COMMENT: It's time for hard choices, not compromises

COMMENT
Franz W. Rother is Editor-in-Chief of Automobilwoche

Germany's trade unionists are showing their fighting spirit. In television interviews they say that laying off workers in Germany is taboo.

They also say that wage cuts are out of question. Why should employees make sacrifices to save a company that is reeling because of mismanagement?

Are we talking about VW in Wolfsburg or Opel in Ruesselsheim? No, the latest German company in crisis is the Essen-based department stores group KarstadtQuelle.

The fight to save KarstadtQuelle is being closely analyzed by VW and Opel executives, and by other automotive manufacturers and suppliers.

They see a potential lesson for themselves on how to deal with trade unionists and on how to implement their own cost-cutting plans.

The lessons include how to tell employees bad news in a considerate way, and how to carry out measures quickly to save factories and improve competitiveness without sparking strikes or making damaging compromises.

The German auto industry has plenty of bad examples.

Opel boss Carl-Peter Forster negotiated with the company's European employees' association for nearly three years -- first about the Project Olympia rescue plan, then about a collective wage agreement and thirdly about spinning off Opel's component plants.

It did not do much good -- Opel will again lose millions this year.

In Ruesselsheim and Bochum, Opel workers fear for their jobs. Workers at Eisenach are temporarily laid off.

Forster now admits he acted too carefully during his first months in office.

In July 2002 he agreed to employees' wage demands and to special payments that he can no longer justify.

In his new position as president of General Motors Europe, Forster has started to tackle the problem of overcapacity and the stubbornness of members of the works council, which represents Opel's employees.

If he had closed an auto or component plant in 2002, he could have spared himself the trouble and probably saved a few hundred million euros.

But two years ago Forster lacked the courage of Louis Schweitzer, who in 1997 closed a Renault plant in Vilvoorde, Belgium, or Carlos Ghosn, who shut down three Nissan plants in Japan in 2001.

Germany's post-war consensus between management and trade unions would not allow such drastic measures.

VW group also has a historical burden to deal with. For many years the company's management did not find the courage to make economically necessary decisions.

The continuous search for consensus resulted in the group moving forward very slowly in an economic context.

Many vehicle projects are behind schedule due to lack of money. Some projects such as the C1 have been cancelled.

In the current wage negotiations between VW's management and the unions, the time has finally come to make hard decisions, not compromises.

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