[Marxism] German autoworker layoffs

Charles Brown cbrown at michiganlegal.org
Fri Dec 10 07:11:13 MST 2004


Germany's New Reality

Layoffs by Automaker Confirm Labor's Diminishing Power

By Peter S. Goodman and Petra Krischok

Friday, December 10, 2004; Page E01

BOCHUM, Germany, Dec. 9 -- During much of Germany's postwar economic boom,

as prosperity mounted and car sales multiplied, workers at the Opel

automobile factory here became accustomed to getting their way: six weeks

of vacation, a 35-hour week and some of the highest factory wages on

earth. Whatever was left of that era ended on Thursday.

Undercut by vastly cheaper labor in neighboring Poland and by increasing

global competition, the union at Adam Opel AG acceded to a plan by General

Motors Corp. to cut 12,000 jobs throughout Europe -- 10,000 of them in

Germany and an estimated 4,000 at the Bochum plant alone. The job

reductions will be voluntary, and GM, which owns the Opel, Saab and

Vauxhall brands, is offering buyouts, early retirement and retraining

worth hundreds of thousands of dollars for the most senior workers.

Though geared to help GM rebound from its global slide in the auto

market -- the company has not been profitable in Europe since 1999 and

expects to save $665 million a year through the jobs cuts -- the deal

underscores the extent to which globalization has torn at the social

consensus governing Germany and much of Western Europe.

Rigid labor rules are blamed for European unemployment rates stuck around

9 percent, compared with less than 6 percent in the United States.

Economic growth has also lagged, and labor-market reform is cited by many

economists as an important step toward changing that.

When Opel workers went on strike for five days in October, it was clear

how times were changing. They went back to work with nothing more than the

promise of talks and the lingering threat that many of the Bochum plant's

9,600 jobs would be shifted to Poland, where labor costs about $4.70 an

hour, compared with $29 an hour here.

"It's not negotiations, what's happening now," said Peter Jaszczyk, who

worked at the Opel plant for 40 years and formerly headed the worker's

council. "Management is just dictating conditions. The union doesn't have

the power anymore."

Around the world, labor is grappling with the impact of capital flowing to

lower-cost countries. Textile workers in Mexico are losing ground to

China; software engineers in the Silicon Valley succumb to skilled

counterparts in India. The changes in Western Europe have been

particularly wrenching because labor has occupied such a powerful perch

for much of modern times -- one that has, until recently, cushioned

against the restructuring and layoffs that have occurred elsewhere.

Now, labor in Europe's wealthiest countries is reeling as capital flows

eastward. Investment is pouring in to new members of the European Union

such as Hungary, Poland and the Czech Republic, where workers earn roughly

one-sixth what they do in Germany and France, and farther away to still

cheaper Romania, Turkey and China. Unions once accustomed to wage

increases and sweetened bonuses submit to slashed pay and benefits in a

desperate bid to keep jobs.

In Germany -- still struggling to integrate its wealthier western half

with the formerly communist east -- the export of jobs is exacerbating an

unemployment crisis. More than 4 million people are out of work, and

unemployment is 10 percent.

A recent survey conducted by the economist Horst Wildemann found that 6 in

10 German companies were preparing to establish a manufacturing base

outside the country in the next four years. That could cost as many as

400,000 jobs a year. A similar study by the Boston Consulting Group found

that transfers of work abroad could eliminate one-fourth of Germany's

industrial workforce by 2015, wiping out 2 million jobs.

Germans have long taken pride in their social harmony and benevolent

welfare state, which has virtually guaranteed decent living standards and

generous health and vacation benefits. Now, the country is bitterly

debating proposals to roll back benefits, particularly those for workers

and the elderly. Meanwhile, a society once accustomed to upward mobility

revises its expectations downward. In a poll conducted by TNS Infratest in

October, nearly two-thirds of the respondents said they would be willing

to give up some of their salaries to make their jobs more secure.

"Germany is now confronted with a process of fundamental change," said

Ulrich Beck, a sociologist at the University of Munich. "We will have to

redefine the notion of work and our entire social system. The notion that

we can return to full employment is a great illusion. It will be a

conversion from a society of having more to a society of having less."

