The Germans increase Panzer production in the Summer of 1940

[TheMarcksPlan]

Total German aircraft airframe weight produced in 1941 was 67,996,000 lbs. In 1944 it was 174,939,000 lbs, an increase of 2.57 times. Single engine fighters made up 11.2 percent of the total in 1941. In 1944, it was 43.6 percent. Approximately 291,000 employees, including direct contractors, were in the German aircraft assembly industry in July 1941, increasing to 460,000 in July 1944. Production in 1941 pound/employee was c. 233.7 and in 1944 was c. 380.3, an increase of 1.63.

Total US aircraft airframe weight produced in 1941 was 90,482,000. In 1944 it was 1,101,116,000, more than a twelve-fold increase. Single engine fighters were 18.9 percent of the total in 1941. in 1944, it was 18.8 percent. Approximately 203,000 were employed July 1941 and 1,063,000 in July 1944. Production in 1941 was c. 445.7 lbs/employee and in 1944 was c. 1,035.9, an increase of 2.32.

A few caveats about these numbers:

• The relationship between airframe weight and production cost is sublinear. For example, a B-17G weighs ~4.8x a P-51D but in 1944 cost ~3.7x as much. Using weight underrates the increase in German production as fighters became increasingly predominant. It also underrates Germany in comparison to U.S.
• How many workers were in the aviation industries is very difficult to quantify, as discussed further here: viewtopic.php?f=66&t=167018&start=15#p2291189 (and preceding posts). "Direct contractors," for example, doesn't include sub-contractors and some parts suppliers.

Part of the German problem was, of course, the bombing campaign, but its significant effects were not felt on the industry until 1944

Definitely false.

Tooze sums up bombing's effects in '43 thus:

Between July 1943 and March 1944 there was no further increase in the
monthly output of aircraft. For the armaments effort as a whole, the
period of stagnation lasted throughout the second half of 1943. As
Speer himself acknowledged, Allied bombing had negated all plans for a
further increase in production.37 Bomber Command had stopped Speer's
armaments miracle in its tracks.Wages of Destruction p. 598.

Bombing was definitely a significant factor before 1944.

Quite possibly more important was the simple lack of infrastructure. In 1944, virtually the same set of assembly plants were turning out aircraft, while in the US, about half the plants operating in 1944 did not exist in 1941.

If by infrastructure you mean capital/plant, this is certainly false. The issue isn't the number of factories producing but the amount of capital stock in the industry overall. There's no economically relevant difference between building a new factory and expanding the capital stock of existing factories. German capital investment was massive throughout the war and has been under-estimated until recent economic historians have looked into the matter. https://economics.yale.edu/sites/defaul ... 060329.pdf

As documented in, for example, Daniel Uziel's Arming the Luftwaffe, the LW underwent a shift towards flow production that was planned from the beginning of the war and gathered steam in '41-'42. This shift from general to specific machine tools (operable by less-skilled workers) required massive investment.

Furthermore, each new type of plane required massive investment in type-specific capital such as finely-tuned jigs for assembly.

German early war productivity declined due to the enormous draft of workers, including many from the aviation industry. See Jonas Scherner "Das Ende eine Mythos," discussed and linked here: viewtopic.php?f=66&t=252374#p2295474. This continued throughout the war despite awareness of the need to protect skilled workers. The German bureaucracy wasn't sufficiently efficient to correctly prioritize personnel in all respects (probably no bureaucracy is). The demographics of Germany's aviation industry skewed very young due to long German apprenticeship practices and the youth of the industry. Apprenticing in aviation work simply wasn't an option for Germans much above 30. There was, therefore, no getting around drafting a lot of aviation workers.

Productivity later increased as the mostly-unskilled replacement/expansion workers (mostly foreign) learned on the job. Nonetheless, foreign productivity remained below skilled German in most cases - unsurprisingly. For the most recent meta-analysis of foreign worker productivity, see Johann Custodis' chapter "Employing the Enemy" in Paying for Hitler's War.

German production also suffered from the dispersal of factories, with one internal RLM document estimating production could have been 30% higher without it.

A proper economic evaluation of the German and American aircraft industries must take at least the foregoing factors into account. Germany drafted a far higher proportion of its aviation workforce and replaced them with less-productive unskilled labor. Contrary to some popular narratives, German aviation production did adopt modern production techniques even if they didn't go as far towards Fordist assembly-line methods as the Americans tried. The partial failure of the Willow Run plant, however, demonstrates that aviation wasn't an industry in which Fordism was necessarily the best industrial approach.

