Volkswagen workers to face Draconian seven-hour workday

by James Bryant, September 19th, 2006, 7:00 am

Most in the US are well aware of the woes that plague General Motors and Ford Motor Company. They have too many plants, too many workers making too much money, and too few products that can compete with their Asian rivals.

However, some might be a bit surprised to learn that Germany’s Volkswagen seems poised to repeat the mistakes that have driven America’s once proud auto industry nearly to its knees. Volkswagen? I thought Volkswagen epitomized excellence in automotive engineering and Teutonic efficiency. Evidently I was wrong on that.

Volkswagen is an auto worker’s dream. The company offers the best wages and benefits of any car company in the world. In addition to wages that would make any manufacturing worker salivate with envy, VW workers only work 28.8 hours per week. No wonder they have time for things like Bavarian finger wrestling.

Volkswagen is hoping to gain concessions from its IG Metall union-represented workers, specifically the reinstatement of the old 35-hour work week – and this is the really cruel part – without added pay. Naturally, VW workers don’t like that plan, and their jobs are guaranteed until 2011. Despite an apparent impasse, something has got to give. VW’s Wolfsburg plant runs at about 70% capacity and it loses money on every vehicle it builds. This business model is not sustainable – just ask Bill Ford or Richard Wagoner.

To meet its financial targets VW says it needs to trim its labor expenses by $1.27 billion. Union leaders for IG Metall have said they are willing to negotiate on hours if other demands are met – including a new product for the über-inefficient Wolfsburg plant and long-term job guarantees.

Here in the US VW faces some disturbing facts. Because most of the Vee-Dubs sold in the US are made in Germany where manufacturing costs are the highest on earth, VW’s US operations lost over $1 billion last year. In fact, in 2005 VW lost more per car in the US than GM did. Unlike its Asian rivals VW doesn’t have relatively cheap US plants. Why not? Because keeping those jobs in Germany is a hot-button political issue in places like Lower Saxony, the government of which happens to control a 14% stake in VW.

So what’s a German auto worker to do? I’d suggest biting the bullet and putting in a grueling 35-hour week. Either that or wind up like the former Ford and GM workers hitchhiking down to the Nissan factory outside Nashville, Tennessee.