风萧萧_Frank
以文会友
Why German Economy Can Fly Against Economic Recession
Frank February 16, 2014, Updated Sep. 17, 2017 in Waterloo, On. Canada
http://www.kwcg.ca/bbs/home.php?mod=space&uid=61910&do=blog&quickforward=1&id=3788
http://frank-waterloo.blog.163.com/blog/static/20523902920141167427368/
Never follow others; going on own way, make German economy fly against economic recession.
I remember that Professor Zhang Weiwei at Fudan University of Shanghai China once said that, the German Chancellor Angela Merkel asks a German economist, why do we have no world-class economist that won the Nobel Prize? The economist answered; please do not worry, if there is the world-class of economist, there will be no first-class economy.
--- Frank, Sep. 17, 2017 in Waterloo, On. Canada
Germany may be one of the few rich countries relying on the hard working rather than that of natural resources, which has attracted great many people to explore the secrets. However, most of them have focused on the macro policy with ignoring the micro details, such as, the Robert Bosch GmbH, a German Company ranked 131 in 2013 global fortune 500:
In 1930s, it once listed, but to be delisted by the founder Robert Bosch since he found many fatal hazards as a listed Company, especially that dividend makes staff lazy.
The wages of the Board members are lower two salary grades than that of the general operators who are working in the production line.
I do not know whether it is universal in the Companies of Germany? However, even as an occasional individual case, the wise approach of the Robert Bosch is enough to be awe-inspiring. It shows the rational of Gemans.
Here, I am trying to dig some trivia that is often to be unseen or to be seen but to be treated as not worth to mention. I believed that those are easily despised or neglected by others, are just precisely the most important. They are the true reasons or may be called as DNA that Germany has been success outstanding.
--- Frank Feb. 23, 2014 in Waterloo, On. Canada
Content
The motivation of the topic
1. German has Civilized Labor Unions as Works Council
2. The Rational Macroeconomic Policy of Germany
3. The DNA of the Success of German Manufacturing
4. Delisted, since public financing has fatal hazards
5. Board members' wages lower than that of general operators
6. Legislated Vocational Training System
7. Family businesses firmly rooted in Germany
8. Many invincible SMEs with leading global technology
9. Germany: national organized R&D ensures competitiveness
9.1. Enterprises are the main body of scientific research
9.2. R & D, Gov collaborates with civil organizations
9.3. The unique management of research funds
9.4. The audit of the research project
9.5. The supervision of the research projects
10. To provide comprehensive after-sales service
11. Boosting employment by creating low-income jobs
12. Stringent government and Rigorous steady administration
13. The industrial and commercial centers throughout the world
14. German co-operates with Russia not sanctions on Ukraine crisis
Some reports regarding Germany
......
More coming soon, I am Googling.......
<<<<<<>>>>>>
The motivation of the topic?
In the morning, Feb. 16, 2014, I happily read the article , and produce a feeling that smart Germans civilize Americans to stop their semi-civilized behavior of chiseling holes on own lifeboat.
I am too excited and think of a lot about the wisdoms of Germans with strong desire to speak out.
1. German has Civilized Labor Unions as Works Council
Feb. 09, 2014, in the article <Management is the Art of Playing Human Nature>, I indicate that the Enterprise is as same as that of lifeboat to be shared by owner and employee to struggle for survival.
But, the Labor Union organize labors against business owner irrationally to play a negative role of chiseling holes to sink own lifeboat.
In the early initiation stage of the Labor Union, it played a positive role in protecting the rights of the labors in the chaotic years of lack of legal regulation. But, today, governments have well legislated for protecting the rights of the labors with the support of thoughtful social welfare. The existence of the Labor Unions has lost the positive significance.
I am not intended malicious criticizing Unions at all, indeed, I appreciate the kind intention of the Labor Union to protect the interests of the labors.
However, in nowadays, with a great good will, the outcome of the Union's efforts is detrimental to the interests of the labors to cause losing more with playing a disservice role. Such as that, once business failure, the Unions' members are also out of work without job to make livelihood for their families. It is not easy to get new job in nowadays economic downturn times.
The facts have proved that the historical mission of the Labor Union has completed, it should go to enjoy rest in the grave.
Though, what happened in Olkswagen's US was the will of the staff from local Americans, but, the positive impact of the German corporate culture can not be neglected. It is that smart Germans bred Americans into fully civilized from semi-civilized state.
In Germany, there also similar organization - Works council as that of Labor Union in North America, but, the initial purpose and actual effect has essentially different. In Germany, it is mainly for promoting workers to participate in management of the companies they work for, and helping full exertion of workers' intelligence.
Canada, as a country of North America, there is Labor Union similar as that of in the United States, but, even worse with own unique fatal DNA.
Recent years, in Canada, there more and more businesses are failed. The most of failures have the fatal impact of the Labor Union or the impact of the workers' ideological from Union's Culture.
