Germany's ailing car industry faces the prospect of slashing jobs as the global slump hits home. Dwindling demand and problems with liquidity have some of the biggest names in the business eyeing a bleak future. There's a saying in Germany that when Daimler coughs, the state of Baden-Wuerttemberg catches pneumonia. Things are not yet quite as bad as that in the home of Mercedes-Benz, or in Germany in general. But strong medicine is needed to get Germany's ailing car industry back on its feet amid a slump in profits and sales. The first dose was requested by Opel, once the nation's biggest carmaker, which has been brought to its knees by the massive losses suffered by its US parent General Motors (GM). Opel has asked the German government for 1 billion euros ($1.27 billion) in credit guarantees to tide it over through a potential liquidity crisis that could arise if GM runs out of cash.
There's a saying in Germany that when Daimler coughs, the state of Baden-Wuerttemberg catches pneumonia.
Things are not yet quite as bad as that in the home of Mercedes-Benz, or in Germany in general. But strong medicine is needed to get Germany's ailing car industry back on its feet amid a slump in profits and sales.
The first dose was requested by Opel, once the nation's biggest carmaker, which has been brought to its knees by the massive losses suffered by its US parent General Motors (GM).
Opel has asked the German government for 1 billion euros ($1.27 billion) in credit guarantees to tide it over through a potential liquidity crisis that could arise if GM runs out of cash.
In an interview with SPIEGEL, Werner Wenning, the CEO of German pharmaceutical giant Bayer, discusses the speculative excesses in the financial markets, the disastrous emphasis on short-term profit and the appropriateness of his multimillion-euro salary. SPIEGEL: Mr. Wenning, speculative excesses have brought the financial markets to the brink of disaster. The industrialized countries are going into recession, and the reputation of executives is at an all-time low. Is capitalism in a crisis? Werner Wenning: I'd say that's probably a bit exaggerated. In 1991, when I worked for the Treuhand agency (the government agency that privatized the former East German state-owned enterprises after the Wall came down) for a year, I realized just how inhuman socialism treated citizens. I am not familiar with any better model than the social market economy. It is the most effective system when it comes to meeting society's needs. Still, we should return to its principles. The Bayer factory complex in the German city of Leverkusen. SPIEGEL: What has been forgotten? Wenning: We have to rediscover a balanced relationship between the interests of the capital markets and the interests of workers. The capital market seeks to achieve the highest possible return on invested assets. The worker, on the other hand, is interested in job security and fair compensation. SPIEGEL: Can the two really be reconciled that easily? Wenning: Those of us working in industry bear little of the blame. We have become more competitive and have done exceedingly well globally. Workers benefit from this; at least at Bayer, they share in the profits. In the financial sector, on the other hand, a number of things went wrong. For a long time, money was too cheap, and it was used irresponsibly. Banks used mathematical methods to develop products that bore no relation to the real economy. They established special-purpose entities that never appeared on any balance sheets. But what was lacking most of all was an agency tasked with supervising the market players.
In an interview with SPIEGEL, Werner Wenning, the CEO of German pharmaceutical giant Bayer, discusses the speculative excesses in the financial markets, the disastrous emphasis on short-term profit and the appropriateness of his multimillion-euro salary.
SPIEGEL: Mr. Wenning, speculative excesses have brought the financial markets to the brink of disaster. The industrialized countries are going into recession, and the reputation of executives is at an all-time low. Is capitalism in a crisis?
Werner Wenning: I'd say that's probably a bit exaggerated. In 1991, when I worked for the Treuhand agency (the government agency that privatized the former East German state-owned enterprises after the Wall came down) for a year, I realized just how inhuman socialism treated citizens. I am not familiar with any better model than the social market economy. It is the most effective system when it comes to meeting society's needs. Still, we should return to its principles.
The Bayer factory complex in the German city of Leverkusen. SPIEGEL: What has been forgotten?
Wenning: We have to rediscover a balanced relationship between the interests of the capital markets and the interests of workers. The capital market seeks to achieve the highest possible return on invested assets. The worker, on the other hand, is interested in job security and fair compensation.
SPIEGEL: Can the two really be reconciled that easily?
Wenning: Those of us working in industry bear little of the blame. We have become more competitive and have done exceedingly well globally. Workers benefit from this; at least at Bayer, they share in the profits. In the financial sector, on the other hand, a number of things went wrong. For a long time, money was too cheap, and it was used irresponsibly. Banks used mathematical methods to develop products that bore no relation to the real economy. They established special-purpose entities that never appeared on any balance sheets. But what was lacking most of all was an agency tasked with supervising the market players.
