Why China's rise is good and bad for Germany

Why China's rise is good and bad for Germany

July 20, 2010 - 11:00 pm ET

Douglas A. Bolduc Douglas A. Bolduc is a special correspondent for Automotive News Europe

BMW's, Mercedes-Benz's and Audi's German plants are running at full speed right now. The reason: wealthy car buyers in China currently have an insatiable desire to own German luxury cars.

"There are more than 900,000 millionaires in China and many of them are bursting to show off their wealth," Sascha Gommel, a Frankfurt-based analyst with Commerzbank AG, told Bloomberg last week.

To keep up with the demand in the world's largest car market, Daimler has hired 1,800 temporary workers and added Saturday shifts at a number of its German assembly plants. Audi also is adding shifts in Germany while BMW has hired 5,000 temporary workers and will give all employees covered by a wage agreement 1,060 euros on average in one-time payment.

The additional assembly plant posts helped reduce Germany's jobless rate to 7.5 percent in June from 7.7 percent in May as the number of people registered as unemployed dropped by 88,000 to 3.153 million, the Federal Labor Agency said.

Unfortunately, it is unlikely that the good times will last for long for German workers. All three German premium brands will boost their production capacities in China in the coming years. For instance BMW, which will export 10,000 3 series vehicles built in Munich to China this year to satisfy demand, will start manufacturing at its second China plant in 2012. BMW plans to hire about 1,000 new employees in China as part of its expansion there. Once that factory is online there will be less of a need for those temporary workers in Germany.

Read more: http://www.autonews.com/article/20100720/BLOG08/307219994/1131#ixzz0uQEWWVfq