German auto rebound shortens Christmas break

[December 22, 2010]  BERLIN (AP) -- German autoworkers are staying at the factory this Christmas break assembling someone else's gifts -- and they don't have a problem with it.

Germany's leading carmakers made the rare move of cutting holidays short as 2010 draws to a close to meet a surge in demand that is contributing to the nation's strong economic rebound from the recession.

During the worst of the global financial crisis, German automakers took advantage of the nation's traditionally generous end-of-year holidays to idle their factories, keep employees at home and cut costs. But this year most are cutting short those holiday closures, while luxury automakers BMW AG and Daimler AG are even keeping some factories running between Christmas and New Year's.

The VDA automakers' association expects car production for the year to come in at 5.5 million vehicles, 11 percent more than last year and on par with 2008 output. Fueling that growth is a strong demand from Asia, especially China.

"Emerging markets are driving the German industry, especially the automakers," said Ferdinand Dudenhoeffer, an auto expert at the University of Dusiburg-Essen.

"The high growth rate in Asia will contribute to high growth in the global economy that will set the stage for high growth in the global automobile market," Dudenhoeffer wrote in an analyst note.

The auto industry is the backbone of Germany's export-oriented economy and has contributed strongly to the 3.6 percent growth predicted by the nation's central bank this year.

German automakers are also benefiting from the recovering U.S. market, which has begun to emerge from the global financial downturn.

The big three carmakers there -- General Motors Co., Ford Motor Co. and Chrysler Group -- will keep plants shut over the Christmas holiday, as usual. The only exception will be Chrysler's Jefferson North plant in Detroit, which will be working one shift due to increased demand for the new Jeep Grand Cherokee and the launch of the Dodge Durango.

German companies like Munich-based BMW AG are enjoying a broader rise in demand. It recorded a 19.7 percent jump in sales for November of 2010 compared with the same month of 2009 -- driven by markets in Germany, the United States and China. The company expects to sell more than 1.4 million cars worldwide by year's end.

"Right now we are running at full capacity," said Jochen Mueller, a spokesman at the factory in Leipzig, which turns out 750 cars a day, including BMW's popular X1 urban sport utility vehicle.

"Above all, the X1 is in very high demand and we decided to keep the factory open between Christmas and New Year's," Mueller said.

Leipzig assembly worker Marcus Henze said this would be the first of eight years at BMW where he is returning to work between the official Christmas and New Year's government holidays.

"Of course we would rather be home with families, but most people are OK with it," Henze said. "Motivation is very high."

The move appears to be unique in Europe. While British luxury automaker Jaguar-Land Rover say demand is up, they have been able to meet it through increased overtime, as has Sweden's Volvo. In France, neither Renault nor PSA Peugeot Citroen were changing their holiday schedules, while Italy's Fiat still hasn't returned to full production since the recession.

In Germany, Daimler, maker of Mercedes-Benz cars, said most of its 16 factories are reducing their year-end closure times to between Dec. 23 and Jan. 3.

"On average, the closures are about one week shorter this year in all of our factories than they were in the past two years of the crisis," said Dominique Albrecht, a Daimler spokeswoman, noting that decisions on closure times are up to each individual plant.

One factory in the northern port of Hamburg, where axles and other components for Mercedes Benz sedans are produced, will stay open between the official Christmas and New Year's.

Volkswagen AG said that "given the current high demand" its European factories will stay open through Dec. 23 -- last year most closed for the year on Dec. 19.

Those where the Tiguan compact SUV and Passat sedan are assembled will reopen on the first Monday of the New Year, while other VW plants resume work on Jan. 10, VW spokesman Christoph Adomat said.

"In the past two years, the trend has been more in the other direction," said Adomat.

Volkswagen, Europe's largest automaker, is predicting a full-year delivery record of more than 7 million vehicles.

BMW Leipzig employee Mike Flieher doesn't mind the year-end hours.

"Basically, we view this as a positive," Flieher said. "We are happy to be busy."

[Associated Press; By MELISSA EDDY]

Greg Keller in Paris, Jane Wardell in London, Colleen Barry in Milan, Sharon Silke Carty in Detroit, Cassandra Vinograd in London and Louise Nordstrom in Stockholm contributed to this report.

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