Export Boom In Germany Raises Red Flags

Bertel Schmitt
by Bertel Schmitt
export boom in germany raises red flags

Every day, German auto managers go on their knees and pray that the financial troubles in Greece, Spain and elsewhere continue. Why? The troubles keep the Euro low, and a low Euro is high octane fuel for German car exports. In May, German car exports rose 46 percent. For the first five months, German car exports are up 50 percent. Despite a lackluster home market, the German car industry is hitting on all cylinders: For the first five months, German production is up 26 percent to 2.3m units, driven mostly be strong demand from China and the U.S. However, red flags are going up. Literally.

The German Metalworkers Union wants a piece of the action. No more Mr. Nice Comrade: “We have to become more confrontational,” said Frank Iwer, a high ranking functionary of the IG Metall. The industry is surprised by the sudden boom. While some companies still let people go (we are looking at you, Opel), others put in extra shifts, ask for overtime and hire temporary workers to keep up with the demand during the holiday months, says Automobilwoche [sub]. No conflict is imminent, but it is brewing. The unions want to sit out the holiday season. In fall, they will demand more money, or they will do what they do best: Go on strike.

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  • Ihatetrees Ihatetrees on Jun 26, 2010

    This should work out. While they'll never get an award from the U of Chicago Economics Department, IG Metal isn't anywhere near as cancerous as the UAW. What they need are temporary bonus and wage boosts based on Euro depreciation or increased profits. This should be negotiable without a strike.

  • RogerB34 RogerB34 on Jun 26, 2010

    Maybe no strike. German GDP 2000 - 2009 was 0.83 percent average per year. Excepting 2009, not a banner year, the average is 1.5 percent per year. The current 2010 estimate is 1.2 percent. The welfare state can't be supported by economic performance since 2000.

  • 50merc 50merc on Jun 26, 2010

    Quite right, RogerB34. And the welfare state can't be supported when a state is demographic decline, either. The motto for our era is "Grab it while the getting is good." Nevertheless, I wouldn't bet against a strike. They might as well take a long holiday; they'll recoup the lost wages as part of the next contract. The unemployment bennies are pretty good, too, in a welfare state. No German on strike has to worry about his next meal. Oh, the stockholders? They're just evil capitalists; screw 'em.

  • Znork Znork on Jun 28, 2010

    Bertel I think you've been out of the country for too long, there won't be any strikes.