The Militant - August 6, 2001 -- Drawn by lower wages, German auto firms build plants in east of country

Vol.65/No.30 August 6, 2001

Drawn by lower wages, German auto firms build plants in east of country

BY GREG MCCARTAN
A report on the expansion of auto production in eastern Germany gives information on attempts by the big automobile companies in the country to profit off high unemployment and lower wages in the region.

BMW announced July 18 that it will build a $855 million production plant in Leipzig, the second largest city in the area that comprises the workers state of the former German Democratic Republic. The same day the European Union also gave the go-ahead for the German government to give Volkswagen massive subsidies for building a plant in Dresden that would employ 800. The BMW plant may employ up to 10,000 workers.

"That kind of good news has become rare in eastern Germany, a region suffering from sluggish growth and high unemployment, currently about 17 percent of the workforce," the Financial Times reported. Investments by Porsche, BMW, and GM-owned Opel total $4.2 billion over the last decade. Car manufacturing accounts for 10 percent of industrial production in eastern Germany, employing 100,000.

The auto bosses point to a highly skilled workforce, a plentiful supply of workers, and lower pay than auto workers in the rest of Germany as the main incentives, denying that government subsidies have any role in their decision to move production to the region.

"We have received 8,000 applications for 260 jobs on offer, and the majority of candidates was really good," a Porsche spokesperson said of one hiring session.

A BMW official said, "Concerning flexibility of working hours, we have reached new dimensions." This includes imposing a shift schedule that can fluctuate between 60 and 140 hours a week. Industry officials say they can take advantage of these conditions and still put the "Made in Germany" stamp on their products. Government investment of billions of marks in what the Times called "a state-of-the-art [system of] motorways, roads, railway lines, and airports" gives the companies access to a good transportation system.

As the motivations of the auto giants show, maintaining a differential in wages and working conditions between the "unified" east and west remains a priority for the German ruling class and a central question in the class struggle in the country.

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