September 25, 2020

The union IG Metall calls for a bailout for the German automotive sector


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In the previous crisis it was necessary to rescue the banks. In the current crisis, the automobile sector may have to be rescued. That’s at least the approach of the powerful German union IG Metall, which considers that only with financial support from the State will companies be able to face the double challenge of resuscitating, after the forced paralysis by the coronavirus, and carry out the process of technological renewal in which the manufacturers were already immersed. IG Metall boss Jörg Hofmann echoes the palpable reality in works councils. “Bankrupt companies will not be able to innovate, even if their solvency is facilitated,” he says, “the necessary transformation process can only take place if the industry stabilizes enough to develop new mobility concepts.” The German sector also has a very clear indicator that the future is already here. On the outskirts of Berlin, Elon Musk advances in the construction of Tesla’s megafactory “Gigafactory 4”, the most advanced in the company and possibly in the world, which will not only produce 500,000 electric cars a year on European soil, with firsts in engines and bodies that will be announced on September 23, but also comes with a business model concept that threatens to break schemes. Proof of this is that Tesla is collaborating with a pharmaceutical company related to the COVID-19 vaccine.

In this context, Hofmann points out that “the switch to electric mobility in the German sector can only be successful if companies that are currently active in combustion technology really have the opportunity to make the changes.” “We do not want state subsidies, what we want is investment capital through the Mittelstandsfonds,” he says, referring to a bond fund created in 2013 and which has since distributed an average annual yield of 4%. IG Metall has already tested this idea with the Social Democratic Party (SPD) and the Greens, without appreciating any particular resistance. He has explained the technological bottleneck that occurs at the level of medium suppliers because these companies are not capable of investing in innovation. Hofmann has closed a meeting with Merkel. Whoever rejects the proposal for the moment is the Liberal Party (FDP), contrary to any additional state aid for the automobile industry. “IG Metall and The Greens seem to have succumbed to Federal Minister Altmaier’s mania for productive nationalization, but everyone should be clear that this is not the way, that Germany does not need an orgy of nationalization,” said the vice president of the parliamentary group. from the FDP, Michael Theurer, “Anything else would be a serious disgrace of the market economy.”

“Instead of relying on fantasies of political-industrial omnipotence as in Altmaier’s National Industrial Strategy 2030, the Federal Government must once again rely on proven recipes for success in the market economy,” insists Theuer, “Ludwig Erhard achieved the miracle Gerhard Schröder’s economic and labor market reforms helped Germany regain its former economic strength. Nationalization cannot save jobs or prevent bankruptcies, it is an interventionist wrong path at the expense of taxpayers, which also blocks a return to budgetary stability ”.

But even Theuer acknowledges that the situation in the sector is critical. Merkel’s CDU intends to support the motor sector, fundamental in German industry and a great export asset. Economy Minister Peter Altmaier wants consumer incentives to buy electric cars, but also for combustion engines, including diesel, with high levels of energy efficiency. The amount of subsidies for the purchase would be about 5,000 million euros. However, the Finance Minister, the Social Democrat Olaf Scholz, considers that “there is a great issue that needs to be talked about a lot, and that is that from our point of view, there can be no incentives to buy cars with a combustion engine.” The economic research institute IFO in Munich warns that premiums do not usually generate more sales, but that their main consequence is usually that the buyer advances the date of purchase of the vehicle. Bavaria, the Land most affected by the pandemic and where the conservative CSU governs, pushes for the premium to buy cars with combustion engines, aware that the consortiums it houses in its territory, such as BMW and Audi, do not arrive on time to the electrical race. “It cannot be that France spends 8,000 million euros on the car and Germany nothing; the automobile is the heart of our economy ”, defends the president of Bavaria, Markus Söder.

Car registrations in Germany totaled 251,044 units in August, which is a 20% drop compared to the same period last year, according to data from the Federal Motor Transport Authority of Germany (KBA). 47% of the vehicles sold in Germany last month were gasoline, with 117,897 units, 38.8% less, while 27.7% of them had a diesel engine, with 69,416 units, a 26, 7% less. The number of electric models increased by 221.5% in the eighth month of the year, with 16,076 units, representing 6.4% of the total. Hybrid cars increased their sales by 132.7%, to 46,188 units. BMW and Mini were the only German brands to increase their sales in August, with 21,549 and 4,070 units, 15.2% and 3.3%, respectively, while the rest fell compared to 2019, registering the steepest falls Smart (1,379 units, -71.1%), Porsche (1,712 units, -49.5%), Opel (9,499 units, -46.8%) and Audi (16,405 units, -35%).

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