Conference 7.286::digital

	   IT investment: Europe's IT use lags behind, US companies
	   warn
       
	   MONDAY JANUARY 27 1997
	   ---------------------------------------------------------
	   By Louise Kehoe in San Francisco
	   ---------------------------------------------------------
	   Europe is falling behind the US and Asia in the use of
	   information technology, a trend which threatens its
	   future prosperity, according to executives at several US
	   high-technology companies.

	   At the same time, they say, protective labour laws in
	   Europe are discouraging new investment in manufacturing
	   plant by overseas IT manufacturers.

	   "The problem in Europe is an unenthusiastic approach to
	   the use of IT in business," said Mr Andrew Grove, chief
	   executive of Intel, the world's leading semiconductor
	   manufacturer.

	   This is putting the competitiveness of European
	   companies and the strength of its economies at risk,
	   according to several of his colleagues in the industry.
	   "Technologies such as electronic mail are just not part
	   and parcel of the way [European companies] operate,"
	   said Mr Grove. "IT is largely incidental to the way
	   managers work."

	   Mr Grove, who will address the Davos World Economic
	   Forum in Switzerland next week, plans to deliver a blunt
	   warning to political and business leaders that the world
	   outside Europe is far more advanced in the use of IT.

	   Similar concerns were expressed last week by Mr Richard
	   Thoman, International Business Machines chief financial
	   officer, when the computer company reported its year-end
	   results. "It is troubling to anybody who cares about
	   European prosperity that today, in general, Europe is
	   investing in capital goods, including information
	   technology, at only about half the rate you see in the
	   US and Asia," he said. "That doesn't augur very well for
	   their future."

	   IBM is also among the US technology companies critical
	   of European labour laws that make it difficult for
	   businesses to adjust to changing market conditions.

	   "We are continuing the hard fight to reduce our
	   infrastructure in Europe," said Mr Thoman. The company
	   had aimed to cut its costs in Europe by $300m to $400m
	   in the fourth quarter of 1996, but achieved savings of
	   only $200m.

	   The "inflexibility" of the European workforce is also
           creating problems for Digital Equipment, said Mr Robert
	   Palmer, chairman and chief executive of the computer
           company. Cutting its workforce and closing excess
           facilities throughout Europe is proving to be a slow and
           frustrating process.

           France and Germany head the list of European countries
	   that are difficult to do business in, according to US IT
           industry executives. This "has the unfortunate effect of
           making these countries less desirable to start new
	   operations in", said Mr Palmer.

           "It is not an accident that unemployment in the UK is at
           a long-time low," he said. "It is a lot easier to
	   operate in the UK. The workforce is a lot more
           flexible."

		 � Copyright the Financial Times Limited 1997
	       "FT" and "Financial Times" are trademarks of The
			   Financial Times Limited.

    Ask UK workers if they are so happy about the money dictatorship ...
    You know the difference between Capitalism and Communism ???
    NONE: both are man oppression. This is probably the 'modern' slavery...
    To end my point of vue I would also say the people who write such
    articles do not know what the term 'work' means. For these people
    'money' is not important... because they have so much ...
    
    Jean-Pierre
    

               >This "has the unfortunate effect of
               >making these countries less desirable to start new
               >operations in", said Mr Palmer.
    
               >"It is not an accident that unemployment in the UK is at
               >a long-time low," he said. "It is a lot easier to
               >operate in the UK. The workforce is a lot more
               >flexible."
    
    There are two points to be said about this: since when has Mr Palmer
    started new operations ? He has laid off some 60 thousand people, and
    is the last one to lecture on investment opportunities. On the question
    of UK unemployment, the way unemployment is measured in the UK has been
    changed 27 times by the governing party, always with the  effect of
    reducing the number of unemployed. The position of the UK economy in
    world terms has been one of continual decline, in spite of the
    advantages which the exploitation of North Sea oil have brought.  
    I speak as a UK citizen nand my family have been in business in the UK 
    for generations. 
    
    These remarks are a cheap shot at Digital employees in France and
    Germany. If Mr Palmer really has nothing else to blame for his
    failures, he should resign immediately. His resignation can do our
    company nothing but good.
    
    ..Kevin..

