Tensions in the periphery: Dependence and the trajectory of a low-cost productive model in the Central and Eastern European automotive industry

Abstract

This article analyses the productive strategy adopted by Renault for its Dacia plant in Romania. It proposes a detailed analysis of the conditions for the success of the Logan project – Renault’s radical approach to the concept of the low-cost automobile. We look into both market- and production-related aspects that have made the Logan work and highlight the tensions sparked by Renault’s drive to capitalize on its favourable market situation as well as the success achieved by Dacia’s workers in defending their interests. In particular, we emphasize the company governance compromises that have shaped industrial relations at Dacia over the past decades and show how in recent years the maintaining of such a compromise has come increasingly into question due to threats by automation and relocation in a context of constantly rising wages and improving working conditions. Finally, we discuss the strategic dilemmas facing both management and labour and their possible resolutions, as well as the relevance of the Dacia case for understanding the future of Central and Eastern Europe as a peripheral region attracting automotive foreign direct investments.