Codetermination and Industrial Adjustment in the German Steel Industry: A Comparative Interpretation

See Zysman John , Goverments, Markets and Growth (New York, NY: Cornell University Press, 1983).

This characterization is similar to Peter Katzenstein's measure of a “successful industrial adjustment strategy,” which he defines in terms of “the extent to which social coalitions, political institutions, and public policies facilitate or impede shifts in the factors of production that increase economic efficiency with due regard to the requirements of political legitimacy.” See Katzenstein Peter , Small States in World Markets (New York, NY: Cornell University Press, 1984), p. 29.

See, for example, Blank Stephen , “Britain: The Politics of Foreign Economic Policy, the Domestic Economy, and the Problems of Pluralistic Stagnation,” in Katzenstein Peter J. , ed., Between Power and Plenty: Foreign Economic Policies of Advanced Industrial States (Madison, WI: University of Wisconsin Press, 1978); and Longstreth Frank , “The City, Industry and the State,” in Crouch Colin , ed., State and Economy in Contemporary Capitalism (New York, NY: St. Martin's Press, 1979).

See Katzenstein Peter , Small States in World Markets (New York, NY: Cornell University Press, 1984) for a thorough discussion of the Swedish case. 5.

Exports to Non-EC Markets (in million tons) 197719811984

Germany678376.

France464.744.

Italy262923.

UK261320.

Source: Eurostat: Quarterly Iron and Steel Bulletin, Vol. 1, 1982 (Brussels: Statistical Office of the European Communities, 1982) and Eurostat: Iron and Steel Quarterly Statistics, Vol. 1, 1986 (Brussels: Statistical Office of the European Communities, 1986).

Iron and Steel Committee, Eleventh Session, Report III, “Productivity Improvement and its Effects on the Level of Employment and Working Conditions in the Iron and Steel Industry,” (Geneva: ILO, 1986), p. 12.

“Continuous casting saves energy, improves product yield, cuts labor usage and offers better surface quality and improved internal properties.” Iron and Steel Committee, Report III, “Productivity Improvement,” p. 12.

Those producing over ten million tons per year.

German steel firms have also invested heavily in other technological advances. For example in 1978, 11 percent of crude steel output in Germany was produced with the open hearth process; by 1984 open hearth steelmaking had been eliminated entirely. Compare this with the United States, which is the only major steel-producing country in the advanced world with significant open hearth production remaining (9 percent in 1984, down from 16 percent in 1978). (OECD, The Iron and Steel Industry in 1978 and The Iron and Steel Industry in 1984).

Reliable data on comparative productivity are very difficult to find. An ILO report provides the following ranking.

Steel Industry Labor Productivity, 1984

Countrytons per employee per year.

Japan350–400.

U.S., Canada, Belgium, Netherlands300–350.

Federal Republic of Germany250–300.

France, U.K., Australia200–250.

Major Third World and East European Producersunder 200.

Source: Iron and Steel Committee Report III, “Productivity Improvement,” p. 24.

Iron and Steel Committee Report IE, “Productivity Improvement,” p. 22.

Employment in steel dropped precipitously between 1980 and 1981, by 28 percent in a single year.

Employment dropped by 15 percent in 1982–83 alone.

Iron and Steel Committee Report III, “Productivity Improvement,” p. 22–23. See also Table 1 above for output figures.

Other “star” productivity performers have in fact been the (relatively high wage) Netherlands and Sweden. Iron and Steel Committee Report III, “Productivity Improvement,” p. 23.

See, for example, (Thyssen Chairman) Kriwet Heinz in Handelsblatt, January 24, 1985 and Wertpapier, January 1, 1985, as well as “Stahl-Krisenmanagement seit 10 Jahren: Kein Anlass zum Feiern,” Ruhr Nachrichten, September 8, 1984 and Getler Warren , “German Steel Firms Attack Subsidies,” International Herald Tribune, September 7, 1984.

See, for example, “German Steel Revives,” New York Times, May 26, 1986, p. 17.

See Table 4 above, as well as International Herald Tribune, September 7, 1984.

In fact output of standard specialty steels in Germany as a whole rose by 35 percent in fiscal year 1983/84 (Thyssen Geschaftsbericht, 1984, p. 17).

International Herald Tribune, September 7, 1984.

