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Of course, it has to be the bad bad Standort Deutschland, with its lazy workers who get paid too much?
The Opel crisis has more to do with bad management decisions, the wrong line of cars in Germany, the failure to see the right trends developing.
Mistakes Porsche doesn't make. They are doing just fine and their workers are not getting less money and social benefits than those of Opel.

Note from David: Porsche is a comparatively small niche player profiting from strong US sales. They sell twice as many units in the U.S. than in Germany. Thank you, American customers. Porsche's turnover increase is mostly based on the success of one brand - the Cayenne.

Certainly, management problems can aggravate the problem - VW comes to mind, not so much OPEL. But it's the German automobile market in total that's in decline. Since 2000 new car sales in Germany fell in each and every year.

But I may have missed something, Transatlantiker: Germany's economy under Schroeder/Fischer a success story? Please help...

yeah, why is porsche doing fine - in the land of social justice?

its probably because general motors sucks!

I feel no Schadenfreude, just sadness about the decline of Germany, once the industrial powerhouse of Europe

There is no *decline*, the problems are strictly temporary. We are late in restructuring our economy, but this is in no way a permanent condition. Opel, GM's German subsidiary also did especially badly in the last years.

By the way, David, it would be somewhat peculiar if you felt "Schadenfreude", being German yourself.

Note from David: "Schadenfreude" is as German as sauerkraut or beer. I guess it was invented by Germans.

And as to "the problems are strictly temporary" - I love this joke! Problems of the health system - temporary? Problems of the pension system - temporary? Problems of high unemployment - temporary? Problems of the tax system - temporary? Problems of the education system - temporary? Problems of public debt - temporary? You've got to be kidding...

Have a look at the reports of the "German Council of Economic Experts". Makes great reading...

Oh and:

BTW: the U.S. automobile market is doing just fine, thank you.

German carmakers are also doing just fine there, thank you, too. :)

Success story? Hardly. More competition. Easier to outsource jobs to Eastern Europe. Their workers are getting as good as ours but at a fraction of the costs.

But you can't cut wages back to Polish or Czech levels. Who will buy all these new shiny cars then?
This is the major flaw in outsourcing. It works fine for a while. Produce in a low salary country, sell in a high salary country.
What happens? You kill more and more jobs in the high salary country and of course consumption drops. A vicious circle.

Not that America isn't experiencing the same thing. How about minimum wages of $5,70 (plus illegal workers who undercut those wages)? Still China is cheaper. Universal problem, so it seems.

Yet Outsourcing isn't all bad. Produce locally, for the local markets. Manufacture the cars you want to sell to Chinese in China makes sense. Manufacture the cars you want to sell to Germans in China, and you'll be heading for trouble in the long run.

So how will you make money? With luxury goods, with excellent goods, and with very economical goods. The in-betweens suffer most.

The major problem in Germany is not taxes, it's the bureaucracy involved with taxes and work. Too many rules, too many exemptions. Encourage the small businesses, those that don't (or can't) take their jobs elsewhere. They are the backbone of every country.

Look ahead to the future, invest in new technologies. What will people need in 5, 10 years?
A company that produces the right things for the right market can afford to pay its workers well. And then the circle stops bein vicious, but turns upward again.

BTW: Herzinger über Joschka Fischer und sich selbst in der neuen Weltwoche!

http://www.weltwoche.ch/artikel/?AssetID=8972&CategoryID=73

Der Artikel in der ZEIT über die Bush-Kerry-Debatte war dermaßen Kerry ergeben, daß ich die ZEIT weggeklickt habe.

David:

Note from David: Porsche is a comparatively small niche player profiting from strong US sales. They sell twice as many units in the U.S. than in Germany. Thank you, American customers.

But the US has a population more than 3.5 times the size of Germany's, so if you want to measure economic prosperity by the sales figures of Porsches, the US fares rather badly.

Note from David: Germany is Porsche's home market. For a German automaker to sell twice as many units in the U.S. than in Germany is extraordinary. In the first half of 2004 BMW sold 137000 units in Germany and 144000 units in the U.S. - way below Porsche's ratio. (Interim Report on June 30, 2004, p. 6)

"I feel no Schadenfreude,"

Ohhhh...i feel some,a real big fat Schadenfreude and and i feel better from day to day. LOL


"just sadness about the decline of Germany"

...you just get what you have asking for!!!

"once the industrial powerhouse of Europe."

..with strong and friendly US-support.


THANKS GM FOR THE FIRST LESSON !!!

To the anonymous coward commenting above: There is no decline, just some temporary problems.

Btw, GM has just issued a profit warning.

