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The geography of transformation : the restructuring of the automotive industry in Hungary and East Germany, 1989-1994.

By Adam Swain
Topics: Geography Economics
Year: 1996
OAI identifier: oai:etheses.dur.ac.uk:1628
Provided by: Durham e-Theses

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  1. 1.5 Organisation of the thesis doi
  2. 128employers. The result was a proliferation of labour Qrganisations and a chaotic environment for management-labour bargaining. Thus although the unions had become more independent this had been at the cost of influence. Most important was
  3. 13postal survey are not reported in this thesis9. In addition, information on automotive investment, in order to contextualise the case studies was compiled from secondary sources' . In the course of four
  4. 140who was entitled to the FDGB's assets, which comprised around 300 properties in addition to shares in major enterprises. At the same
  5. (1993). 162increase would have increased wage costs in Saxony to 56.5pc of those in its twinned bargaining region,
  6. 18 The THA provided between DM 50-6Obn per year to its enterprises but little was directed to capital investment. Where an enterprise
  7. 1989 Organisational structure 1993 SAQ (training) Dr Melegy (pressed parts)
  8. 2.2 Crisis in the automotive industry The causes of doi
  9. 21 At the same time the opening of the new engine plant at Chemnitz was put back from 1994 to 1995/6.
  10. 21.2 A geography of transformation: the automotive industry in east and central Europe Since the early 1 970s the automotive
  11. 3.2 The soviet system Behind the fa├žade of regulation and doi
  12. 3.4 Conclusions The complexity of post-soviet transformations in east and central Europe did not illustrate the simplistic notion of a 'transition to
  13. 4 The remainder of production was intended for the domestic market. 2561992. In 1993 sales to the CIS increased to nearly 2,000,. thanks to a cash payment, but the long term future was insecure.
  14. (1993). 430 VIIList of tables 2.1 Direct foreign investment in east and central..Europe,
  15. 5.1 Simplified organisational structure of[KARUS, 1993
  16. 5entailing 1 .2 million units of additional
  17. 95industry and the defence industry respectively). Both MMG and Bakony were corporatized by the SPA which with management sought to identify strategic foreign partners that could supply new markets. However, the SPA and
  18. (1995). Additional automobile assembly capacity in east and central Europe,
  19. Although both countries attracted significant automotive DFI, in quantitative terms the flow into east Germany was substantially greater than
  20. Amid western criticism that Hungary's privatisation process was proceeding
  21. and parts). Despite the high effort demanded of workers, output
  22. (1993). Automobile production in east and west Germany 176 4.5 Expected contracting and expanding industrial branches according to the Ministry of Industry and Trade,
  23. Bakony also had considerable problems. Having been transformed into a company limited by shares (owned by the state) by mid-1992 it failed to attract a strategic foreign partner to invest in the whole firm.6 Both MMG and Bakony were
  24. Between 1989 and the end of 1993 some USD10.6 billion direct foreign investment (DFI) was sunk into greenfield and joint venture projects in east and central Europe (UNCTAD 1994,
  25. By mid-1993 VASAS had had mixed success in establishing a presence in the new foreign owned automotive plants. Not least, it
  26. By the beginning of the I 980s the automotive industry was one of
  27. compared doi
  28. East Germany was excluded from the CMEA international car production system which was associated with the co-ordinated purchase of Fiat technology in
  29. Easterii Germany Following its formation by the last soviet-type government in 1990, the Treuhandanstalt was intended to be an instrument of industrial policy (THA 1991).
  30. Eastern Germany The process of privatisation was very different in the former GDR than was the case in Hungary. Whereas the Hungarian authorities pursued a 'gradualist' strategy, in the course of German
  31. Exchange ratio of IKARUS buses against different cars of
  32. Following the passing of the Trust Law in June 1990, enterprises were given just one month to transform themselves into limited liability companies. The THA subsequently began to convert public into private property in two ways: reprivatisation to
  33. For a detailed examination of DFI in Hungary see Barta (1993), Wang (1993) and Hamar (1994).
