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Author: Hawkwin Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1976161  
Subject: Re: Unions and Car Companies Date: 12/13/2012 9:40 AM
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A few points as to why the comparison does not work well.

German auto workers were subsidized by their government. The salary of auto workers in Germany was paid in part by direct payments from the government.

Basically, Germany bailed out their industry via direct payments to the employees.

http://www.solidarity-us.org/node/2607

Between what they were paid by their employer and the government supplement, they earned 65-90% of their usual wage. The government also had a version of “cash for clunkers” so some auto plants were at full production.

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Also, unions (and management) operate very differently in Germany. They actually get along in many cases. Strikes are rare and they have joint committees where they often work out their differences. How they got there vs how we got to our situation, I don't know, I just know that they find a way to work things out much better. The following article seems to suggest that the councils are what make things different.

http://www.forbes.com/sites/frederickallen/2011/12/21/german...

The second institution is the German constitution, which allows for “works councils” in every factory, where management and employees work together on matters like shop floor conditions and work life. Mund says this guarantees cooperation, “where you don’t always wear your management pin or your union pin.”

As Michael Maibach, president and chief executive of the European American Business Council, puts it, union-management relations in the U.S. are “adversarial,” whereas in Germany they’re “collaborative.”

Does such a happy relationship survive when German automakers set up shop in the U.S.? No. As a historian observes in the article, “BMW is a German company and it has a very German hierarchy and management system in Germany,” yet “when they are operating in Spartanburg [in South Carolina] they have become very, very easily adaptable to Spartanburg business culture.” At Volkswagen’s Chattanooga plant, the nonunionized new employees get $14.50 an hour, which rises to $19.50 after three years.

The article’s author, Kevin C. Brown, asked Claude Barfield, a scholar with the American Enterprise Institute, why the German car companies behave so differently in the U.S. He answered, “Because they can get away with it so far.”

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The problem of the US car companies is not the unions, the problem is that for some reason anglo-saxon countries (the UK, too) seem to simply be worse at running companies involved in heavy manufacturing than the rest of the world.

Too simplistic. German car companies that come to the US, behave like US companies. For example, they fight unionization as strongly as any US company. The following article suggests that Germany auto companies see US unions as too confrontational and not like their home country counterparts.

http://www.guardian.co.uk/world/2011/dec/30/uaw-car-union-ge...

The United Auto Workers union is staking its future on the kind of struggle it hasn't waged since the 1930s: a massive drive to organise hostile factories.

This time, the target is foreign carmakers, whose workers have rebuffed the union repeatedly. Specifically, Reuters has learned, the union is going after US plants owned by German manufacturers Volkswagen and Daimler, seen as easier nuts to crack than the Japanese and South Koreans.

...

German auto executives declined to talk in detail about the UAW's push. Privately, they remain wary of the union and its confrontational past. "They view the UAW as a disaster," said a Wall Street banker who has worked extensively with the industry.

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In summary, German auto workers are or have been subsidized by their government, the workers and the companies have greater ability and incentive to work together, and German auto companies appear to blame US unions for the adversarial nature of the US market and reject unionization in the US.
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