    It might come as a surprise to some of our leaders, but there's a
    large number of US companies here in Germany, besides Digital.
    
    IBM, HP, Compaq, Microsoft, to name a few, operate under the 
    same law as Digital, and guess what ? They all manage to grow 
    their business quite nicely.
    
    One might discuss the pro's and con's of Germany's economic and
    political system from every angle, but blaming the employees for the
    misfortune of the company seems unfair to me.
    
    Klaus

	   >IT investment: Europe's IT use lags behind, US companies
	   >warn
           >
           >By Louise Kehoe in San Francisco
	   >---------------------------------------------------------
	   >Europe is falling behind the US and Asia in the use of
	   >information technology, a trend which threatens its
	   >future prosperity, according to executives at several US
	   >high-technology companies.
    
    I think Louise needs to read a bit more. Scandinavian IT is
    ahead of the United States and Asia. They are leaders
    in many areas such as GPS, phones, internet use, etc...
    
    Regards,
    George

    Lots of stuff I've seen says Asia doesn't need IT to get where it's got
    to, or use it to keep them there. They use flatter management structures
    and a genuine meaningful approach to improving quality (amongst others)
    to minimise the need for the kind of I.T. stuff the industry sells.
    (That's also been my first-hand understanding of what goes on in the
    Japanese implants in the UK. Use what works, but improve continuously).
    
    'Course, Andy Grove may know something I don't.
    
    regards
    john

re .56:
    
           >France and Germany head the list of European countries
	   >that are difficult to do business in, according to US IT
           >industry executives. This "has the unfortunate effect of
           >making these countries less desirable to start new
	   >operations in", said Mr Palmer.

           >"It is not an accident that unemployment in the UK is at
           >a long-time low," he said. "It is a lot easier to
	   >operate in the UK. The workforce is a lot more
           >flexible."
    
    One might wonder why Ford is going to build the new Escort in Germany
    and Spain, and not in UK (See attached article from "The Observer",
    19-Jan-1996)? And how come HP is so stupid as to build a new PC factory
    in Germany (near Stuttgart, where their German HQ is)?
    
    

         
    FORD workers found out the hard way last week about the flipside of the
    Government's inward investment 'miracle': sacking British staff is
    cheap and easy.
         
    City financiers and economists call it the 'cost of exit'. A
    calculation of how quickly and  inexpensively  a workforce can be
    dumped in order to protect a multinational's profits now plays am
    increasingly important part in companies' decisions about where to
    invest.

    With the changes made to trades union and employment protection
    legislation under Conservative governments, it Is hardly surprising
    that the UK easily wins the 'lowest cost of exit' contest. Nowhere in
    Europe comes close.

    Of course, the Government claims that the cheap, deregulated and
    malleable workforce Created by its policies has played a part in
    ensuring that 40 per cent of all US and Japanese investment into Europe
    lands on our - shores the 'miracle' trumpeted by ministers.

    Vicky Pryce, chief economist with accountant KPMG, has worked with many
    foreign companies investing here.

    'With fast-changing global markets, the cost of exit is now of growing
    importance. A company needs to know how quickly and cheaply it can get
    out if things go wrong. There Is no doubt that it is one of the key
    factors that attracts companies to Britain.'

    So it is no wonder that Ford's decision to shift investment from its
    Halewood plant on Merseyside and to build the next Escort in Germany
    and Spain has left communities in northeast England and south Wales
    feeling uneasy.

    These are two of the regions that have prospered most from the influx
    of investment. They could again see their dole queues lengthen if
    foreign companies decide to up sticks because the UK regime lets it off
    the hook more easily.

    For Patrick Minford, economics professor at liverpool University and
    one of the Chancellor's former wise men, It is a price worth paying:
    'The downside of a flexible labour market is that It makes it much
    cheaper for companies to wind down production.

    'In Spain, it would cost you an arm and leg to shut down. But we
    attract a lot more foreign investment than Spain. A flexible labour
    market is, on balance, a good thing.'
         
    Minford's views are littIe comfort to the local community left to cope
    with a stark reverse for Covernment aspirations to turn the UK into the
    enterprise centre of Europe. With companies such as Courtaulds and
    Coats Viyella also shutting down UK factories and moving to cheaper
    plants overseas, the UK should perhaps be known as the 'easy come, easy
    go' centre of Europe.