In view of this, according to my personal experiences from intended working in the different types of enterprises of Canada in the past 12 years, I have written many articles to talk about business management, especially, with the purpose of reversing the absurd corporate culture.
Following are some of my articles.
<The Fatal DNA of Canadian Company>
<Management is the Art of Playing Human Nature>
<My View on the Argument of Social Polarization>
<My view on Entrepreneur and Enterprise inspired by Peter Shoore>
<The DNA of the Success of German Manufacturing>
<Canada's Corporate Management & Reducing Psychological Pressure in Workplace> (CCMRPPW).
I have a long-standing impression that German is the most rational on this Earth. Also, I have a lot of memories about their samart approaches in many aspects.
But, now, I would like to focus on economy and corporate management.
2. The Rational Macroeconomic Policy of Germany
In the last century, after the U.S. President Roosevelt successfully saved the Great Depression by the means of the government intervene in the economy, the most of countries take Keynesian theory, such as, Fiscal Deficit, as the magic to sitimulate their economy. Now, most of them are debt-ridden, and some of them become losers with bared buttocks and broken spine.
However, at that time, rational Germans did not silly go with the flow. May be that they have foreseen that Keynesian Fiscal Deficit is the economic heroin with instant excitement, but long-term fatal. So, they adopts own Freiburg School neoliberal theory that can sustain for long-term stable development.
Now, nearly 80 years practice has shown that the choice of Germans is smart prescient.
Feb. 9, 2014, in the article <The Fed's waning magic in the age of Yellen>, the writer Edward Luce said that: "Every chairman of the US Federal Reserve seems to get hit by a crisis in their first year. Whatever might blindside Janet Yellen, she starts off with a problem that affected none of her predecessors: the Fed has run out of ammunition. Moreover the one remaining weapon the Fed thinks it has – the hocus-pocus of 'forward guidance' – is a gun that fires blanks."
Many facts show that Fiscal Deficit is not only has lost its positive effect, but also has become economic heroin, and the addiction is quick growing in most of countries. Great many countries have become drug addicts, if, stop using drugs, they certainly cannot stand. However, if, continue in drug use, destined to premature death. Now Fiscal Deficit has become unbearable economic nuisance.
However, those are not the fault of the great Keynes, but the fault of the dogmatists of the policy makers, and the ignorance of the governors. They can only draw a tiger by copying home-cat, but they never have ability to independent think according to the actual objective situation in changing constantly.
As my view, one kind of medicine corresponds to one kind of disease, the disease has changed, and the good medicine may become deadly poison.
Nowadays, compared with that of formation period of Keynesian theory in before and after 1930s, the big changes in the economic structure, the large increase in the economic capacity, the over triple times increase in the population, and the bestial mad plunder of over-developed Financial Economy to the Real Economy, especially, the rapid free flow of the large amount of international hot money that large enough to destroy the economy of a nation, and the access is as easy as that of just a finger click.
International situation has undergone earth-shaking changes; however, the governments worldwide are still dogmatically continuing Keynesian economic theory that developed under old situation and certainly is not suitable for new problems.
In the article <The Precious Legacy that Keynes Left to Us>, I said that:
"In my view, the greatest contribution of Keynes was not the The General Theory of Employment, Interest and Money but The end of laissez-faire." "The way of his bold but sensible questioning about orthodoxy with advancing ideological could help us to advance the way of our thinking, and avoid to fall into the trap of dogmatism, it is the prerequisite to do any thing correctly."
"The world is in constantly developing, the objective conditions are constantly to be changed, and the nature of the problems will be changed, too. Only boldly breaking the restraints of old ideological frame, the horizons of vision is able to be expanded, the new innovative ideas can be find, the innovation is able coming true. So that, when facing particular new problems, we can quickly identify specific new solutions."
"This the Precious Legacy that John Maynard Keynes Left to Us."
We are aware that, the Fiscal Deficit has caused the European Sovereign Debt Crisis, and the Freiburg School neoliberal theory helps industrious Germans playing a role as that of the savior for those European losers under Sovereign Debt Crisis.
Facing new social and economic issues, in 2003, Germns timely develop new solution <Agenda 2010> with aimed at reforming the German social system and labour market to improve economic growth and thus reduce unemployment.
Of course, Germans is success again with new economic miracle.
Mar. 19, 2012, Thomas Schulz published article <'We Need To Learn from Germany': How the German Economy Became a Model?>.
“It wasn't so long ago that many viewed Germany's economic model as outdated and the country as the "sick man of Europe." These days, however, even the Americans have come to praise parts of it, though they still doubt whether they would be able -- or willing -- to adopt it wholesale.”
Googling, you will find a lot such reports of recognition.
3. The DNA of the Success of German Manufacturing
Now, let's look at the smart of Germans in terms of corporate management.