The German government's offer to come to the rescue of carmaker Opel has come in for hefty criticism, particularly from within Chancellor Merkel's own party. Meanwhile Opel says it is reducing production for next year and cutting back to a 30-hour week in most plants. They say that if America sneezes, the world catches a cold. Now, it seems that if US auto giant General Motors has influenza then its European subsidiary Opel is going to straight to the German government for the aspirin. On Monday Berlin agreed to consider extending loan guarantees to Opel so that it can insulate itself from the troubles at its parent company in Detroit. While Chancellor Angela Merkel was careful to insist that any such move would be a special case, the plans are already coming under fire. Some politicians from within her own party have attacked any hint of a bailout, with some arguing that German taxpayers should not be helping out what is essentially a US company. German carmaker Opel may be facing a cold winter. Merkel met with Opel executives on Monday after they asked for a loan guarantees of around €1 billion ($1.26 billion) to ensure liquidity if Detroit-based GM files for bankruptcy. The entire US car industry is pleading for a government aid package of around $25 billion to weather the current problems wrought by the worst economic situation in decades. In Germany, where the auto industry is one of the biggest employers, some are concerned that any state aid to Opel could flow across the Atlantic to prop up its US parent company. Others worry that bailing out one company or one sector could have a snowball effect with troubled firms automatically turning to the state when the going gets tough.
The German government's offer to come to the rescue of carmaker Opel has come in for hefty criticism, particularly from within Chancellor Merkel's own party. Meanwhile Opel says it is reducing production for next year and cutting back to a 30-hour week in most plants.
They say that if America sneezes, the world catches a cold. Now, it seems that if US auto giant General Motors has influenza then its European subsidiary Opel is going to straight to the German government for the aspirin.
On Monday Berlin agreed to consider extending loan guarantees to Opel so that it can insulate itself from the troubles at its parent company in Detroit. While Chancellor Angela Merkel was careful to insist that any such move would be a special case, the plans are already coming under fire. Some politicians from within her own party have attacked any hint of a bailout, with some arguing that German taxpayers should not be helping out what is essentially a US company.
German carmaker Opel may be facing a cold winter. Merkel met with Opel executives on Monday after they asked for a loan guarantees of around €1 billion ($1.26 billion) to ensure liquidity if Detroit-based GM files for bankruptcy. The entire US car industry is pleading for a government aid package of around $25 billion to weather the current problems wrought by the worst economic situation in decades.
In Germany, where the auto industry is one of the biggest employers, some are concerned that any state aid to Opel could flow across the Atlantic to prop up its US parent company. Others worry that bailing out one company or one sector could have a snowball effect with troubled firms automatically turning to the state when the going gets tough.
The European Unions is planning to unveil an economic stimulus package worth 130 billion euros, German Economics Minister Michael Glos said Wednesday. All member states will be expected to chip in. Glos told private German TV news channel n-tv that each EU country would be expected to contribute 1 percent of their gross domestic product to the package. He added that this would amount to about 25 billion euros ($31.61 billion) for Germany. According to news reports, details of the package are supposed to be announced on Nov. 26, with EU leaders possibly approving the plan at their summit on Dec. 10.
Glos told private German TV news channel n-tv that each EU country would be expected to contribute 1 percent of their gross domestic product to the package. He added that this would amount to about 25 billion euros ($31.61 billion) for Germany.
According to news reports, details of the package are supposed to be announced on Nov. 26, with EU leaders possibly approving the plan at their summit on Dec. 10.
"We welcome the commitment to a shared belief that - as it says in the summit conclusions - market principles, open trade, investment regimes, and effectively regulated financial markets foster the dynamism, innovation and entrepreneurship that are essential for economic growth, employment, and poverty reduction." "But we cannot go on as we did in the past, as the G20 conclusions suggest: The summit expressed its trust that growth will be restored. Yet, we cannot simply go back to business as before. What we need is a commitment to qualitatively better growth, recognising that resources are finite. A modern day Maynard Keynes would put people back to work and foster innovation by installing solar panels and wind turbines on every building across Europe."
"But we cannot go on as we did in the past, as the G20 conclusions suggest: The summit expressed its trust that growth will be restored. Yet, we cannot simply go back to business as before. What we need is a commitment to qualitatively better growth, recognising that resources are finite. A modern day Maynard Keynes would put people back to work and foster innovation by installing solar panels and wind turbines on every building across Europe."
