Strikes halt production at three BMW plants

Tuesday, June 24, 2003

FRANKFURT, Germany -- Strikes for a shorter work week in depressed eastern Germany rippled into the country's economically dominant west Monday, forcing automaker BMW to halt production of a hot-selling model for lack of parts.

Rival Volkswagen is saying it may soon follow suit because of the three-week-old strike, which has crippled some of the most productive plants in the formerly communist east -- including several built by VW since German reunification.

IG Metall, Germany's biggest industrial union, has targeted the east German auto industry and its suppliers for selective walkouts in a campaign to cut the work week from 38 hours to 35, the same as in the west. More than 9,000 workers struck Monday, halting production in 10 factories in the eastern regions Saxony, Brandenburg and Berlin.

Union leader Juergen Peters said part of the goal was to bring pain to the west, which accounts for most of Germany's economic wealth.

"You could say we are fighting a proxy war," he said on ZDF television.

BMW said it idled three plants in its home state of Bavaria, in the west, because strikes at the ZF Getriebe supplier left them short of gearboxes for cars in the 3-series. Some 10,000 workers stayed home.

While the strike's overall effect on the German auto industry has been limited, business and government leaders say it could sour companies on investing in the east. Already, BMW has said it would review investment plans in the region.

"It's very expensive and it's not a good thing, but if the strike lasts only one or two more days or until Thursday then it's not a real big problem for the auto industry," said Robert Pottman, an auto analyst at M.M. Warburg in Hamburg.

A longer strike, however, could hurt earnings for the quarter, he said.

The head of the German Automobile Association, Bernd Gottschalk, accused the union of harming the east's economic prospects.

"You ask yourself if those responsible know that with this strike they have set loose an anti-investment campaign against east Germany with long-lasting effect," he told a news conference.

Factories closed by strikes in the east included Volkswagen plants in Dresden, Mosel and Chemnitz. VW said it will halt production of the Golf at its main assembly plant in Wolfsburg in the west for lack of components from Mosel.

Chancellor Gerhard Schroeder urged the two sides last week to work out their differences.

But union leaders said that while they were ready for new negotiations, the strike would go on.

"We do not want a further escalation but rather a quick and sensible solution to the conflict," said Hasso Duevel, leader for the union's Berlin, Brandenburg and Saxony district.

Both the union and employers said they were ready for new negotiations, but set no date.

In Germany, wages and working conditions are generally negotiated for entire industries, not company by company -- though increasing numbers of firms are leaving the system and cutting their own deals with workers.

The union argues that productivity gains in the east mean it is time for the same working hours, nearly 13 years after Germany reunified at the end of the Cold War. Employers say the cost savings from the longer week -- for the same base pay -- are key to attracting investors in a region whose unemployment rate is two times as high as in the west.

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