In May 28, 2012, I once wrote an article <The DNA of the Success of German Manufacturing> with that, the driving force for German outstanding manufacturing mainly comes from their legislated management for rationalization proposals, which is with profit-related bonus to motivate all of staff to pay their full talent into the business running.
The idea was initiated as earlier as 1872 by Mr. Friedrich Alfred Krupp who was the owner of German steel manufacturer of the company Krupp. Now, in all German businesses, their staff can use computer network systems to easily submit or query their rationalization proposals.
4. Delisted, since public financing has fatal hazards
In the article <Dividend Makes Industrious German Lazy> I introduced with that:
"Robert Bosch, the German industrialist, engineer and inventor. He has found the Robert Bosch GmbH in 1886. His philosophy is that ;we should all strive to improve current situation.'”
"As that of general popular practice of business operation world widely, in 1930s Robert Bosch GmbH once had listed and gave the stock to the management team. After a while, Mr. Robert Bosch found the top mangers changed their habit and attitude, they went to lazy and not work as hard as before. The dividend income encouraged them paying attention on enjoying life. So Mr. Robert Bosch changed his mind to have bought back the stock and delisted."
"At that time, only three people knew this secret, and it was disclosed until recently by Mr.Franz Fehrenbach, the former president of Robert Bosch GmbH, (the incumbent president isVolkmar Denner since July 1,2012) when he was accepting the interview of talk show of China Central Television in May 20, 2012." The name and the link of the video is as follow:
Decoding the successful Gene of made in germany (Translated from Mandarin)
http://www.youtube.com/watch?v=c59dM6AYTXI
Note: the Moderator presided in Mandarin, but the answer of Mr. Franz Fehrenbach in English, which revealed a lot of secret detals in Macro and Micro management in German manufacturing sector, it has high reference value.
"The delisting has played a positive effect to the development of the enterprise. The interview also has revealed that Robert Bosch GmbH is ranked at 119 in the world’s top 500 enterprises. The sales revenue is 50 billion euros, in which the profit is about 8%. It is inventing 16 patents a day. Its technology is playing a role of determining the level of the development of the automotive industry of the world and is earning most of the profits of the vehicle manufacturing."
"Mr. Robert Bosch also summarized other bad effects as listed Company."
"1. Loss of autonomic power in decision-making."
"2. Loss of autonomic power in financing."
“3. The pursuit of the stock market value will be made fall into a short-term behavior in business running, to affect long-term development investment."
"4. Listed Company can not keep excellent CEO, they may be ousted due to poor short-term profit caused by focusing long term investment. Some prospective researches may need long time to reach practical results, such as, 5 years, 10 years, even more."
5. Board members' wages lower than that of workers
In above interview, when talking about the payment, Mr. Franz Fehrenbach said that, the workers in Robert Bosch GmbH belong to the Metal Union, the salary is highest in the Germany compared with other industry or Unions, The wages of the Board members lower two salary grades than that of the workers. We think that amount of payment is enough and reasonable. After heard what he said, the onsite audience were laughing loudly with unbelieving look, Mr. Franz Fehrenbach immediately explained with that: this is not a joke, it's true. Our annual report has this information; you can find the payment of each board member.
I think that, besides Germans, for any people in any countries, the wages of the Board members lower than that of their workers is incregible, not mention that even lower two salary grades.
In my memory, German Chancellor Angela Merkel is the first Head of State to criticize the unreasonable high payments of the corporate executives.
Feb. 17, 2014, morning, I read article <Dell finally goes private, delisted Tuesday, Oct. 29, 2013>. It shows the smart of Robert Bosch of the founder of the Robert Bosch GmbH.
6. Legislated Vocational Training System
The success of German-made, thanks to their excellent industrial workers, and all this, thanks to its unique system of vocational training. I admire the smart cost-calculation methods of German companies fund vocational training.
Following is reproduced from article <The German Vocational Training System: An Overview>.http://www.germany.info/Vertretung/usa/en.html
"The German vocational training system, with its combination of classroom and business, theory and practice, learning and working, is recognized worldwide as a basic and highly effective model for vocational training. The dual system is firmly established in the German education system, having, as it does, firm roots dating back to the Middle Ages. An essential characteristic of the dual system is the cooperation between largely private companies, on the one hand, and public vocational schools, on the other. This cooperation is regulated by law."
"In Germany, more than 50 percent of all students who were college-bound in high school but decided against university apply for vocational training, and many companies participate in vocational training. Companies provide training voluntarily, and often at their own expense, because they believe that this is the best way to meet their own need for skilled staff. Private companies bear two-thirds of the total costs spent every year on (initial) vocational training in Germany – costs which amount to an average of 15,300 euros per trainee per year. Businesses that take part in the practice consider training their own new employees the best form of personnel recruitment. Training companies save on recruitment costs and the cost of new-employee training. They also avoid the latent risk of hiring the wrong employee for the job. The main benefit for trainees is receiving market-relevant training that improves their chances in the labor market while simultaneously improving social skills and developing personality. Finally, the state, too, benefits from the dual system through easing the burden on public budgets by participation of the enterprises and by keeping the workforce up to date."