    Yet no matter how nonchalant the Government appears over decisions to
    relocate outside the UK -  ironically to countries adopting the EU
    Social Chapter - they are scarcely helpful for ministers who would
    rather talk about Britain's 'impressive' inward investment figures in
    the runup to the election.

    They certainly don't want to mention the fact that although investment
    is coming into the UK, it is also running out at record levels.

    Recent figures suggest that while in 1995 investment by foreign
    companies into the UK increased to 13.3bn, UK investment overseas rose
    to 26bn. Such is the continued propensity for British firms to find
    investing overseas preferable to their home market.

    Critics of the Government's agenda argue that the UK would benefit more
    if industrial policies were aimed at keeping some of these millions
    that are destined for overseas InsIde the UK, creating jobs and tax
    revenues. Would it not be better for companies to build facilities in
    Britain and expand exports?
         
    The start differenve between the UK and its competitors in terms of
    investing outside the domestic market can be seen by looking at figures
    released from the the Organisation for Economic Co-operation and
    Development. UK investment overseas represents 2.65 per cent of GDP
    compared with 0.82 per cent in Germany, 0.5 per cent In the US and 0.72
    per cent in Japan.

    KPMG's Pryce, who wrote a report on the rising level of outward
    investment for the Government, denies that there is much of a problem.

    'Most. investment overseas was undertaken after the opportunity to
    export had been exhausted.

    'Companies wanted to get closer to their markets. Much of this
    investment would not have, happened had It not been abroad.'

    But the ministers cannot have it both ways. They argue, that inward
    investment into the UK creates jobs, leads to innovation but does not
    result in foreign companies repatriating profits.

    So surely they cannot claim that outward investment does not cost jobs
    or diminish inn~ vation while conveniently boosting profits for British
    companies and shareholders.
  

From the same issue of "The Observer":
    
How redundancy deals compare

UK

Acceptable to all? Companies must consult unions or employee representatives
but there is no legal pressure to reach agreement.

Available to all? No. A company only has to pay employees with more than two
years' service.

Generous terms? Not really. The statutory payment is 210 for each year of
service. Those over 41 are entitled to this amount multiplied by 1.5. However
many companies have additIonal arrangements, eg one week's pay for each year
worked.

So? It's relatively easy and cheap to make a British worker redundant.
         
GERMANY

Acceptable to all? Should be. Companies must agree terms with works councils -
or face a lengthy investigation in the labour courts, which rarely accept the
economic case for redundancies. Most companies agree large packages to avoid
such a trial. 

Available to all? Yes. Paymant is for all, irrespevtive of how long they have
worked for the company.

Generous terms? Better than the UK. The rule of thumb for blue collar workers is
half a month's salary for each year worked, for white collar workers a months
pay. 

So? It's relatively difficult and expensive to make a German redundant.
         
SPAIN
         
Acceptable to all? The company must reach agreement with the regional labour
authorities, which may declare redundancies 'null and void'. The onus is on
companies to offer generous enough deals to avoid such a situation.

Available to all? Yes. Pay- ment does not depend on how long an employee has
worked for the company.

Generous terms? The terms are much better than the UK. Payoffs are between 20
days' and a month's salary for each year worked. So? It's relatively difficult
and expensive to make a Spanish worker redundant.
     
                        

    Many analysts agree, however, that the high levels of unemployment
    in Europe are due to its market being more regulated than other skill
    pools. I am not so sure if the good protection offered by the various
    European governments is really "protecting" the workers to the extent
    intended. It is more of a deterrent in the current climate.

    >Per

    > Many analysts agree, however, that the high levels of unemployment
    > in Europe are due to its market being more regulated than other
    > skill pools. 
    
    This statement is hard to verify, as this area is a minefield of spin.
    First, there is no agreed measure of the "level of unemployment." 
    
    Second, following the collapse of the comecon economies, the economic
    base for the employment of some 50 million Europeans was removed. The
    wonder is that these economies have recovered so quickly. 
    
