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Re: German lack of mass production technique in 1930's

by Paul Lakowski on Wed Feb 25, 2009 6:13 am
Somua2 wrote:What was the opportunity cost to Germany for not adopting mass production methods in the early/middle 1930's?

"It cost them the war. Most countries that had made this preperation in the mid 1930s, like Britain Russia & USA etc , were able to shift to top production in most areas with a year or two of the start of the war, with every thing after that being fine tuning. It would take the Germans up until 1943/44 ,before they could finally say they had a war economy in swing.

For what its worth the Defense minister in 1934 Von Blomberg, when faced with Hitlers demands on the military ,reported the only way to bridge the gap between were they were and were they needed to be by the end of the decade, was to convert the armaments industry to mass production.

Up until mid 1941 all military contracts were annual contracts based on 'cost plus financing'. That means the company factors in price of making the weapon resources used labor etc plus profite and pass that on to the government. IF the weapon takes longer to build they get reinbursed for the difference. So there is no incentive to produce more for less. Equally as bad they horded resources regardless and used the excess resources for products on the civilian market.

Von Blomberg showed how 'multi year fixed price contracts' could be employed from 1934 on, to greatly increase production with out increasing cost or resource consumption. These studies showed that for the same industrial/financing base , they could more than triple the out put by relaxing the overtly demanding weapons specifications by a mere 10%. It would be later shown that this process also forced companes to be more frugel with resources so that they could quadruple out put based on the same resource base.

Historcially the Luftwaffe faced with the impossible demands Hitler made, swithed over from 'annual cost plus financing' to 'multi year fixed price' in 1937. Within 5 years there production increased ~ 5 times. Even when Hitler finally acknowledged that mass production would be needed , he still left his armaments mininster [Todt] powerless to enforce demands to switch contracts so , it wasn't until Speer took over that he made Hitler empower him to clean house on the armaments industry. But even that wasn't complete power.

Hitler refused Von Blomberg and set up the Wehrmacht so all the service branches came independantly to him for contracts. Through that process the top priority for production shifted ever few months based on which service branch was courting Hitler. A complete and utter mess.

To find out more read

Overy : War and Economy in the Third Reich
Deist: "Germany and the Second World War" Vol 1

Burdrass; "Demystifying the German "Armament Miracle" During World War II. New Insights from the Annual Audits of German Aircraft Producers"

Tooze "Wages of destruction" is also very good , but his data and math is flawed [armaments production can't be based on tonnage comparions , you need to factor in manufacturing efficency etc]."


So my question to you all is what if von Blomberg convinces Hitler in 1934 to focus on fixed price multi-year contracts to take advantage of economies of scale and incentive-ize arms manufacturers to produce more units for less cost, rather than the OTL contracts (cost-plus) that incentive-ized raising costs and minimized production?

Several other books discuss this affecting the army heavily (the Luftwaffe used these contracts from 1937 on, but were hamstrung by several other issues), especially in Panzer and motorized vehicle production. It took the Luftwaffe about 3-4 years to fully realize the benefits of this, so if started earlier by 1938 the army can also benefit fully from these sorts of contracts and producer "learn by doing" experience. What does this mean from 1939 on?
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