7. Family businesses firmly rooted in Germany
This section is the excerpt translation of Oct. 23, 2013 in Mandarin, the link is as follow.
http://bbs1.people.com.cn/post/2/0/2/134446028.html
In Germany, there about three million companies, 99% are SMEs, most of which are family businesses. For family businesses, the honestly operation of the company is all of their work. While in the UK, a company may already involved in the capital markets, there may be financing from big business, and then one day decided to close the plant in the UK, to move their production lines overseas. In Germany, the family business is the life of the family, the families remain in Germany, and the companies will stay in Germany.
Most of German family businesses have a strong capital base, so no need for public financing in the stock exchange. Therefore, no need to have to adjust according to the situation of the stock market quarterly, but to develop long-term goals to achieve it step by step without rush. This ensures the business plan from a long-term focus to avoid the negative impact of excessive scale expansion to the enterprise.
8. Many invincible SMEs with leading global technology
This section is the excerpt that translated from an article in mandarin, the link is as follow.
http://finance.sina.com.cn/economist/jingjiguancha/2007.shtml
Germany has a lot of Small and Mid-sized Enterprises - SMEs. They are mostly very professional to focus on one or several products, they are keeping update to get competitive advantage of not being exceeded in the international market.
Germany has a large number of companies following the Volkswagen, BMW, Mercedes-Benz came to China, which including parts, switches, steering wheel, wires, spark plugs, and more. Similarly, Siemens and other big environmental energy companies have brought their supporting enterprise community into Chain.
9. Germany: national organized R&D ensures competitiveness
This section is the excerpt translation from July 31, 2012 in Mandarin, the link is as follow.
http://www.chinatopbrands.org/a/pingpai/ppb/20120731/4104.html
Note, before as an independent technical immigrant into Canada, I was working in a research institution of China, with a deep feeling of that, because the particularity of research activities, the waste of research funds is widespread, also, it is difficult to control the results of the researches, which leading to low efficiency in research funds using. I think that for Canada will be also, with no exception. The management approaches in Germany may provide a good inspiration.
The success for Made in Germany comes from its efficient operation of the well co-ordinated multi-level scientific research system.
9.1. Enterprises are the main body of scientific research
In Germany, enterprises have been the main body of scientific research. In 2010, the total investment in R & D from German companies is 49 billion euros which accounting for 70% of the total research investment.
Generally, German large enterprises establish R & D department to hierarchical carry out research activities. The researches focus on exploring strategic technologies to develop autonomy innovations.
In Germany, the R & D investment of SMEs is relatively small, about 8 billion euros per year. But German government and funding agencies provide a variety of funding support at all levels, or joint R & D projects. The cooperation of SMEs with universities and research institutions are common and depth.
In overall, the vitality of German enterprises' innovation comes from its advantage of the overall research system. The research bodies at all levels focus on enterprises' innovation through reasonable cooperation to have achieved good results.
9.2. R & D, Gov collaborates with civil organizations
In R & D, Gov collaborates with civil organizations, due diligence respective responsibilities. The government constantly improves the laws and regulations to timely introduce innovative incentives for innovation to have played "escort" role with providing financial support to enterprises and research entities. In recent years, the average investment is about ? 20 billion or so. To promote technical standardization is also the focus of the government to aim at grasping the speak right in the industries, to help German companies take the initiative.
Between decision-making and executive departments, there is an Advisory Groups that formed by German Science joint conference, Scientific Committee, and Academy Alliance, etc. With the background of comprehensive understanding of the national research and education, to make recommendations to government on the development strategy and major project, as an important link between the government and the research subjects.
9.3. The unique management of research funds
In the management of research funding, Germany has a number of large-scale professional research funding organizations, for example, the German Research Association and other public institutions.
They get a lot of money from government each year, and then allocating the funds based on national strategy by their profound understanding for the forefront of the technology trends with professional decision-making, which can effectively improve the efficiency of R & D funds allocation.
Also, the private research funding agencies are financially strong with according to their own preferences to fund research subject or scholarships, to play a useful supplement to public research funding.
9.4. The audit of the research project
In Germany, research activities have a relatively sound and fair rules, the management for research project is more scientific.
Everything speaks depending on the strength of the project. The healthy competition promotes scientists to concentrate on their researches full-heartedly.
In Germany, the experts of project audit committee are merit-elected by government commissioned agencies. The members must have no benefits association with the project applicant. As long as the project is superior enough, the applicant will surely win.
9.5. The supervision of the research projects
In scientific management, the government focuses on the fair and transparent of the selection process, but, rarely involved in the actual operation, to commission independent professional service provider to take charge for coordination and supervision.
