Close to 50,000 auto workers in the southwestern state of Baden-Württemberg walked out in the country’s first industry-wide strike in seven years, threatening to spread the actions across the country if an agreement is not reached.

Union members stayed off the job at 20 companies in the city of Stuttgart, a union stronghold and a major auto industrial center. The action halted production at plants belonging to the luxury car makers Porsche, Audi, and the Mercedes-Benz unit of the DaimlerChrysler Corporation.

Speaking to 400 strikers at a rally outside Porsche’s plant, IG Metall union president Klaus Zwickel received loud cheers when he said the actions will continue "until we get an acceptable result, acceptable to those who voted to strike."

Warning strikes in the lead-up to the May 6 walkout involved tens of thousands of workers, as the employers stuck to their offer of a 3.3 percent wage increase. The union began with a demand of a 6.5 percent pay hike, but reduced this to 4 percent in negotiations.

Union officials told the press that workers in the industry should not receive less than the 3.6 percent wage settlement awarded in recent chemical industry negotiations. Martin Kannegiesser, head of the employers’ federation Gesamtmetall, said the 3.3 increase represented a "threshold of pain for our companies."  
 
Employers’ stance
The big-business press has closely followed the conflict, since issues of the competitiveness and profitability of major industries in Germany are involved.

"Zwickel won’t get a new offer from us," said Ottmar Zwiebelhofer, the bosses’ chief negotiator, referring to the IG Metall president.

"It’s ridiculous to talk about a 6.5 percent increase at a time like this," said Ulrich Ruetz, a chief executive at an engine parts maker outside of Stuggart, referring to the economic slowdown in the country. "We can shift our work to our plants in Hungary, Ireland, or even south Korea," he said, in a clear threat to the workforce. "We cannot do it in short term, but we can do it."

The International Herald Tribune explained that the European Central Bank (ECB) "has served notice that it is carefully watching the union. Because the union’s contract covers 3.6 million workers--well above the union’s official membership--it is bound to feed wage inflation across a broad swath of the economy." Wage inflation is the capitalist daily’s term for higher wages won by workers.

"Economists and business executives worry that a generous wage settlement for the metalworkers will lead to higher wages for the huge public employees’ union, construction workers and banking workers," wrote the New York Times May 7.

The BBC reported that "pay deals in the metals industry have a wider importance, as they tend to set the tone for settlements in other industries."

"A growing number of executives now say that Germany’s whole wage structure is too rigid," the Times said, pointing to the fact that almost all manufacturing involving metal, from carmakers to machine-tool companies and electronic manufactures, is covered by the single agreement. The pact includes companies employing anywhere from a few hundred to tens of thousands of workers.

The big-business press has noted that the conflict registers a departure from the understanding that has existed between the employers and the trade union officialdom of avoiding confrontations whenever possible. This arrangement has been put under greater pressure as the German bosses seek to undermine wages and working conditions by shifting production out of the country, and by increasingly refusing to be part of industry-wide union contracts.

"The battle lines have become considerably harder this time around," said Heinz Junker, chief executive of Mahle, a large maker of pistons and other engine parts.

In search of lower labor costs the Mahle company has shifted the bulk of its manufacturing elsewhere. While keeping its labor force in Germany at 10,000, it now employs 19,000 workers in other countries where it can pay lower wages.

As the economic crisis has deepened and competition has sharpened, around half of all companies in eastern Germany have abandoned industry-wide collective bargaining agreements. In the two years that followed IG Metall’s last settlement in 1995, when it won a 4 percent pay increase after the workers went out on strike, the companies bound by the contract cut 200,000 jobs.  
 
Huge profits
Union officials have pointed to the huge profits made by the auto companies despite Germany’s economic downturn. Speaking at the rally on May 6, Uwe Huck, the head of the workers council at the Porsche’s plant, said that with a 13 percent profit margin the company can’t say that there is no money.

Although the big auto companies are currently profitable, auto parts makers and smaller manufacturers say they are not doing so well.

"The car companies are pushing the employers’ association to accept an agreement," one executive at a parts company told the Times. "But they won’t let us pass on any of those increased costs to them," he said, noting that the big auto makers have already imposed lower prices on the parts manufacturers.

The International Herald Tribune wrote that "Chancellor Gerhard Schroeder, who has intervened repeatedly in an effort to forestall the strike, could see his reelection results dimmed in September if the economy weakens further and unemployment remains high, pollsters say. The union has thrust him into an almost unwinnable situation. Schroeder, a center-left Social Democrat whose reelection campaign in September relies on unions for support, can neither afford to alienate the labor movement nor to preside over a double-dip recession."

The German Employers Federation has encouraged its members to hold wage increases to 1.8 percent this year, claiming that anything higher will derail the economy. The Tribune concluded that the union needs to reconsider its "ideological adherence to wage equality in the country with the highest wage rates in Europe.... And this is the biggest problem for Schroeder, the German economy and the ECB."  
 
 
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