustainable, and it has to change.

One of the changes automakers would most like change is to run factories at closer to capacity. According to a 7 March Reuters article, the region has 241 auto plants in 27 countries, and their average utilization rate is 65 percent. European companies point to the experience of their counterparts in the United States. Factories operated by the latter were producing at 66 percent of capacity in 2008, Reuters reported, but utilization rates are expected to rise to 82 percent this year following a series of closures and layoffs, coupled with increased sales and production.

Not surprisingly, the Big Three U.S. automakers are also returning to profitability.

For the lubricants industry, it is difficult to see a downside to plant closures themselves if they are operating so far below capacity. Every factory uses industrial lubricants, but consumption is already down given current utilization rates. If some factories closed, their auto production – and lube consumption – would simply shift to other plants.

Layoffs, on the other hand, would unquestionably have negative impacts on the economy and the lubes industry. Auto companies are still paying workers even if they are making fewer vehicles. Workers who lost jobs would require unemployment payments or would have less to spend – or a combination of both. European governments can ill afford the first, while their economies cant bear the latter. To avoid these outcomes, ACEA says governments also need to bolster programs that help retrain the jobless and steer them to industries that do need workers.

Ironically, consumption of automotive lubricants would probably not be affected by streamlining steps. Automotive lube demand depends primarily on the car population and oil change practices, and these wont change much because of plant closures and layoffs. If the economy suffers, people may drive less and need less motor oil; if it improves they may buy more vehicles and drive them further.

Based only on these considerations, it sounds as if the lubricants industry should not care much whether ACEA members gain greater freedom to close factories and lay off workers. But lubricant companies and their suppliers do have an interest if such steps help Europes automakers stay competitive. If European companies decline, foreign OEMs will grab their market share, and although the latter operate plants in Europe, they also import a portion of their vehicles.

Perhaps more important are the research and development partnerships that European lubricant formulators have with European automakers. When OEMs need to develop lubes for their equipment, they often enlist help from lubricant companies based in their home markets, and industry insiders say such alliances are becoming more common as lube performance demands rise.

Formulators that engage in such partnerships gain valuable insight into the workings of these machines, not to mention a head start developing oils and greases for them. That has a direct influence on the expertise of these companies – not just to provide lubes for European models sold at home and abroad, but also for lubricant formulation in general.

It ought to be obvious that expertise is one key to a companys success. European lube companies may want to watch whether the regions automakers get what theyre asking for in 2012.