Those professional service providers is the major feature of the German research system, in Germany, there are about 20 such service providers, better known is Jülich Research Center, DLR research institute. Their position is independent academic agency to sign contracts on specific projects with government, according to the authority responsible to manage the project in pre-assessment, quality control, regulatory progress, application promotion and public relations work.
The management teams generally submit progress reports every six months to the management, and conduct a comprehensive annual general report, management staff will regularly visit the laboratory, enquire about project progress. Because managers are also professionals, so communication is often smoothly.
10. To provide comprehensive after-sales service
This section is the excerpt translation of Oct. 23, 2013 in Mandarin, the link is as follow.
http://bbs1.people.com.cn/post/2/0/2/134446028.
German companies are not only producing high quality products, the label of Made in Germany are included a range of ancillary services elements: "after the sale of a machine, the company is also responsible for the installation, to train operators for buy-side firms, 24-hour service hotline. The ultimate effect is to achieve fully guaranty of the machine effective functioning.
11. Boosting employment by creating low-income jobs
This section is the excerpt that translated from an article in mandarin, the link is as follow.
http://finance.sina.com.cn/economist/jingjiguancha/2007.shtml
German job market has created a miracle in the history of the Federal Republic while the unemployment rate continued to rise to the record levels in the neighboring countries.
This success thanks in part to government launched Schroeder labor market reform so-called "Agenda 2010" in 10 years ago, in which, the key is to create low-income working class with withdrawal of the job market regulation to increase the flexibility for creating more jobs. of course, it promotes the emergence of a lot of low income work.
12. Stringent government and Rigorous steady administration
The section in the excerpt translation of that published in Oct. 13, 2013 in Mandarin, the link ia as follow.
http://bbs1.people.com.cn/post/2/0/2/134446028.html
Try to improve by small modification in step by step to avoid radical changes as that of the "Agenda 2010". if we seen the whole of Germany as a huge business, then this can be regarded as their usual mode of operation.
In Germany, a broad social consensus is that uses the perspective of engineering to look at a lot of things, such as, the political system, is like a gear set, on the whole legal basis, the different administrative bodies are interlocking in each other and mutually reinforcing.
13. The industrial and commercial centers throughout the world
German government has established the industrial and commercial centers around the world. They are the organization to provide help for German SMEs world widely.
14. German co-operates with Russia not sanctions on Ukraine crisis
When some countries have recklessly insisted to sanction Russian on Ukraine crisis, German shows exceptionally rational and thoughtful with deliberately consider the economic consequences.
May 18, 2014, report <'It's a dead end': German FM joins chorus of discontent over Russia sanctions rhetoric> said that:"German Foreign Minister Frank-Walter Steinmeier has called for restraint in imposing new sanctions on Russia, as politicians, businesses and the general public in Germany grow ever more skeptical of putting more pressure on Moscow.""The idea of slapping Moscow with any further restrictions appears to be lacking popular support in Germany
May 13, 2014, Germany Pushes Western Effort to Mediate Ukraine Crisis.
May 11, 2014, German ex-Chancellor Schroeder defends party with Putin ; says sanctions, isolation pointless.
Some reports regarding Germany
Olkswagen's US workers vote against joining union
15 February 2014 Last updated at 00:16 ET
http://www.bbc.co.uk/news/world-us-canada-26203784
Some 1,550 people work at Volkswagen's Chattanooga plant, which is the company's first US facility
Can the Germans save US labour?
In a surprise move, US workers have voted against union representation at a Volkswagen car plant in the southern state of Tennessee.
The vote derails efforts by the United Auto Workers (UAW) to organise foreign-owned factories in the southern US.
Experts had expected the ballot to pass in favour of unionising, after Volkswagen tacitly supported the move.
The vote had faced resistance from Republican politicians, who argued it would slow economic growth.
It was the UAW's first attempt in 13 years to unionise a plant not run by one of the three big US carmakers - General Motors, Ford, and Chrysler.
Analysts say the result could significantly curtail future organisation efforts and further dent the union's reputation.
Membership is reported to have plummeted 75% since the late 1970s, leaving it with barely 400,000 supporters.
'Outside influence'
Some 1,550 workers began voting at the plant in Chattanooga on Wednesday and rejected the union plan by 712 to 626 with an 89% turnout.
UAW spokesman Gary Casteel said "some outside influence" had been exerted on the poll.
The Center for Worker Freedom purchased 13 billboards in Chattanooga opposing the vote
"There are still some issues that have to be sorted out about this election, and we'll let the people that do that evaluate the impact of others and whatnot further down the road," he said after the result was announced on Friday night.
Some believe the loss will make it harder for the UAW to recruit members at other southern plants.
