Neoliberalism : Germany : a struggle for cultural survival


Richard Moore

    Ralf Bartel, of the German trade union federation DGB,
    believes unions and workers are often better than managers and
    owners at making the right decisions.
        From an Anglo-Saxon point of view, there may be little rhyme
    or reason behind such a view.

'Anglo-Saxon' in this case, is a code phrase for Thatcherism
and Reganomics. We all believe in that, right, all of us

The article below is in part a success story, in that a union
persuaded a multinational that they could benefit from
preserving more jobs in Germany, based on worker-identified
productivity gains.

Germany has a proud tradition of worker productivity and
competence. This goes deep into the culture. There is a
well-known aphorism, "Most of us work to live; the Germans
live to work." This is of course a cartoon exaggeration, as
aphorisms often are - but there is an element of truth as
well, particularly if we are talking about pride in work.

Wagner's opera, Die Meistersingers, expresses the priority of
this German virtue in no uncertain terms. Each of Wagner's
heroic prototypes is displayed: the wise ruler, the brave
commander, the devoted professor, and perhaps there were more.
But the top accolades, Wagner's understanding of the core of
the German spirit, went to the master crafts people,
symbolized by the 'master-singers', as was convenient in the
medium of opera.

We can explain this phenomenon in part, perhaps, because
Germany was late to industrialize, and is not that many
generations away from a strong and very successful guild

With the assault of neoliberalism and free trade, this
cultural tradition is being threatened. It becomes
increasingly difficult to find niches where productive and
skilled work can command a respectable wage, within the German

a pity,


Reshaping Germany's companies 

By Jorn Madslien 
BBC News website business reporter in Hemer, Germany 

It was in North Rhein-Westphalia, Germany's gritty industrial
heartland, where Germany's Chancellor Schroeder was dealt the
political body blow that made him call federal elections on 18
September - a year early.

In May, chairman of the governing SPD social democratic party
Franz Muntefering was given a beating in a local election by
workers angry at the way jobs were being moved to cheaper
countries and worried about the erosion of workers' rights.

Seeing the writing on the wall, Mr Muntefering had tried to
blame foreign private equity investors for Germany's economic
ills, labelling them "locusts" who were asset stripping
companies, sparking large job losses in the process.

A plan by Grohe Water Technology to cut thousands of jobs and
move production to China made matters worse for Mr

Not only because the kitchen and bathroom fittings
manufacturer's home town Hemer lies within his electoral

But also because Grohe is owned by two private equity firms,
TPG (Texas Pacific Group) and CSFB (Credit Suisse First

"The company planned to cut 3,200 jobs [from its workforce of
about 4,500], based on a proposal by the consultants
McKinsey," says regional IG Metall union representative Joerg

This, says Mr Weigand, would have ended Grohe's industrial
production in Germany and dealt a devastating blow to the
people of Hemer, who have even named their town square Grohe

Union victory

The manufacturer's plan sparked a savage response from German
unions as it came to be seen as a symbol of what is wrong with
the way the country's troubled economy is managed.

There was no plan B until IG Metall came up with one Ralf
Bartel, DGB trade union federation

Yet, rather than launching industrial action, IG Metall
proposed a compromise - accepting almost 1,000 job cuts and
one factory closure, in return for fresh investment at
remaining German factories to secure future employment.

Grohe - wary of negative publicity - swiftly took the union's
recommendations onboard and sorted out the dispute internally.

There was praise for IG Metall's efforts in the dispute and
the union's membership, which had been slipping steadily for
years, was given a much needed fillip.

"It is always difficult to call it a victory when several
hundred jobs are lost, but compared with the alternative it
was a victory," insists Mr Weigand.

But there was no such luck for Chancellor Schroeder who was
left with the precarious media balancing act of mollifying the
unions as well as calming the fears of international
investors, wary about his party colleague's anti-capitalist

Control issues

Underlying it all was a philosophical debate about control -
who should be in charge of German industry and decide how
companies should be run.

