Reconfiguring the US Auto Sector: Lessons from Germany

John Cody

Advocates of neoliberal policy believe that flexible workforces, looser regulations and less government will lead to stronger economies and a better environment for business. Within the US, many such policies have been put into effect with disastrous consequences for the labor market and industry. Even beyond the US, there are claims that all countries are converging into one homogeneous neoliberal set of actors due to globalization pressures. However, in contrast to such assertions is the case of Germany, which features a relatively secure and well-paid manufacturing workforce that fuels one of the largest export surpluses in the world.

Germany’s automobile manufacturing sector provides a pertinent example as to how workers can have both fair wages and decent work while sustaining companies that generate far more profit than US automobile producers since the 2008 crisis. Germany’s comparative advantage in automobile manufacturing has much to do with its institutional arrangements, all markedly different from those in the US. These institutional arrangements touch on a broad range of areas, including worker training, union power, co-determination and social welfare provisions. Due to labor's position as an institutional stakeholder, Germany has ultimately seen reduced conflict between employers and employees and fostered a competitive workforce to produce in-demand vehicles.