Go South
Eight plants have been opened by foreign car makers in the US in the past decade. With the exception of a Honda plant in Indiana, the rest have chosen to open in Southern states with right to work laws. They are:
Nissan - Mississippi
Toyota - Mississippi and Texas
Hyundai - Alabama
Honda - Alabama and Indiana
Volkswagen - Tennessee
Kia - Georgia
"If they can't win this one, what can they win?" asked Art Schwartz, a former General Motors union negotiator following the vote.
The push for organisation started after Volkswagen opened its only US facility in Chattanooga in 2010.
The manufacturer's 61 other plants around the world have so-called "work councils", which represent employees' interests in daily dealings with management.
Mandated by law in Germany and popular in other European countries, works councils have never been tried in a US factory.
Prior to the ballot, VW's Chattanooga chief executive Frank Fischer said in a statement: "Our plant in Chattanooga has the opportunity to create a uniquely American Works Council, in which the company would be able to work co-operatively with our employees and ultimately their union representatives, if the employees decide they wish to be represented by a union."
Conservative groups had lead a fierce anti-union campaign in the lead-up to the ballot.
Opponents warned it would jeopardise Volkswagen's tax incentives and hurt the local economy by scaring away business.
Low wages have long been a selling point to lure big firms like Nissan and Boeing to the US south.
13 February 2014 Last updated at 20:01 ET
Can the Germans save American labour?
By Kim Gittleson BBC business reporter, New York
http://www.bbc.co.uk/news/business-26181511
Workers at a Volkswagen car plant in Chattanooga, Tennessee are poised to make US labour history.
In a move that could reverse 70 years of Southern factory work, they're on the verge of unionising - a feat in a part of the US where collective bargaining has generally been shunned and low wages have long been a selling point to lure big firms like Nissan and Boeing to the region.
About 1,550 workers at the plant - which makes the mid-size Passat for Volkswagen - began voting on Wednesday in an election that concludes on Friday.
If a majority vote in favour of a proposal to join the United Auto Workers (UAW) union, it "would be a radical departure from the past approach in the South to economic development," says Vanderbilt University's professor Daniel Cornfield.
Moreover, it would be a particularly German approach to collective bargaining, with workers given more control over day-to-day management through "work councils".
Chris Brown has worked at the VW facility for three years
But what many are hailing as a potential victory for organised labour is sending shivers throughout Republicans and the business community in Tennessee.
"Businesses are choosing to move to [non-union] states for obvious reasons and I think we can expect if the UAW wins this election that other states and other communities are going to try and take" business from Tennessee, says Maury Nicely, a representative of Southern Momentum, a coalition of anti-union workers at the Chattanooga plant.
First of its kind
Although the vote was scheduled just last week, the push for organisation started a few years after Volkswagen (VW) opened its only US facility in Chattanooga in 2010.
Chris Brown, 38, was one of the very first to apply for a job at the plant.
"I had always wanted a job working in auto manufacturing but there wasn't any facility down here," he says. We're hoping this will open up a new era in the south”
"I remember the day I read about [VW opening a plan] in the newspaper I thought this is amazing - I applied and VW saw fit to hire me."
But despite his enthusiasm for the job - he works on the assembly line applying the finishing touches to the vehicles - he thought it might be better if there was a structure in place for workers.
So Mr Brown and a fellow co-worker met with representatives from the UAW - and that's when they discovered that the other 61 VW plants around the globe have "work councils".
"A works council is elected by the entire workforce. It then has daily interactions with management around problem solving, production and personnel issues, labour standards," explains Cornell labour historian Lowell Turner.
Mandated by law in Germany and popular in other European countries, works councils have never before been tried in a US manufacturing facility.
"American companies don't even know anything about works councils, don't want to know anything about works councils, and are resistant to unions," explains Prof Turner.
Now, he and his fellow supporters have spearheaded the first attempt in 13 years to unionise a plant that is not run by one of the three big US carmakers - General Motors, Ford, and Chrysler.
"This model has never been here before - we're hoping this will open up a new era in the south," he says.
German roots, American expression
But VW, of course, is not a US firm.
And in a departure from other foreign car manufacturers who haven't taken kindly to organisation efforts, VW has remained "neutral" on the UAW's push.
In a tacit show of support, Volkswagen Chattanooga chief executive Frank Fischer said in a statement: "Our plant in Chattanooga has the opportunity to create a uniquely American Works Council, in which the company would be able to work co-operatively with our employees and ultimately their union representatives, if the employees decide they wish to be represented by a union."
But not everyone is looking to usher in this new era, particularly with its European associations.
"This all emanates from Germany," says Mr Nicely, who says the workers he represents think that the plant has been a success story without union help.
Others opposed include anti-union Republicans like Grover Norquist, who has spent millions opposing the campaign through an organisation called the Center for Worker Freedom, which has bought 13 billboards in Chattanooga.
Even Tennessee Senator Bob Corker, a Republican who played an instrumental role in securing VW's business by luring the firm with over $500m in incentives, has spoken out, saying it could hurt the local economy by scaring away business.
