Business Briefs

Trade union federation warns IG Metall leaders

Germany's DGB trade union federation on Thursday called on the once powerful union IG Metall to quickly resolve its leadership wrangle in the wake of its abortive strike in eastern Germany. DGB deputy head Ursula Engelen-Kefer urged IG Metall to take lessons from the debacle. Numerous industrial relations tasks remained in eastern Germany, she said. On Tuesday, the board of IG Metall failed to resolve the row between its outgoing chairman Klaus Zwickel and would-be successor Jürgen Peters, who was blamed for the strike's failure. Peters has refused to withdraw his candidacy. Numerous politicians from various parties have also called for an end to the row in the interests of IG Metall members. According to the Berlin-based newspaper Tagesspiegel, 50,000 members have quit the union since January.

Economist warns crisis could be union's undoing

On Thursday, the president of the German Institute for the Study of the Economy, Klaus Zimmermann, warned on that the current power struggle in the country's metals and engineering workers' union could prove a threat to the future of unions in Germany. If employee organizations are unable to reorientate themselves to deal with the problems of the day, he said, this could become the "beginning of the end of the labor movement." Zimmermann said unions should set constructive goals that spur job growth and encourage flexible regulations. If they continue to push in their traditional direction, as demonstrated by IG Metall deputy Jürgen Peter's failed strike in eastern Germany, this could be a sign "that the end is near," Zimmermann said.

Germans prefer brands

When it comes to grocery shopping, Germans like a good deal, but even more so if it's a cut-price product with a familiar brand name. A study released on Thursday by GFK, a German consumer research group, found that growth at Germany's Lidl discount chain outpaced that of the wildly popular Aldi chain because of the number of brand-name products it sells at a discount. Aldi, Germany's market leader, mostly sells generic products produced exclusively for its stores. "Lidl is especially winning in areas where it focuses on brands and, thus, differentiates itself from Aldi," the report said. Between January and May, Lidl's revenues increased by 16 percent compared to 5.5 percent at Aldi. Lidl is expected gain revenues this year of €7.8 billion ($8.8 billion) compared to Aldi's €25 billion.

Munich Re Opens Doors in China

Munich Re, the world's largest reinsurance company, announced Thursday it has obtained a license to become the first international reinsurer to do business in China. "At an annual double-digit growth rate, the Chinese insurance market is an integral part of one of the most dynamic and promising economies in the world," the company said in a statement. "Munich Re will now be in a perfect position to benefit from its long-standing network of strategic relationships with the Chinese insurance industry by cooperating in all life, health and non-life business lines." As part of the terms of its deal to join the World Trade Organization, China was forced to liberalize its insurance market and open it up to foreign competition. Munich Re and other reinsurers offer backup insurance that helps spread the insurance risk in the event of major disasters like the terrorist attacks of Sept. 11, which resulted in billions of dollars in payouts.

Car insurance to get more expensive in Germany

With record flooding last year in eastern Germany and huge losses in the industrial insurance sector, car and legal insurance is about to get more expensive in Germany. The German Insurance Association (DGB) announced on Thursday that car insurance premiums would rise by close to 2 percent in 2004. The price hike comes only a year after a 4 percent increase in premiums. Damage liability policies for companies are also expected to increase dramatically – by as much as 13 percent – as a result of billions in losses among liability and accident insurers during 2003. The organization, which represents the interests of Germany's insurance companies, said legal insurance costs were on the rise as a result of a wave of lawsuits related to firings.

Spar supermarket chain posts massive loss

Beleaguered German supermarket chain SPAR announced on Thursday a net loss of €379.4 million in 1992 and an operating loss of €154 million. Much of the costs were writeoffs related to the planned closure of more than 100 supermarkets. But the chain's bottom line, Netto, improved slightly over the previous year, with its operating loss decreasing by €11.5 million. SPAR, which is controlled by the French supermarket chain Intermarche, attributed the improvements to "positive developments" in its Netto discount chain. In May, Spar was saved from bankruptcy by creditors and Intermarche, which holds an 80 percent stake in the company.

Compiled with material from wire services.