    Third, your statement fails to explain that many areas of Europe with
    little regulation have high unemployment for historical/structural
    reasons, eg Greece, Portugal, Ireland. These countries have far less
    regulation than France and Germany.
    
    Germany and France represent a hugh market for Digital. We have to
    compete there and play by the rules they have there, or we will not
    grow. To turn our backs on these markets for ignorant reasons is
    scandalous. We need a CEO who understands this.
    
    ..Kevin..
             

RE: .-1
>>We need a CEO who understands this.


	So does Intel apparently from what I've been reading in this
	string of notes..

							mike

|    Germany and France represent a hugh market for Digital. We have to
|    compete there and play by the rules they have there, or we will not
|    grow. To turn our backs on these markets for ignorant reasons is
|    scandalous. We need a CEO who understands this.

	I agree 100%. In part, I think our CEO understands that he has
	to play by the rules. But he probably does not understand how to
	play by the rules. This is why he perfers to chicken out, I bet.

	>Per

[I write this not with an axe to grind on any given point, but to illustrate
that just such discussions are going on in the marketplace in general.  It's
not just a Digital thing.]

Last night on one of the US news shows (on CNN, I think), they talked about
some action that a large group of French workers have been fighting for a
large time.  They said the company had finally agreed to sit down and
negotiate with the workers over this matter (I don't remember what).
They said that the workers would be viewed as heroes by other workers all
over the country, but that this was ironic, because it sent a clear message
that this was a difficult country to invest in, and the action might actually
cost jobs in the long run.

I realize I haven't passed along everything they said, and that that was only
one news report whose fairness I am not qualified to judge.  But it seems
like it sounds a warning that the interested parties ought to consider
carefully - and it seems to agree to some degree with some of the things
attributed in this string to Bob Palmer, however inelegantly they may have
been uttered.

-Mark

     >>don't kill the goose that laid the golden eggs?
    
    What a funny coincidence you should choose this title. I was thinking
    of writing the same title myself but in a completely different context.
    
    About 12 months ago I had a conversation with a manager with an
    important European sales function. We were talking about the best way
    forward, and he told me that we wanted "to concentrate on high margin
    countries."
    
    "What do you mean ?" I asked.
    
    "Well not all countries pay the same contribution of revenue to the
    corporation. Some pay more than others, they are the high margin
    countries."
    
    "Which are the high-margin countries ?"
    
    "Germany, for example,"he replied.
    
    "Which other countries ?"
    
    "Well that is it, really, Germany is the high margin country!"
    
    So I would say, Germany is the golden goose and by cutting the sales
    force there we are killing the golden goose.
    
    As for CNN, well it is not my idea of a neutral source. In fact there
    was a lot of US criticism of the French Government in the US press
    following the victory of the French trade unions on the pensions
    question. 
    
    But my point is, things are the way they are in France and Germany.
    Complaining about it is like a golfer complaining about the wind. You
    had better shut up and get on with your game, because the wind is there
    for everyone. They constitute the heart of the European economy, and
    you might just as well decide to pull out of the States of Washington
    and New York, because you feel high US arms spending is bad for the
    world economy. If the CEO of a European corporation made such a
    decision, everyone would fall about laughing. But it seems such naive
    prejudice passes for informed opinion stateside.
    
    Digital's problems with employees in those countries are self made. In
    1989 there were very few trade unionists in the company, but by
    completly ignoring its duties and by not following a clued up approach,
    there is now difficulty. HP has a European Works Council, it is a
    respected and trusted group. So do many other US Corporations. IBM has
    had a union contract in Germany for nearly 30 years. Digital
    is trying to bury its head in the sand and this won't work.
    
    ..Kevin..                

    The following text has been sent today to: Bob Palmer, cc: Rando,
    Copperman, Mullarkey, Dirkmann
    
    
    Open letter to Robert B. Palmer, Chairman and Chief Executive Officer, 
    Digital Equipment Corporation
    
    Dear Bob, 
    
    We learned from an article in the Financial Times of January 27 that 
    you blame the "inflexibility" of the European work force for problems 
    at Digital Equipment. You cite France and Germany as examples of 
    countries where it is particularly difficult to do business. On the 
    other hand, you mention the UK as the country where "the workforce is a 
    lot more flexible".
    