Sen Corker said on Wednesday that VW would decide to produce a new sports utility vehicle in a plant in Mexico if the union vote was successful, although VW later denied this would be the case.
Supporters hope that if the measure passes, it could serve as inspiration for other factories in the South
A new model
The results of the election are set to be released later on Friday.
A failure in Chattanooga would almost certainly damage the UAW and could significantly curtail future organisation efforts, as a failed attempt to organise at a Nissan plant in Smryna, Tennessee, did in 2001.
But a victory - particularly one that has at its core a commitment to German-style labour relations - could have far reaching implications for workers across the US.
"American workers for the first time are getting the opportunity to vote for union representation that would also include a German-style works council," says Prof Turner.
"If it works then we have a new model to draw on that could serve as an inspiration for other companies and unions around the country who are looking for new model of labour relations."
German economy's flying again. Did goverment money fuel it?
By Stefan Karlsson, Guest blogger / August 29, 2010
When GDP fell, the German government boosted spending. But when GDP started rising, government reined in spending. Sorry, Keynesians. - -- Stefan Karlsson
Professor Manfred Hegger from the Darmstadt University of Technology (left) shows German Environment Minister Norbert Roettgen (second from left), Chancellor Angela Merkel, and Economy Minister Rainer Bruederle a solar-powered energy house Aug. 27. Some attributed the strength in Germany's economy to higher government spending. But the data shows something different.
Mario Vedder/Pool/Reuters
After the extremely strong German second quarter growth number, and the weaker American one, Germany seems to have become the great role model in terms of achieving growth. This is kind of strange since a lot of countries both in Europe and elsewhere have had stronger growth (It would be more understandable to view it as a role model in holding down full time unemployment, but that has little to do with growth and more to do with its work sharing scheme).
Now Dean Baker tries to attribute the strong performance on increase in government purchases (which is not entirely synonymous with government spending since it excludes transfer payments). Baker says that since 2008, government purchases has increased more in Germany than in the United States, something which he claims disproves David Brooks suggestion that government spending increases don't boost overall growth.
But if you study the data more carefully, you can see that Brooks’s argument is actually more consistent with the data than the Keynesian argument advanced by Baker and others.
First of all, it should be remembered that the German slump was actually somewhat deeper than the American one. Between the first quarter of 2008 and the second quarter of 2009, GDP fell by 3.9% in the U.S. and by 4.4% in Germany*. Then in the three following quarters, U.S. growth was higher, 2.6% versus just 1.5% in Germany. Thus between the first quarter of 2008 and the first quarter of 2009, GDP fell by 1.3% in the U.S. compared to 2.9% in Germany.
How did government purchases develop in the two countries between Q1 2008 and Q1 2010 then? It rose by 2.8% in the U.S. and by 6.6% in Germany. Thus it is true that during the period when growth was weaker in Germany, German government spending rose more.
But what about Q2 2010 when German GDP rose by 2.2% while U.S. GDP rose by just 0.4% compared to the previous quarter? Well, during that period real government purchases rose by just 0.5% in Germany and by 1.1% in the U.S**.
Thus, during the period German government purchases grew more, its GDP was weaker, while during the period German government purchases grew less, its GDP was much stronger. Meaning that the actual correlation between government purchases and GDP has actually been negative, not positive as Baker and other Keynesians claim.
BTW, Krugman again invoke Hoover in this debate as an alleged example of a budget cutter, despite the fact that real government purchases actually rose by 11.0% between 1929 and 1932, with federal government purchases alone growing 18.1% between 1929 and 1932.
*=Note that the German recession ended a quarter earlier so to make the numbers comparable I have included that first recovery quarter in the "recession"-period.
**=If you visit the source pages that I link to, remember that quarterly growth is expressed differently in America and Europe.
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Eurozone economy shrinks. Germany ekes out growth.
Eurozone conracts by 0.2 percent for the second quarter. Germany manages a slightly better-than-expected 0.3 percent, while debt-laden euro nations shrink.
By Ben Deighton and Sarah Marsh, Reuters / August 14, 2012
In this February file photo, workers build Ford Fiestas at a Ford factory in Cologne, Germany. Germany's economy, Europe's largest, grew a larger-than-expected 0.3 percent in the second quarter as consumer spending and strong exports helped stave off effects of the eurozone debt crisis, the Federal Statistical Office said Tuesday, Aug. 14, 2012.
Frank Augstein/AP/File
BRUSSELS/BERLIN
The euro zone's debt-ravaged economy shrank in the second quarter, having flatlined in the first, despite continued German growth which economists said could soon be snuffed out.
The 17-nation currency bloc contracted by 0.2 percent on the quarter, data showed on Tuesday. Germany eked out growth of 0.3 percent, marginally beating forecasts, but its forward-looking ZEW sentiment index slid for a fourth month running, undercutting even the lowest estimate in a Reuters poll.