Guys,

just look at BMW's financial statement...GM is bankcrupt compared to that.
I wouldn't buy an Opel anyway as it always has been been the rotten apple of our car industry for 30 years.
Thank you for the applause! :)

Oh and btw:

from Porsche's financial statement 02/03:

Sales Revenue Germany: 1992 Mio. €
Sales Revenue North America: 2127 Mio. €

Thats twice as much ?!?

Note from David: I spoke of units, not of revenue.

Porsche sold 32.763 cars in the U.S. in business year 2003/2004, and 15.299 cars in Germany (same time period). So, Porsche's U.S. unit sales are even more than twice the volume in Germany. Blame it on my calculator...

David,

I meant: Why would you feel Schadenfreude at the problems you own country is having?"

Btw, I didn't say that the problems couldn't be solved overnight, but they are solveable.

@David/anonymous


weltschmerz, angst, schadenfreude and ...

m a s o c h i s m -german borrowings, german ideas and really the leitmotiv of your weltanschauung?

I think it was Marcuse in one of his very rare moments of mental sobriety, who remarked: Among the working class there is nearly no anti-americanism ... (in contrast, of course, to the well-educated classes)

ZDF, Spiegel, 3SAT, ARTE are our adversaries, complacent idiots deemed to be "intellectuals", not families cracking down to HARTZ IV: Grass "quipping": "Der Cowboy schießt aus der Hüfte ... wir müssen unseren Freunden (sic!!) in den Arm fallen ...", and Bremer and Slomka should be our targets, not those leading decent lives and working way harder than all the media pundits such as Scholl-Latour who seems to be transfixed in his very personal quagmire of self-sufficient superiority to the US/rest-of-the-world.

BTW: the U.S. automobile market is doing just fine, thank you.

David: Is it really beyond you to see the difference between the market doing "well" (say seeing its producers make money) v. the number of cars sold being "proof" that all is well in the US car market? Chrysler's (at the time) "best" volume levels also came with record setting losses. Every car was being sold at a loss -- and somehow ;) they didn't manage to make it up on volume. According to that America haters at the Economist:

In an industry with such high fixed costs, it is tempting to sell at almost any price to keep the cash coming. That is what GM did after September 11th, and everybody is still doing it today. [...] In this market full of discounts, each manufacturer is hoping that it can squeeze more car sales at the expense of its rivals. In fact, sales stayed artificially high only because the producers are making it attractive for consumers to swap their older vehicles for new ones. Detroit is, in effect, paying people to scrap their cars. Falling second-hand values bear this out.

But I may have missed something, Transatlantiker: Germany's economy under Schroeder/Fischer a success story?

Where exactly did Transtlantiker suggest this, David? Or is it just easier to continue the war on straw?

Note from David: Exactly in his first sentence: "Of course, it has to be the bad bad Standort Deutschland...".
Need further interpretation of what this sarcasm means?

Als 'Vollsortimenter' mit 20 Modellen, nur noch 8% (immer noch stark fallendem) Marktanteil und über 50% Überproduktion (immer noch steigend), wie soll sowas gutgehen.

Wer kauft sich denn jetzt noch einen Signum Frontera, Vivaro und wie die Dinger noch heissen, wenn er wegen Produktionsaufgabe in vier Jahren keine Ersatzteile mehr bekommt und die Kiste als Gebrauchtwagen nichts mehr wert ist?

Dieses unsägliche Dahinsiechen kennen wir doch zur Genüge von der englischen Autoindustrie.

Two points.

First, to the idiot above who thinks outsourcing means you can't afford the products anymore, when some jobs leave. Did you ever take into consideration that goods and services cost LESS because of the outsourcing?

Not to mention the fact that the money saved can then be invested in new areas of technology and R&D which in turn creates new businesses. Ever wonder why there are more Israeli high tech companies listed on the NASDAQ, as opposed to all EU countries COMBINED????????????

Second, when the Germans re-elected Schroeder to spite the US, it was the biggest mistake they made since declaring war on the US in WW2.

"I feel no Schadenfreude,"

Ohhhh...i feel some,a real big fat Schadenfreude and and i feel better from day to day. LOL


"just sadness about the decline of Germany"

...you just get what you have asking for!!!


"once the industrial powerhouse of Europe."

..with strong and friendly US-support.


THANKS GM FOR THE FIRST LESSON !!!

RE: Transatlantiker - cars/outsourcing.


I agree that the GM announcement is only partly related to the EU economy. The largest part of the decline in US company sales in the EU market and EU company sales in the EU market is not the economy. It is the success of Japanese automakers in the EU market. The EU is beginning the competition curve that America went through in the 80s as the Japanese captured a large section of the automobile market. That is a good thing in the long run but can be painful in the transition.

