Eastern Europe, with Its Cheap Labor and High Skills, Is Becoming the World's Newest Car Capital
“DETROIT EAST” : Business Week, 25th July /2005.
Eastern Europe, with its cheap labor and high skills, is becoming the world's newest car capital
In the Verdant Hills north of Bratislava, the capital of Slovakia, workers at the sprawling Volkswagen plant turn out efficiency-boosting ideas as steadily as the Polo compacts and Touareg sport-utility vehicles gliding off the production line. One recent suggestion was to bring emergency repair teams inside the factory instead of housing them outside in a separate building. Body-shop manager Holger Nestler quickly gave the idea a green light, setting up eight glass offices near the robots that each SWAT team tends. With the repair staff a mere shout away from the site of breakdowns, downtime has been slashed. Back at VW headquarters in Wolfsburg, Germany, union bosses rejected the same idea.
All the better for Bratislava. The Slovaks recently won the bid to produce Audi's new Q7 SUV, beating out VW's Western European plants for the job. The Bratislava factory, which now churns out 250,000 cars a year, is the most profitable of 42 VW plants worldwide, thanks to low labor costs, flexible manufacturing, and motivated workers. "The secret is the mindset of the 10,000 employees. It's a culture of fighting to win," says Thomas Schmall, the 40-year-old German chairman of Volkswagen Slovakia. "The unions ask us how we can increase business and how they can help create jobs."
That's not the attitude of VW's truculent German unions, which have saddled it with the highest labor costs in the industry -- close to $50 an hour for a 28-hour workweek, some 20% over the already high average wage for German auto workers. In contrast, Slovaks cost $6 per hour and work 40 hours a week, netting VW annual personnel cost savings of $1.8 billion, according to analysts at Germany's Bank Sal. Oppenheim. If Schmall needs to boost production suddenly to meet a surge in demand, the new shifts can be arranged overnight. In Germany, negotiations
Eastern Europe, with its cheap labor and high skills, is becoming the world's newest car capital
In the Verdant Hills north of Bratislava, the capital of Slovakia, workers at the sprawling Volkswagen plant turn out efficiency-boosting ideas as steadily as the Polo compacts and Touareg sport-utility vehicles gliding off the production line. One recent suggestion was to bring emergency repair teams inside the factory instead of housing them outside in a separate building. Body-shop manager Holger Nestler quickly gave the idea a green light, setting up eight glass offices near the robots that each SWAT team tends. With the repair staff a mere shout away from the site of breakdowns, downtime has been slashed. Back at VW headquarters in Wolfsburg, Germany, union bosses rejected the same idea.
All the better for Bratislava. The Slovaks recently won the bid to produce Audi's new Q7 SUV, beating out VW's Western European plants for the job. The Bratislava factory, which now churns out 250,000 cars a year, is the most profitable of 42 VW plants worldwide, thanks to low labor costs, flexible manufacturing, and motivated workers. "The secret is the mindset of the 10,000 employees. It's a culture of fighting to win," says Thomas Schmall, the 40-year-old German chairman of Volkswagen Slovakia. "The unions ask us how we can increase business and how they can help create jobs."
That's not the attitude of VW's truculent German unions, which have saddled it with the highest labor costs in the industry -- close to $50 an hour for a 28-hour workweek, some 20% over the already high average wage for German auto workers. In contrast, Slovaks cost $6 per hour and work 40 hours a week, netting VW annual personnel cost savings of $1.8 billion, according to analysts at Germany's Bank Sal. Oppenheim. If Schmall needs to boost production suddenly to meet a surge in demand, the new shifts can be arranged overnight. In Germany, negotiations