France enters recession as Germany splutters along

HAMISH_MCTAVISH

MacMickster wrote: »

German companies have a problem. They design and then manufacture goods that people want, but are increasingly unable to afford.

Maybe the answer for these companies would be for BMW, Audi, Mercedes and Volkswagen to close down their German plants and open new ones in Bangladesh benefiting from much lower labour costs. Surely this would be the logical step for these companies in a global economy. It would be a bit of a blow for the German economy though.

As Germany has no minimum wage, no need to offshore jobs, just pay the current workers half as much.;)

MacMickster

HAMISH_MCTAVISH wrote: »

As Germany has no minimum wage, no need to offshore jobs, just pay the current workers half as much.;)

Bangladesh does have a minimum wage - roughly £25 per month. You could probably get the very best workers that the country has to offer for 10 times that. Bangladesh also doesn't have all of this EU employment legislation to drive up costs.

If the major markets for these companies going forward are likely to be Russia, India and China, then I can't see the downside to setting up in Bangladesh. True there are likely to be tariffs on imports to the EU, but that is a shrinking market anyway.

epz_2

People buy german cars because they are german and perceived high quality, you cant outsource that.

Frankly I doubt it costs that much more to build a bmw than a ford but they can charge a healthy premium like designer hand bags etc, is it really worth damaging that when they could just get robots to do the really repetitive bits and german labour for the rest.

Also it should be pointed out as with all outsourcing, that cheep foreign labour is getting expensive at a frightening rate not to mention all the trade secrets walking across the road to competitors.

grizzly1911

MacMickster wrote: »

Bangladesh does have a minimum wage - roughly £25 per month. You could probably get the very best workers that the country has to offer for 10 times that. Bangladesh also doesn't have all of this EU employment legislation to drive up costs.

If the major markets for these companies going forward are likely to be Russia, India and China, then I can't see the downside to setting up in Bangladesh. True there are likely to be tariffs on imports to the EU, but that is a shrinking market anyway.

epz wrote: »

People buy german cars because they are german and perceived high quality, you cant outsource that.

Frankly I doubt it costs that much more to build a bmw than a ford but they can charge a healthy premium like designer hand bags etc, is it really worth damaging that when they could just get robots to do the really repetitive bits and german labour for the rest.

Also it should be pointed out as with all outsourcing, that cheep foreign labour is getting expensive at a frightening rate not to mention all the trade secrets walking across the road to competitors.

I thought they already built these cars in China and soon to be India to get round their tariffing systems?

http://www.bmw-brilliance.cn/cn/en/com_waw_bba.html

Don't many suppliers use common parts, engines as well these days.

I don't dispute the cars are designed and engineered well but people are buying a badge and the skin as much as the mechanics.

Thrugelmir

MacMickster wrote: »

German companies have a problem. They design and then manufacture goods that people want, but are increasingly unable to afford.

Precisely what the UK is aspiring to.............

StevieJ

ILW wrote: »

The UK will keep on buying Audis and BMWs. We cannot get enough of them.

I wonder how many they would be selling if the were priced in Deutschmarks It well past time that individual EU members currencies reflected their economies

purch

Thrugelmir wrote: »

Reunification came at a huge cost.

Not just to Germany.

The total lack of regard the Germans had for the ramifications of Deutsche Wiedervereinigung on their fellow EU and ERM members was an unheeded warning in the rush to monetary union a decade later.

Thrugelmir

purch wrote: »

The total lack of regard the Germans had for the ramifications of Deutsche Wiedervereinigung on their fellow EU and ERM members was an unheeded warning in the rush to monetary union a decade later.

Unsure that's the correct term. Somethings are worth the price. Quite rightly the Germans put people before money.

purch

Their people before other's money

Jennifer_Jane

michaels wrote: »

Hmm - France, probably seen as a role model/poster child for what Ed and Ed would say a labour govt would look like is in deep do-doo. I wonder if DLW and Moby will be along to comment?

I don't know about DLW or Moby, but Ed Balls was asked a question about this in Parliament yesterday. His "answer" was to say that people should really be thanking Labour for not having gone into the Euro.

Hope that helps....