Crisis in German Decentralized Production

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Abstract
This paper discusses the current crisis in the German industrial district of Baden Württemberg. Considered to be a flagship example of flexibility and international competitiveness for European manufacturing during the 1980s, producers in the district - both large and small - have fallen upon hard times in the 1990s. This paper suggests that the explanation for the crisis can not be traced either to high wages or low levels of productivity in the region. Rather, the problem con fronting the producers in Baden Württemberg- and by extension in German industry as a whole - is that they are being challenged by an alternative system of flexible manufacturing that is superior to their own. Rigidity in the system of production in Germany can be traced to institutional arrangements that were previously thought to be a source of strength: broad yet nonetheless specific skill categories and distinct, functional divisions within management. Successful adjustment in Germany today will have to involve profound self-reflection on and debate about the reform of some of the most taken-for-granted dimen sions of German industrial order.

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