A tale of two systems: many readers don't believe it

A tale of two systems, in which we contrasted the way that German automakers operate in terms of labor relations in the United States with how they operate in Germany brought a substantial reader response, including the following. A response from the editor is here.

Jan. 3, 2012 -— Your article derives momentum from asserting that, in 2010, twice as many cars were built in Germany than were built in the U.S. While at a granular level this is correct, if light trucks -— of which the incarnations are many and varied -— are included in both figures, the U.S. built approximately 35 percent more vehicles than Germany in 2010: 7.6 million vs. 5.6 million. I wonder, was this a simple oversight, or a surgical use of facts in order to support your core premise?

Further, your profitability references for Daimler and BMW do not highlight the fact that both manufacturers have chosen to build profitable vehicles in the U.S. (with VW joining in as well) and that those profits are included in the figures you cited.

Finally, although 2010 marked the beginning of a recovery for the North American auto industry, it certainly wasn’t a banner year. However, little by little, U.S.-based auto companies are improving their product offerings and, in my opinion, are becoming globally competitive in most product segments. In light of this, I believe that after some very dark days, better times for the U.S. auto industry lie ahead, built on a sound foundation of good designs well executed in a sustainability competitive business environment. As such, while I do agree that this is “A tale of two systems,” I am less certain than you appear to be that one is superior, and respectfully suggest that we both wait and watch before reaching our respective conclusions.

— Patrick Kinsie, Oakville, Canada

Dec. 30, 2011 — The big question is how do Germans build twice the number of cars per man as Americans.

— Brian Oneil, Tavernier, Florida

Dec. 29, 2011 — Car production in the U.S. was 7.7 million. Your article significantly understates this at 2.7 million in a comparison to Germany.

— Eric Perkunder, Seattle, Washington

Dec. 28, 2011 — The basic assumption is that a legitimate use of governmental power is to assure certain classes of workers a middle-class existence. Socialism does this, picking winners and losers along the lines of supporting leadership power bases. The problem with a true free-market democracy is that open competition would serve two purposes: to keep pushing wages down for old technology, and to rush new innovation where profit margins are higher.

Totally missed from the article is some vital information: what percent of the German automakers’ actual profits are generated from the American manufacturing base? It is highly likely that the German autoworkers’ wages and living standards are being subsidized by profits from American operations. This was true when Daimler bought out Chrysler, and it would be interesting to see if the German wage standards were actually self-sustaining. I suspect that the truly high-margin, top-of-the-line, big-ticket autos are being made in Europe. Without that “cherry-picking,” I doubt the European auto business would be self-sustaining. Even Renault and Fiat have substantial manufacturing operations in Eastern Europe, Turkey, India, and other low-wage areas to keep them in business. Certainly VW does, in Eastern Europe. Even Chevrolet and Buick now have more sales and manufacturing in Asia than in America.

The real question is whether Americans want jobs in the $15 to $20 per hour range. I think a lot of Americans do, even if it means we have to rethink “the classic American dream.” I have a 34 year-old son with a college degree making a living as an air conditioning service repairman in that labor range. He does not own a home, and is happy to have a trade that people actually need [and] steady employment. He is living a “reduced American dream” — a family with a working wife, one car, almost out of debt, and saving money for his self-supported retirement. This may be the new “norm,” what we can actually afford, rather than a living standard that is so [far from] self-sustaining that we have mortgaged the economic future of our grandchildren to pay it off. Europe is teetering now, and will fall first. Will we be far behind?

— Thomas Waters, Emory, Texas