Your note on outsourcing is only half correct. Outsourcing lowers the wage for current workers in outsourceable positions...but it RAISES the wage for new workers taking those jobs. That is a good thing. It also lowers the price of the end product, making it available to those with a lower wage. That is also a good thing.

The long-term efficiency gained by outsourcing is paid with short-term disruption in the labor market.

I believe it also inevitably reaches an equilibrium slightly favoring the local market once the initial luster wears off. Equilibrium is reached fairly rapidly as the new workers wages rise. In short order the new workers lower wage plus the "friction" costs (different culture+ communication+ transport+ etc) of using outsourcing rises to equal the higher wage of a local worker who does not carry the additional overhead. Some jobs remain outsourced and others will be insourced again. Everyone naturally favors their own group, so the equilibrium will naturally favor the local market once the gross disparity is eliminated.

Outsourcing is just "work arbitrage", to (maybe) coin a phrase, and I doubt that the opportunity lasts any longer than a similar financial arbitrage does...once you adjust for the longer transaction periods.

Need further interpretation of what this sarcasm means?

Giving an alternative interpretation of the source of Opel's problems equals arguing that "Germany's economy under Schroeder/Fischer [is] a success story?"

You're joking (or?)

Note from David: Again, check his first sentence. It's obvious, he defends the "Standort Deutschland". Why this is "an alternative interpretation of the source of Opel's problems" beats me.

Let's agree to disagree. It gets boring.

Why is Porsche doing fine? Quite simply because they are in a market where price changes have little impact on demand, so they are not affected too much by German labour costs. Which does not mean that they are not affected at all, however. Many parts of the Boxster are made in Finland and the motor for the Cheyenne comes straight from Slowenia. So, even Porsche avoids German labour costs and (probably more importantly) labour market regulation to some degree.

Now, is it bad management at Opel that has lead us to the planned layoff of 10000 workers in Germany? Maybe to some degree. But it's also a fact that buying an Opel will never ever be as sexy as buying a Porsche 911. They can do what they want managementwise, they will never be able to get into the luxury segment. Quite similar to Volkswagen, where the Phaeton is a flop. And now even the new Golf doesn't sell, so there's more trouble ahead for the auto industry in Germany.

What we are seeing is very simple: the high-price niche where automobile manufacturers can still survive German labour market costs and regulation is shrinking. BMW and Porsche are still blossoming, in some segments Mercedes is too. Everywhere else, it's time to panic.

Tanker Schreiber,

when the Germans re-elected Schroeder to spite the US

That didn't happen. Schröder's campaign motivated his most left-wing supporters to vote for him after all, after some of his policies had turned them off. That gained him a couple of percent points. What also helped him was the reasonably competent handling of the widespread flooding shortly before the elections.

Even so he only won by 6000 votes, a tiny majority.

Not even rampant Anti-Americanism will do the trick this time......
ohh doch!!! gestern im auslandjournal meinte der moderator bei der anmoderation eines beitrages zum thema polen doch glatt, daß amerika mit der
massenentlassung bei opel deutschlands politische haltung abstafen will. Zwar betonte er dann, daß es wohl eher an unseren hohen lohnkosten liegt, aber das so etwas überhaupt erwähnt wird ist einfach unglaublich!

Of course my comment about the "Standort Deutschland" was meant in a sarcastic way, but that hardly translates into a backing of Schroeder/Fischer. We have had these discussions for years, and the problems were clearly there when Kohl was still in power.

Why shouldn't I defend the "Standort Deutschland"? I'm a German. Is defeatism what you cherish?

Who is cutting jobs all the times and who is creating new ones? The transnational corportation can shift jobs around the globe easily. The costs in Germany will always be higher than in Asia and Eastern Europe unless you are willing to reduce your lifestyle to that level. But in that case, the German market will be gone.

This is a nonsense discussion. Are German jobs too expensive? Yes, but not because the workers are paid too much, it's because of regulations, bureaucracy, forced contribution to a social welfare system that does not have to disappear, it just has to be reformed, streamlined, with more individual choices.

The companies I'm invested in are mostly German "Mittelstand". When they have a good product, good marketing, a vision for the next ten years, I invest in them. I have rarely ever been disappointed. And yes, their workers get paid well.

I travel to the U.S. at least one time a month. I see good and bad there. Some regions are thriving, others look appaling when it comes to jobs and industry. And a worker costs much less there than in Germany.

