HOT NEWS: German Auto Strike Partially Settled

IGM union srike was settled for the German state of Baden-Wuerttemberg, Stuttgart being the Porsche central/headquarter's location. The 820,000 metalworkers in Baden-Wuerttemberg will receive a total of 7.1 % additional income in two steps: 1. On June 1, 2002 4 % and 2. on June 1, 2003 3.1 %. The strikes will continue in the Berlin-Brandenburg region. This was reported in DIE WELT, 5/16/2002 - tomorrow's edition. <a href="http://www.diewelt.de/daten/2002/05/16/0516de332336.htx" target="_blank">http://www.diewelt.de/daten/2002/05/16/0516de332336.htx</a> How much of an impact the 7.1 % wage increase will have on the 2003 Porsches' MSRPs is self-evident.

Ouch!! Thanks for the update Karl. I'm glad to know the strike is over...but better get 'em while they're hot. Regards.

Karl, You just made my day. I am having a glass of wine thinking/dreaming about my June build C4S. I posted a few days ago about the strike and it was amazing no-one really knew anything about it. Maybe an '02 is the one to have, '03 prices go up, short supply, good resale. I'll be smiling when I'm driving this one. Anyone want a 99 C2?

Here is the latest update in today's issue of the Wall Stree Journal. Although the article suggests that competition will limit price hikes by Porsche and DaimlerChrysler -- and the fallout will be a reduction in the # of workers employed -- I can't believe that the price of the '03's won't be adversely affected. Regards. -------------------------- German Metalworkers Win Raise, But Economic Fallout Is a Concern By CHRISTOPHER RHOADS Staff Reporter of THE WALL STREET JOURNAL BERLIN -- Germany's metalworking sector won a higher-than-expected wage increase in one state late Wednesday, likely bringing the 10-day-old strikes toward a conclusion but raising concerns about effects of the deal on the economy. The union representing employers agreed to a 4% wage increase starting in June, followed by a 3.1% rise in June 2003 for the rest of that year. Including a one-time payment this month of �120 ($109.50), the deal amounts to about a 4.5% increase for the next 12 months, according to J.P. Morgan, well above the comfort zone of the European Central Bank, which has repeatedly warned about the effects of higher wages on inflation. The ECB had suggested wage increases around 3% would be tolerable. "It's a good result," said Klaus Zwickel, the head of IG Metall, the powerful metalworkers' union, which has more than 2.8 million members. Union members still have to approve the agreement, which is expected to happen in the next few days. The deal is only for workers in the state of Baden-Wuerttemberg -- home to several large car companies such as DaimlerChrysler AG and Porsche AG, which have been hit by the unrest -- but is expected to serve as a model for other states. Strikes in Berlin and Brandenburg, in eastern Germany, are expected to continue in the meantime. Though at a high price, the likely ending of the first significant strikes in Germany in seven years is welcome news for Chancellor Gerhard Schroeder, who is up for re-election in September. He is trailing in the polls against his conservative challenger, Edmund Stoiber. A key question now is how damaging the agreement will be to German firms, which are already struggling with low margins and decreased demand. Since more international competition makes passing on the costs of the higher wages to consumers difficult, firms are expected to cut jobs, economists said. From the last major German strikes in 1995, which led to a 4% wage increase in the first year of the 21-month agreement, firms cut about 200,000 jobs, economists estimate. The deal could also serve as a model for a handful of other sectors now engaged in wage talks, raising the prospect of higher wages across German industry. German firms already pay the highest hourly wages in the world, a significant disadvantage as more foreign firms penetrate the domestic market. Julian Callow, an economist with Credit Suisse First Boston in London, said while the increase is high, it is "tolerable," particularly since it extends over two years. Productivity growth in the sector is about 3.5%, which is about the wage increase averaged over the two years of the new contract, he said. "The pay increase can be met by productivity growth," he said. "The worry of the ECB is if this demand is taken up by other unions with lower productivity growth."

Tomorrow's DIE WELT reports that the auto industry productivity "offset" is 2.8 % and not 3.5 % as reported in the Wall Street Journal. The strikes continue in Berlin and Brandenburg. <a href="http://www.diewelt.de/daten/2002/05/17/0517wi332434.htx" target="_blank">http://www.diewelt.de/daten/2002/05/17/0517wi332434.htx</a>

[quote]Originally posted by karl k: <strong>... [b]The 820,000 metalworkers in Baden-Wuerttemberg will receive a total of 7.1 % additional income in two steps: 1. On June 1, 2002 4 % and 2. on June 1, 2003 3.1 %. ... How much of an impact the 7.1 % wage increase will have on the 2003 Porsches' MSRPs is self-evident. </strong><hr></blockquote> I don't think it's self evident, I don't even think it's evident to me! First of all, it's 7.1% over two years. The notion that Porsche is going to immediately hike prices to cover the second year is an unheard of business practice! Second, car prices would only go up by 7.1% if the cars were only labor -- not metal, engine, r&d engineering, marketing, etc. Third Porsche has manufacturing facilities in Finland as well, so not even the entire Porsche production is involved. There's a lot more to making a car than assembling it.