German truck maker MAN cuts shifts

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By Andrew Walker BBC World Service economics correspondent, Munich

MAN, a truck and bus maker with headquarters in southern Germany's largest city, Munich, provides clear evidence that the eurozone financial crisis is hitting the common currency's most powerful economy.

The firm's workers coming back from the Christmas and New Year break face shorter hours and lower pay.

This is a company that is thinking for the long term.

Their futuristic looking concept truck is something you won't see on the roads just yet. The chief executive, Anders Nielsen, says its aerodynamic shape could produce fuel savings of 25%.

But Mr Nielsen has a more immediate concern: "Due to the debt crisis, demand in Europe is dropping. It started in the southern part of Europe and has spread a little bit to the north."

He says selling trucks is a volatile and cyclical business, with investment decisions - such as buying a truck - affected by the uncertainty that has hit the eurozone.

So MAN needs to adjust its production to match demand, Mr Nielsen says.

There are no job losses in the pipeline, but workers will be doing shorter hours.

More than 5,000 people are affected. In the first instance the company expects the reduced shift pattern to continue for six months and then there will be a review.

The blow is being softened by a government scheme for reduced hours work, known in German as Kurzarbeit. The government makes up 60% of the lost income. In the case of MAN, another 30% is being found by changing the timing of workers' bonus payments.

Even so, the workers going on to shorter hours are taking pay cuts.

Crisis impact

Athanasios Stimoniaris is a former forklift truck driver who now represents workers' interests on the works council at MAN in Munich.

He says it will be tough for families where the worker on reduced hours is the only earner. But he says this arrangement is preferable to having people losing their jobs altogether.

Germany more widely has so far weathered the eurozone storms relatively well. Unemployment is just 5.6%. Only Austria and Luxembourg in the eurozone can better that.

But opinions are divided among German economists about how worried the country should be about the impact of the crisis.

Prof Peter Bofinger of Wurzburg University is a member of the Council of Economic Experts, independent advisers to the government. He says recent indicators show German growth being negatively affected. The idea of Germany as the locomotive to pull the eurozone forward did not materialise, he says.

But Hans-Werner Sinn, head of the Ifo economic research institute at Munich University, is much more upbeat.

He says export industries are doing "quite well", though the importance of sales to other euro countries has declined dramatically.

When the eurozone was created, he says it accounted for 47% of German exports. Now the figure is 39%, as German firms have found new opportunities in faster growing economies.

MAN already sells trucks outside the eurozone, but Anders Nielsen is keen to expand that side of the business.

For now, MAN really is feeling the effects of Europe's financial crisis.