Driving VW off a cliff: Germany’s lemming strategy and what it means for us
Something absolutely stupefying is happening in Germany: its iconic auto company, VW, the darling of every Chancellor from Adolf Hitler to Olaf Scholz, appears to be in a death spiral. At the end of this story I’ll draw a link to the salutary lesson countries like Australia and New Zealand need to draw from the German experience if we are to survive and thrive in the coming world.
For the first time ever, Volkswagen intends shuttering factories across Germany and tearing up labour contracts with its workforce in a desperate bid to survive. VW saw its profit margin crater in the second quarter of this year — hitting an unsustainable 0.9% — a reflection of tumbling sales across the planet. Tens of thousands of staff will be let go in a drive to save €10 billion over the next two years.
It is the latest case in what many analysts are seeing as a relentless breakdown in the once-mighty engine of Europe: the German manufacturing sector. The process — deindustrialisation — has multiple causes, but energy prices and labour costs are at the centre of this drama that is Wagnerian in its scale and implications for Deutschland and the rest of Europe.
Also heading for the off ramp — moving production offshore in a desperate bid to keep the wheels turning — are a host of other big-name companies. All are in sectors that not only rely on big brains and skilled workers — two things the Germans have long had in numbers — but access to affordable........
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