    But obviously the present woes of Digital Equipment have nothing to do 
    with the "inflexible" European workforce. Digital's problems are not 
    limited to Europe. The IT market in Europe is expanding, and our 
    competitors' revenues and profits are increasing both in Europe and in 
    Germany, Europe's largest IT market. Digital Equipment, however, has 
    lost momentum with its letal downsizing and is loosing market share 
    every day. This is happening all over Europe, in the UK and in the US. 
    As the examples of HP, SGI and SUN, and even IBM Europe, clearly 
    demonstrate, it is not difficult to do business in Europe. But it is 
    difficult to do business with Digital. 
    
    We therefore ask you to refrain from resorting to excuses such as 
    "inflexible workforce", and ask you instead to concentrate on improving 
    the management of the corporation.
    
    Finally, there are further facts which clearly contradict your 
    argument: The workforce in Germany is so "inflexible" that Digital has 
    managed to downsize it from 9,000 to 3,000 since 1992. That is a hard 
    blow. Of course Digital had to pay a high price for these cuts. But in 
    view of the social impact of corporate downsizing, this is only a small 
    comfort. 
    
    We strongly invite you to present your argument to our colleagues in 
    Germany.
    
    Regards
    
    Christian Brunkhorst
    
    Chairman General Works Council
    Digital Equipment Germany    

    
    
    "Flexible workforce" may not be the only parameter that foreign
    companies search before deciding to invest in a European country, and I
    believe it would be pretty near-sighted to believe so.
    
    As an example, I recall reading only a few days ago about  
    Toyota's CEO visiting England, and officially declaring that he does 
    not intend to invest in Great Britain (in these notes considered the
    flexible Workforce country per excellence in Europe) until it is not
    clear wether G.B. will make its mind up about adopting the "Euro"
    currency next year. 
    
    In other words, in the near future, the most appetising countries will
    be the strongly favorable "Euro" countries... let me think, do these
    happen to be France and Germany ? Sure do !! 
    The reasons are obvious. Exchange rates in Europe can bring strong
    fluctuations in a company's results. A common European currency is
    a strong stabiliser, and much more interesting than the "flexible 
    workforce parameter" to my opinion, and apparently also to a few 
    Asian CEOs which is waht really counts. I am sure soon the others
    will follow suit.
    
    Another parameter for investing in Europe is probably taxes, and there
    is no doubt in Great Britain companies pay less taxes than in the rest
    of Europe. In particular Ireland, thanks to the European Comunity
    contributions has been able to atract a strong number of
    Multinationals, to the extent that the country is now prospering.
    Things may change in the future since by 1998 the EEC will stop
    contributing to Ireland's finances, and turn to other poor "niches" in
    Europe. Here also things could change dramatically. 
    
    I just think that the "flexible workforce" problem is just very
    narrow-sighted. It is "one" element out of plenty others. And before
    making considerations on Germany and France, the strongest countries in
    Europe (economically, of course) I would be extra-careful about the
    futures involved. 
    
    Michel.                                             
    
    

>    lost momentum with its letal downsizing and is loosing market share 

Lethal.

Losing.

You really should spellcheck before you send a letter to the CEO of a
company.

Letters with such errors should go right into the trash.  "English is
not my native tongue" is no excuse when something is important to you.

/john

    John,
    
    Give us a break, will you?
    
    Charles

    Re. -1
    
    > Letters with such errors should go right into the trash.
    
    Guess what I'll do with your comments.
    Regards,
    
    Frans

I don't claim to be an expert or grammar nit-picker, but John's point
is absolutely valid. You do not do your cause any good at all by
seeming to not care enough about it to use a simple tool or engage
assistance in crafting an important letter.

JMO,
Pete

    Has it occurred to anyone that the spelling errors in the base note may
    not reflect the actual text of the letter, but simply errors in
    re-keying?

>    re-keying?

Is this a high-tech company or the IRS?

    I find such errors all the time, and from sources within Digital that I
    would not expect such blatant "spell-checker-would-have-found-this"
    kind of errors. Official memos from native English speakers should be
    correct in grammar and spelling. Period. 
    