[TheMarcksPlan]

A proper economic evaluation of the German and American aircraft industries must take at least the foregoing factors into account.

Let me be more specific on what I mean here.

I don't mean that there's any argument that the German aircraft industry as a whole was as efficient as the American. It wasn't. But there's no reason to use that measuring stick: America was a wealthier, more efficient country than Germany before, during, and after the war. http://www.rug.nl/research/events/raine ... oltjer.pdf (comparing American versus European productivity, with a focus on Britain). And America faced far fewer obstacles to production than Germany, as discussed in my last post.

Rather, we should read modern economic scholarship to resist popular/historical narratives that ascribe lower German production to pathologies inherent in the Nazi regime. There is a fad in scholarship and in popular accounts (such as prevailing AHF opinion) to read every Nazi-tinged program as inefficient/pathological in ways that improperly bleed moral evaluation into economic/military analysis. I partly blame Tooze for this trend, partly blame an understandable desire to push back against Wehrabooism. Tooze's big book is a valuable but seriously flawed piece of scholarship, as I discuss further here: viewtopic.php?f=66&t=252374#p2295663.

IMO it's definitely true that Nazism undercut German military efficiency by importing a focus on "will" that undercut General Staff traditions of rigorous analytical thinking. See Dupuy's Genius for War. German productive efficiency, however, can be analyzed quantitatively where the data allow, without recourse to moral fads in Nazi historiography.

[Richard Anderson]

Okay, I'll play.

A few caveats about these numbers:

• The relationship between airframe weight and production cost is sublinear. For example, a B-17G weighs ~4.8x a P-51D but in 1944 cost ~3.7x as much. Using weight underrates the increase in German production as fighters became increasingly predominant. It also underrates Germany in comparison to U.S.

You keep missing that "cost" is effectively irrelevant in this measure. Yes, a P-51D "cost" X more than a B-17G, but that was the contract price, which itself was a very flexible figure. The Germans were not going to get more Bf 109 or FW 190 simply by spending more Reichsmarks, unless those first went into either building new plant or expanding existing plant.

[*]How many workers were in the aviation industries is very difficult to quantify, as discussed further here: viewtopic.php?f=66&t=167018&start=15#p2291189 (and preceding posts). "Direct contractors," for example, doesn't include sub-contractors and some parts suppliers.

Yes, indeed it is difficult to quantify, for the Germans, but not the Americans where data are monthly. In any case, if the two measures are reasonably congruent, then it really doesn't matter if the US counted 203 employees in July 1941 and the Germans 291 or 2.03 million and 2.91 million. The total US employment in the aircraft industry as of 30 June 1944 (the USSBS figures were reportedly for 1 July 1944) was actually counted as 1,910,000, of which 1,255,000 were prime contractors and 655,000 were subs and parts suppliers. Wagenfuhr counted 935,000 in the German aircraft airframe, engine, and equipment manufacture in 3Q43. US employment for 3Q43 was 1,935,000. So? You want me to calculate the productivity indices for you based on that data? It ain't gonna change significantly.

Not true. Tooze sums up bombing's effects in '43 thus:

Between July 1943 and March 1944 there was no further increase in the
monthly output of aircraft. For the armaments effort as a whole, the
period of stagnation lasted throughout the second half of 1943. As
Speer himself acknowledged, Allied bombing had negated all plans for a
further increase in production.37 Bomber Command had stopped Speer's
armaments miracle in its tracks.Wages of Destruction p. 598.

Bombing was definitely a significant factor before 1944.

Um, no, sorry, but I have to wonder if Tooze was working from the CBO Intelligence Reports? Not even the postwar USSBS reports got it quite right.

"b. First Phase, April Through October 1943
(1) During this interval, 13 attacks were made on factories engaged in the manufacture of Me 109 and Fw 190 fighters, and one attack was made on an engine plant [note that in the CBO records I can only find nine attacks on aircraft assembly plants in 1943, but the USSBS may have been counting different targets in a single attack day]. This period also included the raids on the ball bearing plants at Schweinfurt. The attacks during this phase of the campaign were made on targets that made use of the extreme operational range of the bomber aircraft, and without benefit of fighter escort to and from the target. In the raid against Regensburg on 17 August, the bombers of Third Air Division, Eighth AF, flew on to North African bases. A raid on 9 October against the FW 190 final assembly plant at Marienburg, East Prussia, was the longest that had been flown up to that date. It was successful. The plant was wrecked." USSBS, Aircraft Division Summary Report, p. 67.

