Supplier networks in the German aircraft industry during World War II and their long-term effects on West Germany's automobile industry during the ‘Wirtschaftswunder’

Abstract

Reconstructing the complex supplier network of the famous JU 88 air armament programme, this article shows that outsourcing activities increased considerably in wartime Germany. The resulting inter-firm division of labour did not lead only to a quite effective protection of the German aircraft production against Allied air raids but also contributed to enormous labour productivity growth in most stages of the production process. Even though aircraft production was prohibited in post-war Germany, this supplier network survived and became the backbone of the most spectacular symbol of West Germany's economic rebirth: the automobile industry.

Keywords::

• aircraft
• armament
• Germany
• outsourcing
• World War II
• supplier network

Notes

^1.Williamson, Economics of Capitalism.

^2. In 2000, van de Kerkhof was still right to criticise that economic historians neglected the suppliers of armament firms completely. Van de Kerkhof, ‘Rüstungsindustrie’, 182.

^3.Okazaki, ‘Supplier Networks.’

^4.Bernstein, ‘Toyoda Automatic Looms.’

^5.Wagenführ, Deutsche Industrie, 178, 180.

^6. Klein and Milward were the most influential advocates of the Blitzkrieg thesis. Klein, Germany's Preparation for War; Milward, The German Economy.

^7.Scherner, ‘Nazi Germany's Preparation for War.’

^8.Overy, War and Economy; Müller, ‘Mobilisierung.’

^9.Scherner and Streb, ‘Das Ende eines Mythos.’

^10.Tooze, ‘No Room for Miracles.’

^11.Budraß, Scherner, and Streb, ‘Fixed Price Contracts.’ These microeconomic data were collected from individual audit reports of the Deutsche Revisions- und Treuhand AG and are therefore not affected by the concerns one might have with (some of) the macroeconomic data that had been sugarcoated by Speer's ministry. For the activities of the Deutsche Revisions- und Treuhand AG see Pega, Deutsche Revisions- und Treuhand AG.

^12. Interestingly enough, labour productivity kept on growing despite the employment of more and more forced labourers. Apparently, German firms succeeded in replacing skilled labour with unskilled forced labour through investing in machine tools suitable for mass production. See Tooze and Ristuccia, ‘Machine Tools.’

^13. For the changes in Nazis' price policy in procurement and construction see Streb, ‘Negotiating Contract Types.’

^14.Fear, ‘Rüstungsindustrie.’

^15. Stokes even implies that the initially quite innovative automobile Trabant, produced in the GDR since 1958, was a late outcome from the technological and organisational know-how accumulated in the production networks of Eastern Germany during war-time. The question whether the existing supplier networks were used or destroyed by the GDR authorities in the longer run has to be answered by future research. Stokes, Constructing Socialism, 48.

^16.Nishiguchi, Strategic Industrial Sourcing, 34.

^17. Okamuro supports the view that the experiences with wartime aircraft production had a large influence on the evolution of the supplier networks in the post-war Japanese automobile industry. He observes, however, that the supplying firms were mostly not identical. Okamuro, ‘Supplier Network,’ 37.

^18.Herrigel, Industrial Constructions.

^19.Botticelli, ‘Rolls-Royce and the Rise of High Technology Industry,’ 114.

^20. Ibid., 115–18.

^21.Cullen and Fishback, ‘Big Government's,’ 11.

^22.Giersch, Paqué, and Schmieding, Fading Miracle.

^23. See, for example, Bundesarchiv-Militärarchiv (hereafter BA MA) RW 19/561, note, November 11, 1939; fol. 11–13; note, November 30, 1939, fol. 3–8; RW 19/78, fol. 32; RW 20–3/9, fol. 94.

^24.Budraß, Flugzeugindustrie, 536–56.

^25.Budraß, Scherner, and Streb, ‘Fixed-price Contracts’.

^26. Ibid.

^27. In spring 1937, for example, General Leeb, head of the Heereswaffenamt, asked Bosch (based in Stuttgart) to set up in northern Germany a new, army-owned factory needed to manufacture starter motors and dynamos for German tanks. The Reichsstelle für Raumordnung (Reich office for environmental planning) suggested building this new factory east of the river Weser and north of the geographical line between Kassel and Leipzig in order to put it out of reach of British or French bombers. See Overesch, Bosch in Hildesheim, 40–95.

