Learning from German car firms

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Learning from German car firms

I visited the BMW Plant Dingolfing on June 11, which is an hour’s drive from Munich. Last year, Dingolfing’s 17,500 workers made 369,000 cars.

The head of the production process team said the company’s principle is to give special treatment to meisters, who are mostly in their 40s and 50s. However, not all older employees are rewarded. Instead of age, this is based on performance.

The average annual salary of the workers at this plant is about 50 million won ($44,763). However, the income gap among the workers is quite big. Basic pay has more than 10 levels depending on skills. Being in the same position does not guarantee the same salary. Individual bonuses, up to 14 percent of the base monthly salary, are given. The production team head was surprised to learn that workers’ wages go up every year based on experience and that the average salary is 100 million won in the Korean automobile industry.

Korean companies also don’t have flexible working hours. Workers can accumulate up to 400 hours a year in flex time if they work overtime beyond the legal labor hours of 35 per week. If they accumulate 35 hours, they can have one week of paid holidays. They can take time off in the slow season. Head of the plant, Josef Kersher, said that when a slow economy calls for reduced production, the plant can adjust working hours to keep the staff employed while cutting down on costs.

There are also exchanges among plants. BMW has four plants in Dingolfing, Munich, Landshut and Regensburg, and they send workers to one another as necessary. Hanyang University’s automotive engineering professor Sunwoo Myung-ho said that the automobile industry has large fixed costs from facility investment and that it is hard to keep competitiveness without the German style of labor flexibility.

But this is unthinkable for Hyundai Motor, Kia Motors and other Korean automobile companies. Their labor unions reject flexible working hours and the exchange system. Moreover, Hyundai Motor’s union claims that domestic and overseas production should be determined through an agreement between the union and the management. Productivity is bound to be undermined as a result. It takes 27.8 hours for Korean companies to make one car, nearly twice the 14.8 hours of the United States and the 15.7 hours of the Czech Republic.

GM president Dan Ammann said that Korea is an important production base but is losing export opportunities as labor costs and the exchange rate has raised the production costs. As long as automobile unions continue to demand 30 percent of profits to be shared regardless of management conditions, the gap between BMW and Korean carmakers will only grow bigger.

*The author is a business news reporter of the JoongAng Ilbo. JoongAng Ilbo, June 17, Page 28


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