Ralf Bartel, of the German trade union federation DGB,
believes unions and workers are often better than managers and
owners at making the right decisions.

From an Anglo-Saxon point of view, there may be little rhyme
or reason behind such a view.

But consider this: IG Metall's response to Grohe's plan was to
hire what it describes as "better consultants" to pick apart
the McKinsey report and hammer out an alternative plan that
would both improve efficiency and safeguard hundreds of jobs.

McKinsey had not taken into account the value of existing
know-how among Grohe's workers, the cost of moving to China,
potential damage to the trademark of moving out of the Made in
Germany zone, and the possibility of increasing productivity
at existing plants by 30%.

"There was no plan B until IG Metall came up with one."

Balancing act

Grohe's director of labour affairs Detlef Spigiel is keen to
downplay the importance of the McKinsey report and insists the
firm never intended to go along with all its recommendations.

Instead it aimed to achieve "the right balance between added
value and sales, and that is the reason why we must shift some
production to Asia and the Nafta area".

Only 20% of Grohe's sales are in Germany, so it wants to
reduce the proportion of production in Germany from 80% to 60%
- still high when compared with the car industry for example,
Mr Spigiel says.

Product development, design and research, as well as the
firm's head office will remain in Germany - although the
headquarters may move to Düsseldorf.

When entering Grohe's sprawling factory in Hemer, it  soon
becomes apparent that the plan IG Metall is so keen to take
credit for is well under way to be implemented.

Making upmarket kitchen and bathroom taps involves a complex
process; yet one where highly skilled workers are rapidly
becoming obsolete.

Last year, there were about 1,000 workers at the factory. Now
there are 880. Next year there will be just 660.

"Ten years ago, there was one robot, a pilot one that didn't
really work. Now we have 80," head of production control
Ulrich Moneke.

"We have to have a strategy to reduce labour costs," he adds,
explaining how new working practices are also being

Staff only get paid if the products are properly made, and
workers are paid as teams of two or three who then split their
pay-packets - thus enhancing performance through peer

And yet, "the atmosphere in our plant is better than half a
year ago", says Mr Spigiel. Mr Weigand, who is in charge of
the Grohe case at IG Metall, agrees.


But, there are deeper worries.

Mr Weigand is deeply unhappy about the way "a strong
traditional family company was asset stripped, with all it
needs to produce and sustain jobs taken away".

The IG Metall people are clever, but they have too much power
Detlef Spigiel, Grohe

"Nearly half the capital was taken out of the company by its
private equity investors," he insists.

Adds Mr Bartel: "This is a dangerous development for an

Mr Bartel makes a clear distinction between what he deems
proper foreign direct investment -where money flows in and
jobs are created -  and situations where cash reserves are
withdrawn, where debts accumulated against remaining assets
and jobs axed.

"Investment to secure jobs is welcome, but those who take
money away are not," he says.

New focus

Mr Spigiel's rebuttal is strong.

He believes private equity companies can improve matters by
"re-engineering" companies over a period of several years, as
they do not have to face the short-term demands of the stock

"They want to sell the company five years down the line. They
don't take any dividends during that time, and we have time to
change the company in a private atmosphere," he says.

"Now, with the strong position of Grohe, is the time to do
this [restructuring]. We are able to finance the social plan."

Those laid off are employed for a year - at 80% of their
former salary - by a specially constructed subsidiary that
retrains them and finds them new jobs.

This burden is jointly carried by Grohe, which pays about a
fifth of the cost, and the state which pays the balance. It is
obvious that workers' rights are still strong in Germany.

"The IG Metall people are clever," acknowledges Mr Spigiel,
"but they have too much power".

This is the fourth in a series of reports from Germany; in the
run-up to the election we are also looking at the country's
economy, its unemployed, and how its companies are trying to
beat the slump.

Story from BBC NEWS: 

Published: 2005/09/15 07:33:47 GMT 


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