Global quality production—new patterns of transnational division of labor of German automobile suppliers

Abstract:

The contribution will focus on changing transnational production systems of German medium sized automotive suppliers. In addition to the traditional strategy to integrate low wage locations into their transnational value chains (the “extended workbench” strategy), a new pattern is on the rise, which we call „global quality production“. This means, German automobile suppliers are upgrading low wage locations in Central and Eastern Europe (CEE) as well as in China in upgrade in competencies and capabilities, enabling them to enter higher value segments of production that up to now were thought to be an exclusive domain of German locations.

Based on case evidence the contribution will discuss how the process of upgrading at low wage locations in CEE and China is organized. This includes how German automobile suppliers ensure the local pre-conditions for upgrading strategies, such as a capable local supply base and the supply of a of qualified work force

With regard to Germany the contribution will discuss the ambivalent implications of this upgrading in CEE and China and the newly emerging new pattern of transnational division of labor. One hand automobile suppliers German locations may face new impositions, when firms use the new options for another round of cost oriented relocation. But there can be new opportunities as well, because the successful operation of transnational quality production systems also depends on the capabilities of German locations to newly direct their profiles to innovation and coordination tasks in global systems. For industrial production in German locations this structural change reduces the significance of its traditional function, but at the same time amplifies its direction to innovation functions. For works councils new options of codetermination open up in this process, but using them is bound to preconditions: adjusting their competence profiles, redirecting their organization structures, and reorganising their power base in a differently structured workforce.