The German Automobile Industry and the affect it has on the German Essay

The German Automobile Industry and the affect it has on the German Economy, Stock Utility Analysis from 1990 until 2007 - Essay Example Until the late 1980s, the German production system, which had maintained the legacy f the craft system, was praised for its high-quality products and incremental innovation based on decentralized production by high-quality labour. The German model, termed "diversified quality production" (DQP) or "incremental innovation system," was characterized by highly skilled workers and professional specialization instead f Tayloristic de-skilling f labour. The flexible German system, based on some elements f the craft system, could perform "fast retooling" and "incremental innovation" better than the American mass producers until the 1980s. In particular, the German production system was praised for strong small- and medium-sized companies (Mittelstnder). The strength f these companies was based on the agility f small batches and highly skilled labour. The decentralized and flexible system based on highly skilled workers could be realized by particular German institutional constraints. German corporatist institutions, characterized by a dual system f workers' participation at plant-level decision-making and collective bargaining at the industrial sectoral level, realized the development f advanced vocational training and productivity cooperation. Unlike the free market f the United States, in which companies are less likely to contribute to the development f industry-wide training systems due to the risk f losing skilled workers to competing firms and the possibility f collective action problems in developing public training programs, the German corporatist institutions f trade unions and employer associations implemented highly developed vocational training by limiting the free-riding in the process f training. These centralized corporatist associations f trade unions and employers' associations nationally standardized and rigoro usly enforced vocational training curricula. The centralized trade unions and employer associations could influence individual employers' training decisions. Works councils at the plant level policed the employers' observance f collective agreements for vocational training. In addition, the industry-wide wages system established by collective bargaining reduced the employees' incentives to be receptive to poaching. On the other hand, the German corporatist model that realized the "diversified quality production" worked well only under the condition f social cooperation between labour and management.