^28. See ‘Verordnungen zur Sicherstellung des Kräftebedarfs für Aufgaben von besonderer staatspolitischer Bedeutung’ from June 6, 1938, and from January 13, 1939.

^29. For the regulation of the German labour market, see Werner, Degner, and Adamo, ‘Gläserne Arbeitskräfte.’

^30. BA-MA RW 19/1503, Die Probleme der deutschen Rüstungswirtschaft im Kriege, OKW WiRüAmt Stab, Bearb.: Reg.Rat Dr. Tomberg., September 1940, fol. 99.

^31. BA-MA RW 20–3/13, fol. 143–4.

^32. See for example BA-MA RW 20–3/13, fol. 143–4.

^33.Boelcke, Deutsche Wirtschaft, 249.

^34. BA-MA RW 20/3–9, fol. 94. See also BA-MA RW 20/11–20, Geschichte der Rüstungsinspektion XI, September 1, 1939– September 30, 1940, fol. 45.

^35. Audit report 1940, BArch R 8135–2473, p. 5.

^36. Audit report 1943, Bundesarchiv Berlin-Lichterfelde (hereafter BArch) R 8135–7291, p. 4.

^37.Dickert, ‘Rolle der Autounion,’ 35.

^38. Audit report 1940, BArch R 8135–7095, p. 6.

^39. Audit report 1940, BArch R 8135–1339, p. 3.

^40. Audit report 1941, BArch R 8135–7690, p. 2.

^41. For this debate see Hayes, ‘Corporate Freedom’ and Buchheim and Scherner, ‘Corporate Freedom.’ See also Streb, ‘Das nationalsozialistische Wirtschaftssystem.’

^42. For the capacity constraints, see BA-MA RW 20–2/8, fol. 35; BA-MA RW 20–3/10, fol. 11; R 2501/15098, Ansprache von Kurt Lange in Budapest, June 8, 1943, fol. 33; for the firms' problems to comply with military orders in time, see, for example, BA-MA RH 15/160, OKH, Denkschrift über die Steigerung der Munitionsfertigung auf Grund der Führerfertigung vom 12. Dez. 1939, fol. 262. For the high profits in armament production, see, for example, Spoerer, Von Scheingewinnen zum Rüstungsboom.

^43.Scherner, Logik der Industriepolitik.

^44. See, for example, the motives for the outsourcing decision of the Auto Union AG in Dickert, ‘Rolle der Autounion.’

^45. See for example BA-MA RW 20–3/10, fol. 11–12.

^46. See for example BA-MA RW 20-11/20, Geschichte der Rüstungsinspektion XI, September 1, 1939 – September 30, 1940; fol. 19, 43–5, 51. Note that the regional military procurement agencies compiling the data captured not all of the suppliers before 1942. Notice also, that some of the new producers were so-called ‘Mob’ – firms which did not produce large volumes of armament goods before the war, but which were trained in manufacturing weapons in the late 1930s.

^47.Tooze, Wages of Destruction, 342.

^48.Scherner and Streb, ‘Wissenstransfer.’

^49.Budraß, Scherner, and Streb, ‘Fixed-price Contracts.’

^50. Most of the still available audit reports cover the period from 1939 to 1943. Since the auditors needed at least one year to prepare their reports, most of the audits for the accounting years 1943/44 and 1944 are unfortunately missing and were probably never finished. The shelf mark of this collection held in the Federal Archives in Berlin is BArch R 8135.

^51.Junkers Schönebeck, for example, was forced to engage additional sub-suppliers in 1942/43 to meet its own production commitment. See audit report 1942/43, BArch R 8135–7577, p. 1.

^52. We have also data about the bilateral trade flows between the primary firms and all the rest of the secondary firms that supplied less than 5% of a primary firm's intermediate inputs.

^53.Fear, ‘Rüstungsindustrie,’ 204.