  34. Foreign automotive investment in Hungary by county, 1993 (USDm) 293 5.2
  35. From the outset Suzuki sought to encourage co-operation between its suppliers in Japan
  36. GDR and West Germany 179 4.8 Passenger car sales in Hungary 180 4.9
  37. Greenfield automotive plants in Hungary, 1993 296 5.5
  38. However, in 1994 the amount of registered capital was increased by HUF O.9bn (of which some HUF 400m was paid for by the state) to HUF 6.4bn and the equity ratio altered giving Suzuki a greater share.
  39. However, owing to the short-time working compensation scheme (see Auer et a!. 1992) workers were allowed to be put on zero-hours but still entitled to 9Opc of their normal pay (and employers were exempt from paying social security contributions
  40. However, the nature of work, in terms of the tasks required of workers, did not 40fundamentally differ from traditional Fordist plants (see for example Garrahan and Stewart 1992). As a result employee resistance remained and
  41. IG Metal! in eastern Germany Whereas there was institutional continuity in the form of trade unionism in the Hungarian auto industry, in the former GDR there was discontinuity as the former organisation was dissolved and replaced by a west
  42. IMap 5.8 VW MosePs
  43. In doi
  44. In contrast to other CMEA countries Hungary's industrial enterprises were relatively independent - at least from each other if not the Ministry of Industry - and were not organised into huge industrial
  45. In the course of 1993 doi
  46. Internationalisation represented the intensification of
  47. Likewise Bakony, a major supplier of windscreen wiper motors and other electrical parts, suffered a 4Opc fall in its automotive orders and, in 1990, the termination of its subsidy. Between them MMG and Bakony shed over 2,500 workers between 1990 and 1993.
  48. Magyar Suzuki's major suppliers in Hungary, mid 1993 299 5.8
  49. Moreover, as recession continued the growth of DFI slowed after 1992. This figure does not include direct foreign investment in former East Germany or former Yugoslavia.
  50. Number of foreign automotive investments in Hungary by county, 1993 294 5.3
  51. Part of the investment, anticipated initially to be 4 billion Ostmarks but which rose to 10 billion, involved the construction of a small new assembly plant
  52. Planned employment from foreign automotive investment in Hungary by county, 1993 295 5.4
  53. Planned foreign automotive investment in east Germany by Lander, 1993 USDm) 297 5.6 Planned employment from foreign automotive investments in east Germany 298 5.7
  54. (1993). Planned investment and employment in the Hungarian automotive sector, by
  55. Settlements and Lander in east Germany 184 4.3 VASAS share of the vote in the works councils elections in the engineering and metallurgy industry by county, May 1993 185 5.1
  56. Six tandem interviews - three at VW Sachsen (where six were conducted in 1992), one at GKN (where one was conducted in
  57. Slovak Republic 350 30 2 9 Slovenia 350 nd nd nd Other 1,000 0 0 0 Total 17,100 1,900 11 Source:after Sadler and Swain 1994, 395 Note that $4bn had been invested in the auto sector in eastern Germany.
  58. SMap 5.5 Planned foreign automotive investment in east Germany by Lander, 1993 (USDm) Source . afier Auio,nol,il - P,-oduktion
  59. Stage three: Case studies Having selected the two study areas, research visits were made, in mid-1992,
  60. The forced dependency on DFI (which raised the spectre in political circles of external control) meant that the absence of industrial restructuring was
  61. The industrial relations system disintegrated in
  62. The preliminary
  63. (1995). The result was the reorganisation of the European automobile components industry as major suppliers mimicked assemblers by internationalising production and concentrating on their core competences (see Sadler and Amin
  64. There was thus a feeling in the union that the Labour Code placed the burden of The Strike Code (1989) made labour disputes against a collective agreement between ma;agenient and employees illegal. 156organisin and articulating worker interests
  65. This paved the way for the production, beginning in 1988, of 1050 cc Polo engines at Karl-Marx-Stadt. In
  66. to western Europe. The result was
  67. Trade union membership in Hungary 1990-1993 181 4.10 VASAS membership, 1989-1993 181
  68. TW Mosel's suppliers in east Germany, 1993 300 5.9
  69. VW Group's suppliers in east Germany by Lander, 1993 301 List of figures 4.1 VASAS's organisational structure, 1993 186
  70. With the apparent failure of 'Kalmarism', the

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