    I can forgive errors from non native English speakers (what language
    does one 'think' in?), but I must agree that a letter to a CEO should
    have been gone over by several people before it goes. As I would expect
    no less from the CEO's secretary, because I doubt if a CEO would
    actually type his own stuff.
    
    One other gripe is the use of correctly spelled but entirely
    inappropriately used words - like the email I recieved recently,
    announcing the "Role Out Schedule" for a project. I guess we have to be
    "actors" now?
    
    .mike.

    
    	Just because DECSpell misses it doesn't mean it's not a spelling
    	mistake.
    
    	role/roll - spelling mistake
    
    	that/thta - typo
    

    RE:  <<< Note 4978.79
    
    ->	role/roll - spelling mistake
    
    I disagree, both are spelled correctly. The context of use was in
    error, not the actual word.
    
    And I agree - just because the spell-checker doesn't flag it, doesn't
    mean it's right.
    
    .mike.
    

    
    	This could be a semantics issue, but anyways:
    
    	He spelled "roll" wrong, and his misspelling just happened to be
    	a word as well.
    

|    	This could be a semantics issue, but anyways:
|    
|    	He spelled "roll" wrong, and his misspelling just happened to be
|    	a word as well.
    
	Perhaps it was not coincidental. As we know, some words have
	many meanings. Perhaps the author knew about ''roll'' and thought
	it could be used in the same context as role. In this case the
	misspelling did not just "happen". The word was then correctly
	spelled, but did not have the intended meaning.

	>Per

	As a Digital employee I'm dismayed at these discussions around Germany
	and France being the black sheeps in the company.

        As a believer in European Integration including	some sort of social
	rules, I'd like to publicly thank Mrs Andrew Groves from Intel,
	Richard Thoman from IBM and Robert Palmer from Digital for their
	contribution.

	Joel

    >> Germany and France being the black sheeps in the company.
    
    ahhhm.. that should be "sheep"
    
    JUST JOKING, OK? :-) :-) :-) :-) :-) :-) :-) :-) :-) :-)  It's a joke :-) 
    
    On a serious note : Are you lumping Grove,Thoman(who's he?) and Palmer
    together as representative of something positive or something negative?
    Your meaning was not quite clear to me.  What do these three have in
    common for you and what is their specific relevance to having social
    policies in Europe?
    
    I ask because during a business administration course we studied Andy 
    Grove in detail and the way he dealt with the Intel transformation. On
    the face of it, I see no parallels with Bob Palmer and the Digital
    transformation (other than the fact that both transformations were
    life/death issues and that they were successful - and many would say
    that the jury are still out on the Digital verdict).

    /Chris/

    I saw an interview of the GM (=Opel) CEO for Germany last night on TV
    (can't remember the name, but he's American).
    
    Opel is building a big new factory in Germany. When asked why they
    didn't build it elsewhere in Europe where the workforce is cheaper
    (inflexibility wasn't mentioned) his answer was more or less that
    Germany being expensive is bullshit, the productivity is extremely
    high, it's a good place to invest etc. etc. On the other hand he told
    the older factories are going to be modernized when the new one goes
    into prodution, so the number of (factory floor) jobs won't increase
    (but they have a high demand for highly skilled engineers).
    
    They're also building a factory in Poland. When asked why - why
    couldn't they just deliver Poland from the German factories, his reply
    was something like "that would be pretty stupid - how do you think the
    Poles can afford to buy our cars if we don't give them some work?".
    

	Why do I lump them? see note .56 If you watch 'les guignols' these
	three seem to speak for the 'World Company'. Thoman is CFO of IBM.

	Is it positive? In absolute term I do not think so but if you consider
	that the best way to trigger a European (or any national) feelings 
	is to find common 'ennemies' it could positive.

	Jo�l

     >>the productivity is extremely high
    
    That is it. The question is why. I read an article in the Financial
    Times a while back concerning Alcan Aluminium, which has production
    plants in Germany and the UK. For some reason, although the workers in
    Germany were much better paid, with their 35 hour week, 6 weeks
    holidays, works councils etc etc, the German production costs per unit
    were lower. So they transferred the German manager to the UK plant, but it
    was no good, the UK costs stayed higher. What is the problem, they
    asked the German manager. Well, he answered, it is true that labour is
    much cheaper here and I have no works council to deal with, but the
    problem is that Aluminium processing is a complex task. In Germany the
    unions make us train the apprentices and we have to keep them on. But
    then if something goes wrong in the production process, they fix it
    quickly and we can keep moving. Cheap unskilled labour cannot do this.
    