^54. The Askania Werke, as another example, employed ‘extended workbenches’ in Serbia. See audit report 1942, BArch R 8135–7099, p. 38.

^55. See appendix audit report 1941, BArch R 8135–7736, p. 23.

^56. An audit report for the Dürener Metallwerke reveals that this kind of knowledge was also transferred to foreign firms like, for example, Alfa-Romeo in Milan, Nordisk Aluminiumindustrie in Oslo, and Jugoslawische Stahl AG in Sarajewo. See audit report 1940, BArch 8135–1339, p. 3.

^57. BArch 8135/5465, Audit report GfL 1939/40.

^58.Alchian, ‘Reliability of Progress Curves.’

^59.Bernstein and Sappington, ‘X-Factor.’

^60.Budraß, Scherner, and Streb, ‘Fixed-price Contracts’; Streb, ‘Negotiating Contract Types.’

^61. Note that the data for Rudolf Rautenbach cover only the years 1940 and 1941, which might explain the unusual results.

^62. For the development of the German automobile industry during the ‘economic miracle’ see, for example, Wellhöner, ‘Wirtschaftswunder’ and Tolliday, ‘Enterprise and State.’

^63. There has not been much research concerning the economic history of the automotive suppliers so far. For a profound comparison of supplier relationships between pre-war, wartime and post-war periods see Okamuro, ‘Supplier Network.’ See also Tilly, ‘Zulieferproblem.’ For a contemporary study see Petzold, Zulieferindustrie.

^64.Abelshauser, Deutsche Wirtschaftsgeschichte, 374.

^65. Some of the member firms of the JU 88 supplier network were newly founded before World War II, like, for example, the Vogtländische Metallwerke or the Mansfeld Werke GmbH in 1937.

^66.Bernstein, ‘Toyoda Automatic Looms,’ 412.

^67.Okamuro, ‘Supplier Network.’

^68. Mercedes-Benz Classic Archive, Protokolle der Vorstandssitzungen 1948, minutes of board meeting on May 10, 1948, p. 13. We would like to thank Wolfgang Rabus (Business Archives of Daimler AG) for the valuable help in finding data.

^69. Mercedes-Benz Classic Archive, Protokolle der Vorstandssitzungen 1948, minutes of board meeting on May 10, 1948, p. 13.

^70. See the minutes of the meeting on July 24, 1945, Mercedes-Benz Classic Archives, Protokolle 1945–47, ‘LKW-Sitzung in Untertuerkheim,’ p. 28 (Dr Haspel).

^71. Mercedes-Benz Classic Archives, Hitzinger 8, Vorstand Otto Jacobs 1956–63, Note dated October 3, 1960, ‘Lieferantenumsätze (über eine Million) 1959’.

^72. CDP was not a direct important supplier of the JU 88 network, but presumably among the tertiary suppliers of the secondary firms.

^73. See business archives of CDP in Westfälisches Wirtschaftsarchiv (hereafter WWA), F 189.

^74. Compare Neumann, Carl Dan, 47s.

^75. WWA, F 189, file 121, vol. 2.

^76. The proposal dating from October 27, 1945 contained the following companies: Gebr. Halverscheidt, Voerde; Jung&Sohn, Halver; Knippschild&Beckmann, Hagen; Schöneweiss&Co., Hagen; Gustav Tesche, Hagen; DEW, Remscheid; Walter Gott, Solingen; Rich. Abr. Herder, Solingen; Krumm&Co. Remscheid; C.A. Schlemper, Solingen; Friedr. Hünninghaus, Gevelsberg; CDP, Altenvoerde; Eisenwerk Wanheim; Schmiedag, Hagen; Bochumer Verein; Brockhaus Söhne; Eisenwerk Rothe Erde; Siepmannwerke, Belecke. WWA, F 189, file no. 121, vol. 2.

^77. The ‘Sonderring Gesenkschmiedestücke’ pertained to the ‘Hauptring’ ‘Iron and Steel’. For an organisational chart referring to November 1943 see WWA, F. 189, file no. 245. For the organisation of committees related to the construction of motor vehicles and their reorganisation see also Pesch, Funktionsweise der Kriegswirtschaft, 183ss., 194–201.

