The Other Ticking Time Bomb in Europe Thierry Roge/Reuters Opel workers marched in Brussels in January 2010 to protest the closing of the Opel factory in Antwerp. Opel and other carmakers are under new pressure to reduce overcapacity. GENEVA - While Europe has been preoccupied with the euro crisis, another storm has been gathering that could also take a grievous toll on jobs and growth. Just as Europe has too much debt, it also has more automobile factories than the economy can support. The overcapacity is not exactly a secret, but judging from the talk at the Geneva auto show this week, a long-postponed reckoning with the problem is nigh. "All of the car manufacturers have capacity problems - all of them," Carlos Ghosn, head of the Nissan-Renault alliance, said in Geneva. The industry is just waiting for one company to make the first move, he said. "If somebody restructures it's going to force everybody to restructure," Mr. Ghosn said. The government scrap programs that helped carry the industry through the downturn of 2009 and 2010 are not likely to be repeated. Hard-pressed governments are not in a position to subsidize unproductive plants as they may have in the past. Instead, the big question is how to manage the inevitable downsizing. Sergio Marchionne, the chief executive of Chrysler and Fiat, repeated a call he had made earlier for the European Union to step in and help car companies "distribute the pain and suffering," the way it helped manage cuts in the steel industry in the 1990s. In Europe, any attempt to cut costs can quickly deteriorate into a political struggle between the countries that stand to lose jobs. "That is the only way to do it," Mr. Marchionne said at the auto show. There has to be some production taken out. Mr. Marchionne, who besides running two of the world's biggest car companies is also president of the European Automobile Manufacturers" Association, estimated that the industry needed to cut capacity in Europe by 20 percent. That is a huge number considering that the car industry directly employs 2.3 million people in Europe, including subcontractors, according to the manufacturers" association. Unused capacity is ruinous for car companies because even idle factories cost money to maintain, and unproductive workers must be paid. In addition, the oversupply of cars drives down prices. Mr. Marchionne said the glut of capacity had forced European carmakers into a "discount binge" similar to what occurred in the United States in 2007 and 2008. "You can't keep that up for long," Mr. Marchionne said. You'll go bankrupt. That is, in fact, what happened to Chrysler and General Motors. Mr. Marchionne and Mr. Ghosn were reluctant to point fingers, but to analysts it is pretty obvious which companies are under the most pressure to confront overcapacity. They are G.M."s Opel unit and PSA Peugeot Citroën, both of which suffered huge losses last year. Karl-Friedrich Stracke, the chief executive of Opel, acknowledged as much in a meeting with reporters Tuesday. He estimated that Opel, based in Germany with factories in Britain and several other countries, was operating at about 80 percent of capacity. Mr. Stracke made no claim that an alliance with PSA Peugeot Citroën to jointly develop and purchase components, announced last week, would solve the capacity problems. "PSA has to address their problems and we have to address ours," he said. There is a high urgency to get our company back to sustainable production. There is no other way out. Mr. Stracke deflected questions about plant closings, saying that the company was in intensive discussions with "stakeholders" - code for workers and political leaders - about what to do. He said it would be several months before they reached any agreements. Production capacity in Europe fell only a little after the downturn in 2009. Last year, Fiat closed a plant in Sicily, and Saab in Sweden went bankrupt. Opel shut down a plant in Antwerp. But a large production overhang remains. When Mr. Ghosn said that all the car companies in Europe suffered from overcapacity, he was presumably not including the premium automakers. Bayerische Motoren Werke, Daimler's Mercedes-Benz unit and Volkswagen's Audi unit are operating all-out to meet demand from China, the United States and strong European markets like Germany.