Siemens AG, the archetypal German electronics giant, now employs more

people outside of Germany than within. It recently persuaded its German

workforce to accept longer hours for the same pay by threatening to

transfer jobs to Hungary. German manufacturer Robert Bosch GmbH used

similar threats of shifting work to the Czech Republic to extract longer

hours from workers in France, where unemployment is near 10 percent.

The transfer of work to the lower-cost east is particularly intense in the

auto industry. In 1990, only about one-fourth of the cars produced by

German brands were manufactured outside the country. By 2003, the share

was close to half. The German wheel producer Continental AG employed about

one-third of its workforce outside Germany in 1980. Last year, it was 60

percent. The company will soon churn out 16 million wheels a year at its

factory in Temesvar, Romania, where wages are about one-tenth what they

are in Germany.

"We have to adapt our labor costs at least to those in Western Europe,"

said auto expert Ferdinand Dudenhoeffer. "If we maintain our current

standard, then everything will melt away."

The experience in Germany's Ruhr Valley suggests that the disparity with

the east is so vast that minor adjustments will have little effect.

Bochum was dominated by coal until the 1950s, when lower costs in the

United States shut down the mines. The Opel plant, opened in 1962, created

jobs for 4,000 people. They built about 50 no-frills sedans for

lower-middle-class families in an eight-hour shift.

By 1970, sales were exploding, with sports cars and higher-end sedans

added to the mix. The factory was churning out 1,000 cars per shift with

20,000 workers on the floor. It was the largest employer in the region.

The factory was a key source of parts for other plants in Germany, giving

workers here in Bochum outsized power. When they were rebuffed in demands

for increased Christmas bonuses, a three-day strike secured the extra pay.

In 1973, another three-day walkout yielded a lump-sum bonus. Longer

strikes in the 1980s delivered the 35-hour workweek.

Germany's largest union, IG Metall, negotiates with an association of

employers for a contract covering basic wages for metal and textile

workers throughout the country. But worker councils at individual

factories are free to negotiate for wages above those contract minimums,

which the Bochum workforce regularly did successfully.

"The Opel workers were always the aristocrats of the German labor force,"

Jaszczyk said. "Usually, we would get wages 20 percent higher than the IG

Metall contract. It was normal for us to get salary increases of 8 to 9

percent a year. But it didn't come for free: Opel and GM were making good


At vacation time, workers set off with their families in late-model Opel

sedans they helped produce, driving to the beaches of Italy with an extra

half-month's salary for their trips.

The first tensions came in the mid-1980s as management began installing

robots on the shop floor. No one was laid off, but workers who retired

were not replaced. By 1985, the workforce was about 14,000.

In 1991, Opel opened a factory in Eisenach, in the former East Germany,

where wages were one-third less than those at Bochum, diminishing the

company's dependence on its traditional workforce. About the same time, it

set up an engine factory in western Hungary.

The sentinel moment came in 1997 when Opel opened a factory in Gliwice, in

western Poland.

"People weren't worried at first," Jaszczyk said. "They figured the Polish

workers would produce lower quality, older models for sale in the Polish

and Russian markets."

By last summer, the workforce at the Gliwice plant had doubled to 1,200

and the German press was filled with rumors of layoffs. In October, GM

confirmed the dark talk. At a news conference at the company's European

headquarters in Zurich, it said it would transfer the production of

120,000 minivans a year from Bochum to Poland.

"People are angry," said Benjamin Dreher, an assembly line worker. "They

feel like they're getting sold out."

At city hall, Mayor Ottilie Scholz frets about the prospect of lost jobs

while calling on bureaucrats in Berlin and Brussels to intervene -- how

exactly, she isn't sure.

"There's nothing we can do as a city," she said. "This is part of a

worldwide phenomenon." The head of the workers council, Dietmar Hahn,

sounds resigned to a future in which the workforce is far smaller, if the

factory is even open.

"The situation is very difficult," he said. "We've been shown proposals by

management that we don't like. There's so much fear. I don't think

long-term anymore."

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