Tag: Germany

OM in the News: Disrupting the German Auto Supply Chain

Concern is rising in Europe’s automobile heartland about the economic impact of the industry’s move to electric vehicles from gasoline-powered cars, writes The Wall Street Journal (Aug. 16, 2019). Germany fears the country’s big car companies and rich ecosystem of suppliers is insufficiently prepared for the transition, and that their leadership may not be assured in an electric-car world. Assembling electric cars isn’t as complex or labor intensive as making traditional vehicles and relies partly on imported technology. And China has made rapid forays in electrification and is shaping up as a potentially formidable competitor in the field.

The trepidation is particularly acute in the city of Stuttgart, hub to one of the country’s biggest automotive clusters. The German auto industry employs 870,000 people nationwide, almost half in Stuttgart. They work at companies including Robert Bosch, piston-maker Mahle, and hundreds of smaller businesses that form the region’s auto supply chain. Trade union leaders fear that too few auto suppliers are taking steps to prepare for the huge changes that will come as the industry’s focus shifts even more toward electric vehicles.

And it isn’t just Germany. There are 309 automotive production and assembly plants across Europe, of which 72 are engine plants. The sector supports 13.8 million jobs in Europe, or 6% of total EU workforce and 11% of all manufacturing jobs.

The prediction is that fuel-powered cars will make up just 56% of new cars sold by 2030, down from 95% now. The biggest shift will be in Europe, where regulators are pushing tough restrictions on greenhouse-gas emissions.

Classroom discussion questions:

  1. Is this an issue that will impact the U.S. auto industry heavily also?
  2. What approaches should suppliers be taking?

OM in the News: Adidas Shifts Production — But Robots Get the Jobs

Adidas unveiled a prototype of a "Speedfactory" in Ansbach, Germany this week
Adidas unveiled a prototype of a “Speedfactory” in Ansbach, Germany this week

Adidas is relocating some of its shoe production from Asia to the company’s homeland — but Germans shouldn’t expect a jobs boom, reports NBC Business News (May 25, 2016). What is currently done by hand will soon be carried out by robots as part of what the firm calls an “automated revolution.”

The sportswear giant just unveiled its prototype “Speedfactory” — a 3,000­ square ­foot, high ­tech facility in the southern German town of Ansbach. The first 500 robot-­made high ­performance running shoes are scheduled to be rolled out later this year. “We believe that this is pioneer work for a fully automated production process,” says an Adidas spokesman, adding that the facility will mean the firm “will be able to get the desired product to the customer much faster.”

Adidas moved its production to Asia in the early 1990s, mainly due to rising wage costs in Europe. It kept just one production facility open in Germany, where 700,000 soccer shoes are produced annually. Overall, Adidas manufactures more than 300 million sports shoes per year. The firm initially plans to produce around 1 million shoes in Germany.

A 50,000-square-foot “Speedfactory” is due to be finished in Ansbach by the end of 2016. A second is expected to open in the U.S. next year while a third is also in the pipeline.

Classroom discussion questions:

  1. How does this relate to the return of manufacturing jobs in the U.S.?
  2. What are the advantages of having such a manufacturing facility in Germany, as opposed to outsourcing to Asia?

OM in the News: Making American Factory Workers More Tech-Savvy

apprenticeshipGerman robotics company Festo AG wants to make American factory workers more tech-savvy. As robotics take an ever more prominent role on factory floors, training workers and keeping their skills up-to-date has grown in importance, writes The Wall Street Journal (Sept. 10, 2014). Festo sees in the U.S. “a mismatch in the labor market between what businesses need and the kind of education young people are getting,” said its CEO. The firm is banking on growing demand for German-style vocational education in the U.S. In Germany, companies take on full-time apprentices as young as 16 and provide both theoretical and hands-on training in technical skills the companies need. Such programs usually last two years and results in a certification that is recognized across the industry.

About 2 million U.S. jobs go unfilled because of shortfalls in skills, training or education. Of those, roughly 600,000 are jobs that require more than a high-school diploma but less than a bachelor’s degree. One-third of U.S. job openings through 2020 will require such middle skills, with a vocational certificate, industry-based certification, some college credits or an associate degree—but not a classic four-year college degree. “American training in these areas has deteriorated since the early 1980s,” says one Georgetown U. professor.

German companies with operations in the U.S. have complained for years that factory workers lack specific skills they require to get the job done. Executives and American policy makers have said the U.S. could benefit from Germany’s approach to apprenticeships and on-the-job training. But the German approach is hard to transplant. “It’s a question of culture,” said an industry expert. “Parents and teachers tell kids that going to a four-year college is the only path.”

Classroom discussion questions:

1. Why has the German system seen slow acceptance in the U.S.?

2. Is there a relationship between productivity and apprenticeship programs?

OM in the News and Video Tip: Factory Apprenticeship Is Latest Model From Germany

BMW's plant in S.C. employs 7,000
BMW’s plant in S.C. employs 7,000

For Joerg Klisch, hiring the first 60 workers to build heavy engines at his company’s new factory in South Carolina was easy, writes The New York Times (Dec. 1, 2013). Finding the next 60 was not so simple. “It seemed like we had sucked up everybody who knew about diesel engines,” said Klisch. So he did what he would have done back home in Germany: he set out to train them himself. Working with local high schools and a career center in Aiken County, S.C.—and a curriculum nearly identical to the one at the company’s German headquarters–Klisch now has 9 juniors and seniors enrolled in its apprenticeship program.