Strukturentwicklung der Krupp Stahl AG, 1974–1984 (Krupp Stahl, June 1984).

New York Times, May 26, 1986, p. 20.

This percentage is not crude tonnage grades, but rather specialty steel and higher quality grades.

Indeed, German unions are among the least protectionist in Europe. This is in large part because the union that organizes steel (the IG Metall) also organizes other sectors such as automobiles, machine tools, and electronics that rely heavily on exports. The union's answer to Germany's current unemployment has not been subsidy or protection, but rather a shorter work week. In 1984, the IG Metall won a reduction in weekly working hours to 38-½ in the metalworking industries, and 38 hours in the steel industry. See Thelen Kathleen , “West German Unions in the Eighties: Politics in the ‘Dual System’ of Industrial Relations,” University of California, Berkeley, dissertation, in progress.

Thelen , “West German Unions in the Eighties.”

A number of studies have shown that the level of industrial conflict in Germany is among the lowest in the industrialized world. See for example Korpi Walter Shalev Michael , “Strikes, Industrial Relations and Class Conflict in Capitalist Societies,” British Journal of Sociology, Vol. 30, No. 2 (June 1979): 164–87.

Daley Tony , “Labor and Industrial Change: The Politics of Steel in France and West Germany,” University of California, Berkeley, dissertation in progress.

Daley Tony , “Labor and Industrial Change: The Politics of Steel in France and West Germany,” paper presented to the Fifth Annual Conference of Europeanists, Washington, D.C., October 1986, pp. 29–30.

Ibid., p. 30.

Daley Tony , “Labor, the Interventionist State, and Steel Politics in France,” paper presented to the American Political Science Association Meeting, Washington, D.C., August 1986, pp. 28–29.

Daley , “Labor and Industrial Change,” p. 30.

On the contrary, in terms of its organizational presence, German labor is much stronger than French labor.

Interview, 1985. For a more elaborated discussion of the politics of codetermination and industrial change in Germany, see Thelen , “West German Unions in the Eighties.”

Quoted in Apple R. W. , “West German Unions: An Atypical Success Story,” New York Times, January 21, 1985, p. A4.

This section deals only with the issue of plant level rigidities, which is what Thimm seems to be arguing. It is worth mentioning, however, that wage flexibility can be measured in a number of ways. A study by economists at the OECD defines real wage flexibility as “the elasticity of money wages with respect to prices … divided by the elasticity of wages with respect to unemployment”—i.e., whether wages respond more to unemployment (wage flexibility) or inflation (wage rigidity). By this measure, German wages (along with U. S. and Japanese) are among the most flexible in the advanced countries. France and Britain rank very low on wage flexibility, so defined. See the Economist, November 1, 1986, p. 72.

U. S. wages are very high compared to those in other countries, but the steel crisis has deeper, structural sources as well. Addressing these problems will be more important to the long-run competitiveness of the U.S. industry. See Barnett Donald F. Schorsch Louis , Steel: Upheaval in a Basic Industry (Cambridge, MA: Ballinger, 1983).

In 1983, hourly labor costs in the German iron and steel industry were 15.6 ECU, compared with 14.5 for France, 11.7 for the UK, and 11.2 for Italy. Eurostat: Iron and Steel Statistical Yearbook (Brussels: EC, 1985).

Iron and Steel Committee Report III, “Productivity Improvement,” 1986, p. 52.

See Schultz-Wild Rainer , Betriebliche Beschaftigungspolitik in der Krise (Frankfurt: Campus Verlag, 1978).

The critical aspects of the organization of labor include “mobility of production labour within the plant, willingness of production workers to undertake maintenance and repair tasks, and acceptance of retrained workers into the labour force, which increases workers' interoccupational mobility.” Iron and Steel Committee Report III, “Productivity Improvement,” p. 25.

Iron and Steel Committee Report III, “Productivity Improvement,” p. 60.

Helm, for example, demonstrates a correlation between codetermination and corporate efforts in the area of apprenticeship programs. See Helm Jutta , “Codetermination in West Germany: What Difference Has It Made?” in West European Politics, Volume 9, Number 1 (January 1986): 32–53.

See Piore Michael Sabel Charles , The Second Industrial Divide: Possibilities for Prosperity (New York, NY: Basic Books, 1984).