^78. Later on, Volkswagen objected to the strong connection between the various drop forging companies, because the motor company suspected them of price-fixing agreements, see Tilly, Kooperation in der Krise.

^79. See the correspondence in WWA, F 189, file 121, vol. 2, e.g. Julius Paulsen (purchasing department, Volkswagen) to Peddinghaus, November 11, 1945; Motor manufacturer committee, components and accessories industry to HQ British Administration O.R. on December 14, 1945. See also Neumann, Carl Dan, 54.

^80. Mercedes-Benz Classic Archives, Hitzinger 8, ‘Lieferantenumsätze (über eine Million) 1959’.

^81.Neumann, Carl Dan, 62. It is highly probable that the ‘war-time contacts’ mentioned here are Dr Woldemar Gerhardt, leader of the ‘Sonderring Gesenkschmiedestücke’ (and representative of the Stahlwerke Röchling Buderus) and Heinrich Heuß, member of the working group ‘motor vehicles’ within the ‘Sonderring Gesenkschmiedestücke, during World War II representative of the Adam Opel AG, but later on engaged in the purchasing department at Volkswagen. See the organisation chart of the ‘Sonderring Gesenkschmiedestücke’ in WWA F 189, file no. 245 and correspondence between CDP, Volkswagen and friendly competitors in WWA, F 189, file no. 10 and file no. 273, therein ‘Hausmitteilung’, March 2, 1951.

^82. The organisational chart of the mentioned ‘forging committee’ shows that staff of the automobile industry worked together with representatives of the supplying industry in several working groups. See WWA, F 189, file no. 245.

^83. Werner Lippart, ‘Zubehör+Teile = 1/2 Auto.’ Der Volkswirt, Beilage Kraftfahrzeugwirtschaft, May 5, 1956: 28–30.

^84.VDA, Tatsachen und Zahlen 1961/62, 256.

^85. Ibid., 259; Busch, Strukturwandlungen, 75. In 1936, this ratio came to about 45%. Diekmann, Automobilnachfrage, 449.

^86. In the period from 1950 to 1958 the yearly production of the automobile industry quintupled: from a production of about 300,000 motor vehicles in 1950 to an output of approximately 1.5 million vehicles in 1958 (VDA, Tatsachen und Zahlen 1959/60, 30).

^87. Mercedes-Benz Classic Archive, Hitzinger 8, ‘Lieferantenumsätze (über 1 Million), 1959’.

^88.Diekmann, Automobilnachfrage, 194.

^89. The quota added up to 58.5% (respectively 56.6%) in 1962 and 55.8% (respectively 52.2%) in 1967. See different data series in Diekmann, Automobilnachfrage, 196, 223 and 449.

^90.Diekmann, Automobilnachfrage, 1975; VDA, Tatsachen und Zahlen 1961/62, 259.

^91.Bericht über das Ergebnis einer Untersuchung der Konzentration in der Wirtschaft vom 29. Februar 1964, erstattet vom Bundesamt für gewerbliche Wirtschaft in Frankfurt am Main, in: Deutscher Bundestag, IV. Wahlperiode, Drucksache IV 2320, p. 164.

^92. See Mercedes Benz Classic Archive, Werner Reich, Bericht über meine Untersuchung bei der Daimler-Benz AG, Stuttgart-Untertürkheim, without date, presumably 1963, p. 133.

^93.Nishiguchi, Strategic Industrial Sourcing.

Additional information

Notes on contributors

Jonas Scherner

Jonas Scherner is Professor in Modern European Economic History at the Department of Historical Studies, Norwegian University of Science and Technology, Trondheim, Norway. Postal address: Department of Historical Studies, Norwegian University of Science and Technology, 7491 Trondheim, Norway.

Jochen Streb

Jochen Streb is the Professor of Economic History in the Department of Economics at the University of Mannheim in Germany. Postal address: University of Mannheim, L7, 3-5, D-68131 Mannheim, Germany.

Stephanie Tilly

Stephanie Tilly is a lecturer of economic and business history at the University of Bochum in Germany. Postal address: Schinkelstraβe 13, D-50933 Köln, Germany.