Inspired by a partnership between schools and industry that is seen as a key to Germany’s advanced industrial capability and relatively low unemployment rate, projects like this one are practically unheard of in the United States. But experts in government and academia, along with those inside companies like BMW, which has its only American factory in S.C., say apprenticeships are a desperately needed option for younger workers who want decent paying jobs, or increasingly, any job at all. And without more programs like Klisch’s, they maintain that the nascent recovery in American manufacturing will run out of steam for lack of qualified workers.

“As a nation, over the course of the last couple of decades, we have regrettably and mistakenly devalued apprenticeships and training,” said Thomas E. Perez, the secretary of labor. But S.C.’s emphasis on job training has also been a major calling card overseas. The state lured BMW here 2 decades ago and more recently persuaded France’s Michelin and Germany’s Continental Tire to expand in the state. Apprenticeship Carolina started in 2007 with 777 students at 90 companies. It now has 4,500 students at more than 600 companies and aims to add 1,400 more companies by 2020.

The New York Times article link contains an excellent 3 minute video clip, called “Creating Skilled Workers,” that you may wish to show in class.

Classroom discussion questions:

1. How do such programs affect productivity? (See pages 15-17 in Chapter 1).

2. Why are there so few apprenticeship programs in the US?

OM in the News: Why It’s Hard to Find Qualified Employees in France

Employers in the U.S. complain they can’t find qualified workers. But, as BusinessWeek (July 23, 2012) reports, the problem is not unique to American industry. While French  unemployment rose to 10% recently, about 43% of French companies were unable to recruit the workers they need. In some industries, 2/3 of the companies encountered difficulties hiring. It’s not just high-level engineers who are in short supply. The shortfall for home nursing and cleaning jobs was the highest, at 67%; it was 62% for engineers, 61% for cooks, and 58% for nurses.

The skills mismatch reflects France’s inability to adapt its educational and vocational training to business needs, as neighboring Germany has done. Every year, half a million German businesses take on teenage apprentices to teach them a trade: The apprentices supplement their on-the-job training with classes at vocational schools. In Germany, not only are vocational training firms obligated to provide details to the government on their job placements, but trainers’ pay is partly dependent on how many trainees find a job, which forces them to build classes around well-identified needs. The result: Youth unemployment  in Germany is 8.5%; France’s is 22%.

France’s educational system, somewhat like ours in the U.S., looks down on vocational training (a topic in Chapter 1), perpetuating the notion that intellectual jobs are more worthy than manual work.  “For years, there has been a deep hatred in the education system regarding manufacturing,” says an industry leader.  The lack of mobility among factory hands even inside France adds to the skills mismatch. French employees are rarely willing to move, compared with the U.S. and the U.K., because the French housing market lacks fluidity. While France spends a bigger piece of its national income on education than Germany—6% compared with 4.8%—it gets less bang for its buck.

Discussion questions:

1. Why don’t we have more apprentice programs in the U.S?

2. Where are there shortages of skilled workers in the U.S., and why?

OM in the News: Germany Exports Jobs Training to the US

Germany’s transplant-factories, like the sprawling VW complex in Chattanooga, aren’t just cranking out cars, machinery and chemicals. They are also bringing, writes The Wall Street Journal (June 14, 2012), a German training system that could help narrow America’s skilled labor gap. VW, which will graduate its first class of U.S. apprentices next year, is one of dozens of companies introducing training that combine German-style apprenticeships and vocational schooling.

These programs are winning adherents as manufacturers grapple with a paradox: Though unemployment remains stuck above 8%, companies can’t find enough machinists, robotics specialists and other highly skilled workers to maintain their factory floors. An estimated 600,000 skilled, middle-class manufacturing jobs remain unfilled nationwide, even as millions of Americans search for work.

“In the U.S. we’ve evolved to the point where we think the only thing people should strive for is a four-year college education, and factory work is seen as dirty, dangerous and repetitive,” says the director of the Aspen Institute’s Manufacturing and Society program. “In Germany, the work that is done on the factory floor and prepared by its vocational education system is highly valued.”

In Germany, 2/3 of the country’s workers are trained through partnerships among companies, technical schools and trade guilds. Last year, German companies took on and trained nearly 600,000 paid apprentices. In the U.S., such close cooperation doesn’t often exist. One stumbling block has been companies’ fear of spending on training, only to see apprentices go elsewhere. Siemens spends approximately $165,000 an apprentice in its new three-year mechatronics training program in Charlotte.  VW warns that without training its own skilled workers, it will struggle to expand: As it ramped up production this year, it needed a nationwide advertising campaign to fill 100 of the more specialized new jobs at the Chattanooga plant.

Discussion questions:

1. Why is VW willing to invest so much money in an apprentice?

2. Why are these programs more popular in Germany than in the US?