Final Exam 691G
Case: Walter Hundhausen Gmbh
Size up Germany’s foundry Industry? Is WH well positioned in it now and in the future?
The beginning of the new millennium has presented Walter Hundhausen (WH) with a big hurdle to jump. The German economy is experiencing economic stagnation, an aging population and a German labour market that is filled with many intrusive government regulations.
The German economy has been growing at an average rate of 0.6 percent per year for the last 4 years; making it one of the slowest growing economies in the Euro Zone. However, study’s suggests in 2004, the domestic economy is expected to grow above 2 percent. Moreover, one-third of Germany’s…show more content… Increase in Value of the Euro: Another concern at the macro level is the appreciation of the Euro against other currencies, most notably the American dollar. As the Euro increased, the cost of WH’s products also increased. However, the opportunity to purchase at a lower price scrap iron and steel from non-European countries has also increased. As the Euro appreciates in value, it can now purchase raw materials at a lower cost.
Aging Population: The current labour shortage in Germany is creating a nightmare in the casting industry. In order to attract and retain employees, organizations were paying a premium over scheduled tariffs. These costs were substantial, as many companies were running multiple shifts in order to keep up with demand.
Reduction in Full-Time Employment: The current macro environment suggests a reduction in the number of full-time resources, because of the high labour costs. However, because of the aging population, it’s becoming increasingly difficult to find qualified workers. Sounds counter intuitive; a reduction of full-time staff to cut costs, but many companies in the industry are paying premiums over scheduled tariffs in order to keep their current workforce. Strong Social Employment Contracts: The Germany foundry industry has a strong employment contract system,