Economists said worse is likely to come and even Europe's largest economy is unlikely to defy gravity for long unless decisive action is taken to tackle the bloc's debt crisis.
RELATED: The eurozone crisis in five simple graphs
"Growth turned out to be pretty solid. But this could be the last positive piece of news out of Germany for some time," said Joerg Kraemer at Commerzbank. "The German economy could contract in the summer. It is fundamentally in good structural shape, but can't decouple from the recession in the euro zone, plus the global economy has also shifted down a gear."
Aside from a downward blip in the last three months of 2011, the euro zone has posted pretty consistent, albeit anaemic, growth over the past three years although some of its debt-laden members have been in recession for some time.
"It was a touch better than we expected, but I think overall it confirms the idea that the euro zone is in a recession phase," Aline Schuiling, economist at ABN AMRO, said of Tuesday's data.
"What we see is a vicious circle of budget cuts, high interest rates in the periphery and sovereign debt rising," she said. "Policymakers are moving very slowly. There are limited prospects for growth in the euro zone. We expect another contraction in Q3."
For France, it was the third consecutive quarter of zero growth. The central bank has already said it expects a mild contraction in the third quarter.
"These figures are not excellent, but at the same time France is not in recession while the majority of its European partners are," Finance Minister Pierre Moscovici told Europe 1 radio.
Safe-haven German Bund futures fell and European stocks rose after the slightly stronger than expected German and French GDP reports but the euro dipped against the dollar after the ZEW survey came in worse than expected.
The think tank's monthly poll of economic sentiment slid to -25.5 from -19.6 in July. ZEW economist Christian Dick said the German economy would slow due to weak growth in its main export markets, but would not deteriorate sharply.
Austria and the Netherlands almost matched Germany's performance, each posting growth of 0.2 percent. Economists surveyed by Reuters had expected the Dutch economy to shrink 0.3 percent.
Finland, one of Germany's northern European allies in pushing for austerity, suffered a 0.7 percent year-on-year fall in GDP.
SOUTHERN PAIN
For the currency bloc's members at the sharp end of its debt crisis, the picture is bleaker still and as economies shrink, so do tax revenues, making deficit-cutting even harder to achieve.
That has fostered a growing debate inside and outside Europe about the sense of austerity drives.
Bailed-out Portugal's recession deepened with GDP diving by 1.2 percent on the quarter andCyprus contracted by 0.8 percent.
Figures released on Monday showed deficit-cutting measures helped to shrink Greece's economy 6.2 percent year-on-year in the second quarter. Economists say the slump will persist as the government scrambles to secure billions in additional cuts to keep bailout funds flowing.
Italy's second quarter data last week showed the economy contracted 0.7 percent quarter-on-quarter, compounding the difficulties for Mario Monti's technocrat government as it tries to avoid a bailout.
Spain's economy shrank 0.4 percent over the same period, pushing it deeper into recession, according to figures out two weeks ago.
The big unanswered question is whether a weakening economy will make Germans, the EU's paymasters, less likely to support government rescue efforts for the broader euro zone.
German Chancellor Angela Merkel has said repeatedly over the past year that she will do everything to save the euro, most recently after the European Central Bank signalled it would intervene in the bond market to lower Spanish and Italian borrowing costs.
Not all Germans support that course and the chancellor's room for manoeuvre appears to be shrinking at a time when both Greece and Spain may soon require new rescues. However, if ordinary Germans start to feel real economic pain, their response could be to demand their leaders sort out the crisis that is now finally knocking at their door.
Spanish and Italian bond yields have steadied since ECB President Mario Draghi promised to do whatever it takes to save the euro zone. It is quite possible that Madrid and Rome will seek help from the euro zone's rescue funds and the ECB before the year is out.
"It remains decisive whether the euro crisis can be controlled. We expect that the ECB has initiated a turning point with its signal of bond purchases," said Christian Schulz, economist at Berenberg Bank. "After a weaker summer the German economy will be able to grow faster again from the fourth quarter."
RELATED: The eurozone crisis in five simple graphs
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EU says eurozone economy will shrink this year
Merkel says Europe ready to act as big downgrade hits Spain
With Germany finally on board, EU can now go beyond just cuts
U.S. minimum wage hike could cost 500,000 jobs, CBO says - CBC
16.5 million to benefit from hike to $10.10/hr
Thomson Reuters Posted: Feb 18, 2014 2:56 PM ET
http://www.cbc.ca/news/business/u-s-minimum-wage-hike-could-cost-500-000-jobs-cbo-says-1.2542202
Raising the U.S. federal minimum wage to $10.10 an hour from the current $7.25, by late 2016. It could result in about 500,000 jobs being lost by late 2016, the Congressional Budget Office (CBO) estimated on Tuesday.