    What does this mean for Digital ? I believe that if we want to grow,
    the central European markets are crucial, we need skilled sales and
    support personel in the countries, and we have to live with the
    cultural differences we meet on the way. 
    
    ..Kevin..                                                         

    re .85, .87
    
    One more to add to that list: AMD is building a $1.5 bln 
    fab near Dresden.
    
    Klaus

You do have to admire the dedication of some of 
these European workers.  Rather than sticking with
Digital, many U.S. workers would just accept a 
position with another organization.  The Europeans
really seem to want to stay with Digital.

BC

    
    
    
                                  WRONG!
    
    

I heard on the news the other day that Germany has 12%+ unemployment rate.
That could explain why folks want to fix rather than flee. The news did
mention that much of Germany's unemployment at the moment is a leftover
from all the terrible weather they've had this year. liesl

    The cold winter has caused unemployment to increase in cinstruction
    industry - however, that's only a small part of the problem.
    
    Nevertheless, it's not quite as simple as "accepting a position with
    another organization" (.re 89) - especially for the older employees
    (>40, and even more so for those >50) finding anything else can be
    close to impossible.
    

    It seems so easy to forget, that the economy is moving in cycles -
    everywhere.
    
    I remember a few years back, when almost any business periodical was
    filled with headlines about the decline of the US economy. It seemed 
    unbelievable at the time, that the US would ever get out of it.
    
    Now the German economy is in the hot seat. And there sure are a couple of
    problems here that need to be fixed. Some of them will and some of them
    won't. 
    
    If you take a look at the two or three latest issues of Business Week,
    they had to say very nice things about the future potential of the German
    economy - biggest domestic market in Europe, best suited to take
    advantage of the eastern market, to name a few.
    
    The historically high rate of unemployment here has some structural
    reasons, but it has been made worse by fiscal policy during the last
    two or three years. Interest rates have been kept high and public
    spending was cut, making things worse in order to prepare for European
    monetary union.
    
    If the economists are to be believed, then this is an investment into
    Germany's and Europes future, as it provides the basis for a stable
    Euro currency, which in turn should ensure economic growth through the
    years to come.
    
    The latest pressure on the UK government by the Toyota CEO to join 
    the EMU seems to support this theory. It also shows that the
    "flexibility of the workforce" is only part of the picture.
    
    Klaus

    re. -1
    
    And I guess that's why the DAX (Deutsche Aktienindex) which comprises
    of stock prises of the 30 blue chips companies in Germany just moves
    north like hell.
    
    Hung

Re: cost of labour in GY etc.

Audi recently stated that the cost of labour only contributes 2% (two !) to the
total cost of building a car engine. As a consequence, when looking for a place
to build a new factory, they look much closer at possibilities to run the plant
with three shifts seven days a week than at labour cost.

Not that I think this is much relevant for the current situation at Digital...
at least not in NSIS, MCS, Sales etc. but I found this statement very
interesting.

Hans.

*** warning *** this reply has not been spell-checked *** warning ***

    Re .95, that's only for the engine. Car engines these days are
    manufactured by complex machinery that is run almost totally by
    computer. Machining, drilling, boring, milling, etc is all done
    quickly, accurately and repeatably, by machines that never ask for a
    raise, a vacation or a pension. It would be more interesting to see
    what Audi's labor cost is for building an entire vehicle. (Though much
    of the entire process is becoming more automated all the time).
    
    Harry
    

>>    Re .95, that's only for the engine. Car engines these days are
>>    manufactured by complex machinery that is run almost totally by
>>    computer. 

Part's of it, yes. Volkswagen went through a period where they tried to put
a robot behind every workplace and the learnings were that although these
machines could run day and night, they are pretty expensive to design/build 
and are not very flexible. "Empowered groups" were cheaper to rise quality 
and productivity, with robots confined to specific areas only (e.g. toxic 
work environments, simple-repeatitive work patters, ...). 

hl