Die SZ ist sich nicht zu schade, diesen Blödsinn zu verbreiten:

"Verlagerung der Zafira-Produktion
Der Betriebsrat glaubt, dass bei GM politisch motivierte Entscheidungen gegen Opel laufen. So habe die Verlagerung der Produktion von 100.000 Zafiras pro Jahr vom Werk Bochum ins polnische Gleiwitz auch politische Gründe.

Polen, das wegen seiner Irak-Politik von US-Präsident George W. Bush geschätzt wird, hatte vor sechs Jahren 60 Kampfjets bei Lockheed-Martin bestellt, im Gegenzug von den Amerikanern aber die Schaffung von Arbeitsplätzen in Polen verlangt. GM-Manager Carl-Peter Forster bestreitet das nicht, sagt aber, für die Zafira-Verlagerung hätten nur die polnischen Kostenvorteile den Ausschlag gegeben.

Belege fehlen
Der Betriebsrat kann kaum belegen, dass bei GM die große Politik mitspielt. Richtig ist aber auch, dass die Führungsspitze von GM zu den Spendern für den Bush-Wahlkampf gehört. Es trifft auch zu, dass der Stabschef des Weißen Hauses, Andrew H. Card, als Lobbyist in den Diensten von GM stand, bevor er im November 2000 in den Führungskreis um Präsident Bush im Weißen Haus kam."

(SZ vom 13.10.04)

http://www.sueddeutsche.de/wirtschaft/artikel/61/41020/1/

To wring out some of the emotions about this topic one needs to look at some hard data. Europe suffers from over capacity, high labor costs and a sluggish market.

The first two of these problems are being addressed by the various car makers. They will restructure capacity by closing plants. They will reduce labor costs by either getting concessions from their unions or moving production, resulting in lost jobs. This will be done over the objections of both the unions and the government.

The third problem, a sluggish market must be addressed by the German government. It will require allowing Germans to retain more of the money they earn. To do this, it means the government also must reduce its costs. I, for one, do not believe this will be done in a meaningful way or to the degree that is needed.
Market Trends

Car sales in Germany 1999 3.8 million
Car sales in Germany 2004 less than 3.2 million

Market Share
5 largest European auto makers - 1.2%
5 largest Asian auto makers + 1.0%

Asian share 1999 14.8%
Asian share 2004 17.4%


Labor Costs
(per day)

Former West Germany 40.08
US 34.52
Japan 34.52
UK 28.35
france 28.34
Former East Germany 27.12
Italy 20.96
Portugal 11.10
Poland 8.63
Hungary 7.40


Transatlantiker: I think that you are mainly correct in your assessment but misdirected in your solution. As a German you *should* defend Germany. Neither should you concede defeat; but the way to win is to identify the enemy before attacking.

Germany is a weak competitor for only one reason: Socialism. The very high overhead of the German implementation of socialism is driving business away from the German worker. It will not return unless that system is fixed. Exacerbating that problem are the regulations making it difficult for a business owner to release employees. These regulations attempt to save jobs during downturns but strongly discourage hiring during upturns. That prevents the German economy from surging during good times in exchange for the poor substitute of limiting declines.

Germany needs to look inward to resolve that problem.

You again neglect, to move to another topic, the rising salaries that globalization of industry causes in the low-labor-cost countries. Those big cost-of-labor differentials will not last for long and, as salaries rise, the demand for Western goods rises with them.

Jonathan, maybe... but look at the textile industry... first to the Czech Republic, then, Romania, Ukraine, and now the first jobs appear in Myanmar, for 1 dollar... a day!

Sure that does not work that easily when you need skilled labour but anyway.

We are just ahead of the curve... in a few years the Czechs will feel the same pressure.

Sorry, German "socialism" is a red herring, the system wasn't different under Kohl. And for decades it worked because the demographics were right. Now they aren't and the system needs to adapt.

Again, Germany can never compete with prices, only with high quality and innovative products. The latter are lacking (especially Germany missed out on the electronic revolution while remaining excellent in "classic manufacturing"). But Germany leads the field in environmental technology, energy saving measures etc.

Quoting labour costs as the main reason for Germany's economical problems (are we talking dollars or euros btw). does not cut it for me. I work a lot with freelancers and pay them well when the quality is right. The labour market is tough so I could certainly make them work for less, but in the end the quality would drop. Same goes for employed people.

What kills us is the bureaucracy.

T/A:

Of course my comment about the "Standort Deutschland" was meant in a sarcastic way, but that hardly translates into a backing of Schroeder/Fischer.

You'd think this distinction would be obvious to anyone. And yet... sadly, no!

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