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Synopsis

PROCRASTINATION AND OVERSEAS LOCATION: THE EVOLUTION OF VOLKSWAGENS NORTH AMERICAN PRODUCTION PLANS

GŁnter Krumme, University of Washington, Seattle

(http://faculty.washington.edu/krumme/papers/volks.html)


Industrial geographers have shifted their theoretical interest increasingly toward the nature and anatomy of processes of industrial development and structural change- For many researchers this has meant descendinq to the micro-level of locational decision processes over time. Explorations of the ways in which changing mixes of variables are successively constrained are thought to be more enlightening than merely accounting for the reasons' why a certain location was chosen at a specific point in time given unexplored sets of constraints. The evolution of corporate investment and location plans amidst highly turbulent, internal and external economic, social and political environments On local, regional, national and international levels will be investigated in the context of Volkswagen's North American investment plans which ultimately materialized in 1976.

The Volkswagen AG with its headquarters and parent plant in Wolfsburg, West Germany. is an automobile manufacturing corporation which is partly owned by private shareholders and partly by state (Lower Saxony) and federal governments. In addition to divergent and changing qovernment influences, labor unions and other institutions have had a strong impact on the recurring delays of the decision to "export jobs" to the United States Changes in relative levels of labor costs, foreign currency, exchange relations and a rapidly declining market-share appear to have been decisive in the timing of the final decision to operate an assembly plant in the U.S.. Favored by strong inter-state competition, Volkswagen eventually selected existing facilities in Pennsylvania largely on the basis of financial incentives.

These developments occurred against the backdrop of complex and interdependent political economic and corporate processes both in Germany end the U.S. The succession of corporate adjustment strategies and the way in which conflicts were resolved reflected various facets of the fact that Volkswagen belongs to the increasing 'gray area' between the private and public sectors. Of particular interest in this context are the goal antinomies and complementarities resulting from direct or indirect participation of persons or institutions in the decision process whose influence was based on territorial and place-based constituencies on the one hand and on "footloose" multi-regional or multi-national interests on the other.

In Germany, Volkswagen's financial problems and its substantial lay-offs of employees made it difficult to persuade labor unions, qovernments and the public that a further capacity expansion and locational shift abroad were in the best interests of Volkswagen's continued presence in their own region, the corporation's general viability, and West Germany's long-run needs for industrial and occupational change. In the United States, Volkswagen's intentions were at least initially welcomed by most union, industry and government representatives. The ensuing competition among states for the Volkswagen investment, however, placed the firm in a surprisingly strong bargaining position and resulted in Pennsylvania's rather controversial "package" of subsidies.

Given Volkswagen's size and macro-economic importance, the significance of the research goes beyond that of a case study. on the other hand, the insights gained tend to remain exploratory due to the still significant lack of an a priori understanding of corporate spatial processes.


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