New market conditions and "exit strategies" for the German arms industry. OSW Commentary No. 130, 12.03.2014

Due to changing internal and external conditions, the German arms industry is facing serious challenges as are its counterparts across Europe. The arms sales market in Germany is contracting – orders from the Bundeswehr are slowing down and the Federal Ministry of Defence is planning to change the way it cooperates with German arms producers. In addition, member states of NATO and the EU, major customers of German arms manufacturers, are reducing their defence spending, which will spell a fall in their orders for new armament and military equipment. In response to the new circumstances, the German arms industry is beginning to organise itself and increase its lobbying efforts in Berlin and, with the support of the federal government, it has been implementing specific measures in several areas. German companies are interested in securing new markets outside NATO and the EU and are also exploring opportunities for mergers and joint ventures with other German and foreign companies, and are seeking to create more conducive conditions for business on the EU and NATO markets.

Why Are German Employers Associations Declining? A Challenge to the Conventional Wisdom. CES Germany & Europe Working Papers, No. 05.3, 2005

This paper challenges the conventional explanation for declining density of German employers associations. The dominant account asserts that German trade unions have taken advantage of increased globalization since the 1980s which has made internationally active enterprises more vulnerable to production disruptions to extract additional monopoly rents from multinational employers via aggressive collective bargaining. Small firms have responded to the increased union pressures by avoiding membership employers associations, which has produced the density declines. Data, however, disconfirm the conventional explanation; compensation increases have actually become increasingly smaller over the decades. This paper presents an alternative explanation that is consistent with the data. We argue that it is the large product manufacturers rather than the trade unions that have greatly increased price pressures on parts suppliers, which has led to a disproportionate number of suppliers to quit employers associations. The paper also discusses these findings in light of the "varieties of capitalism" literature. It points out that this literature has depicted national models as too homogeneous. The decision of several German employers associations to offer different classes of membership represents an accentuation of variety within national varieties of capitalism.