Pardon me if somebody has already covered this and I've missed it.
There was a very interesting article in the 'Independent' on Tuesday this week regarding the struggle of VAG to remain profitable. The German labour unions and the employers had a very cosy relationship for 50 years. But, the economic scene of things is changing and the cosy relationship seems to be over, at least on the surface.
VAG have announced that a pay freeze is necessary, at least for two years, and delicately refer to the alternative of moving production abroad. The unions have replied with a demand for a 4% across-the-board pay rise and job security for ten years. Shades of Red Robo!
VAG have a winning hand here, they could easily move production abroad ? don?t they already manufacture in Brazil, Spain, Czechoslovakia? Anybody know of any others?
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All those employed by European car manufaturers face the same long term problem. EU imposed welfare laws and restrictions on working hours make it more attractive for producers to up camp and depart to the developing countries where they have a more flexible approach to working conditions.
Unless the EU stops regarding industry as a branch of the Social Security System manufacture will cease to exist in any large scale within the Union.
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The EU will most certainly implode under the weight of its own idiocy at some point. I have been involved in recruiting staff for call centres in the Philippines for US and EU companies, because of (a) labour costs and lazy work ethics in the origin countries and (b) the fact this country is the only one in Asia where a high standard of English is spoken, thanks to the country's days as an American colony. Filipinos are eminently trainable and have a strong work ethic. With modern technology of course it doesn't matter where you put your staff anyway, and these governments have woken up to that.
Over the last 3 years some 200 call centres and IT code-writing operations have sprung up here as investments by foreign companies. How long before manufacturing parts takes off, then whole vehicles? (cf Thailand for starters). Already factories here are bringing Asian and other lo-cost country-manufactured parts in and assembling them here for re-export.
The Government has created duty-free economic zones for this purpose.
China is gathering its skirts - wait till that takes off as a manufacturing base. It is already flooding Asia with cheap scooters and motorcycles. Bye-bye EU.
Labour unions are so stupid and stuck in their 1950's ideology they couldn't find their way out of a paper bag.
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don?t they already manufacture in Brazil, Spain, Czechoslovakia? Anybody know of any others?>>
Belgium, Portugal, Mexico, South Africa, the US etc.
One of the reasons was because of very strong unions and high labour costs - if you keep going to the well, eventually the water will run out.
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It isn't simply Trade Union activity, it's also the tax regime. I can confidently predict that tax rises over the next few years will lead to an export boom of Brits heading for countries where they can keep enough of their earnings to actually live a little rather than hand most of it over to East Europeans.
HJ
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I completely agree with you - I was referring to German trade unions' activities quite a few years back.
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There is an item in this morning's Telegraph that Opel are trying to extend the working week to 40 hours, without an increase in pay.
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HJ, there is more than a steady trickle of Brits and has been for years, if not a boom. Britain's greatest export may one day be its skilled professionals. Old Labour drove me out in 1967 and I have known hundreds like me. Foreign companies have no trouble finding people to work in KSA for example because there they keep every Riyal of their hard-earned.
Asian countries with attractive retirement programmes too.
But coming from the distribution industry with its now very sophisticated logistics solutions, I can quite easily understand how the car I drive can now consist of parts made in a variety of different countries for production-cost reasons and assembled in another which provides a friendly environment with incentives and tax holidays and a trouble-free cost-attractive labour environment.
Quite simply the manufacturer can choose wherever works best for him to build his product and remain cost-competitive.
Old Europe is doomed economy-wise in the end but its seat-warmers can't seem to grasp the simple piece of economics that if you squeeze the lemon long enough all you end up with is pips.
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>>... that if you squeeze the lemon long enough all you end up with is pips.>>
Hence my remark about going to the well too often..:-)
Some VW disputes in recent times:
www.labournet.de/branchen/auto/vw/puebla5.html
www.ruhr-uni-bochum.de/soaps/download/publ-2002_lp...f
One comment I found was: "At the end of the 1980s, Wolfsburg, with more than 60,000 workers and very strong unions, was the biggest car plant in the world, but was regarded as a dinosaur."
Plus DailerChrysler:
www.aiada.org/article.asp?id=20513
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