The actual results of the attack on Marienburg? Yes, production dropped to 80 FW 190 in October 1943, but they were already having problems not associated with bombing...for the year up to October the monthly performance was 36, 88, 141, 91, 90, 120, 106, 87, and 103. Up to the plant being "wrecked" the monthly average for 1943 was just 95.78. In November, the "wrecked" plant produced 79 aircraft and 68 in December, before climbing to 134 in January 1944...and completing 3,026 for the year in 1944.

If by infrastructure you mean capital/plant, this is certainly false. The issue isn't the number of factories producing but the amount of capital stock in the industry overall.

Oh dear, you're confusing money with physical infrastructure again. There were five German aircraft plants producing single-engine fighters as of 1 January 1941. On 1 January 1942 there were five. On 1 January 1943 there were seven. On 1 January 1944 there were nine, including Györ, Hungary, which started in June 1943 and produced through September 1944, completing 270 Bf 109, before shutting down for some reason and Dornier's Wismar bomber plant, which converted to producing the FW 190 in January and completed all of five of them that month. The last "plant" were the Arbeitsgemeinschaft (misc bomber lines converted to fighters - classic robbing Peter to pay Paul), which began producing FW 190 in May and completed 847 in eight months.

There's no economically relevant difference between building a new factory and expanding the capital stock of existing factories. German capital investment was massive throughout the war and has been under-estimated until recent economic historians have looked into the matter. https://economics.yale.edu/sites/defaul ... 060329.pdf

No, and there is no economically relevant difference between not building a new factory and not expanding the capital stock of existing factories.

Anyway, "recent"? In the English language Mark Harrison's work is about 32 years old, Gropman's 24 years, Tooze 19 years, while German-language sources go back even farther. Scherner's work is also 14 years old. If interested, in addition to Scherner, which I first rank across back then, you might also be interested in Albrecht Ritschl's Deficit Spending in the Nazi Recovery, 1933-1938: A Critical Reassessment, a paper prepared for the Department of Economics at the University of Zurich in 2002, which goes into the economic mess the Nazi's got themselves into.

As documented in, for example, Daniel Uziel's Arming the Luftwaffe, the LW underwent a shift towards flow production that was planned from the beginning of the war and gathered steam in '41-'42. This shift from general to specific machine tools (operable by less-skilled workers) required massive investment.

Yes, it did, but if you enjoyed Uziel, you may want to look at Lutz Budraß, Jonas Scherner, and Jochen Streb, Demystifying the German "Armament Miracle" during World War II, New Insights from the Annual Audits of German Aircraft Producers, from January 2005?

Furthermore, each new type of plane required massive investment in type-specific capital such as finely-tuned jigs for assembly.

Yeah, which is pretty much why the "expansion" of FW 190 production essentially meant the conversion of the plants formerly producing Bf 109. Robbing Peter to pay Paul again.

German early war productivity declined due to the enormous draft of workers, including many from the aviation industry. See Jonas Scherner "Das Ende eine Mythos," discussed and linked here: viewtopic.php?f=66&t=252374#p2295474. This continued throughout the war despite awareness of the need to protect skilled workers. The German bureaucracy wasn't sufficiently efficient to correctly prioritize personnel in all respects (probably no bureaucracy is). The demographics of Germany's aviation industry skewed very young due to long German apprenticeship practices and the youth of the industry. Apprenticing in aviation work simply wasn't an option for Germans much above 30. There was, therefore, no getting around drafting a lot of aviation workers.

Do you teach your Granny to suck eggs too?

Productivity later increased as the mostly-unskilled replacement/expansion workers (mostly foreign) learned on the job. Nonetheless, foreign productivity remained below skilled German in most cases - unsurprisingly. For the most recent meta-analysis of foreign worker productivity, see Johann Custodis' chapter "Employing the Enemy" in Paying for Hitler's War.

Well, yes, but then who said German productivity did not improve? Not me, since I just demonstrated one measure of the improvement of productivity in the aircraft industry. That their productivity did not increase as well as the American did is a measure of how much American industry was underutilized 1937-1941 compared to the German, as well as how much greater investment capitol America had access to.

Anyway, refraining from straw men arguments would be nice, if you actually would like an honest conversation.

German production also suffered from the dispersal of factories, with one internal RLM document estimating production could have been 30% higher without it.

Those mean Allies. What were they thinking of? Meanwhile, a 30% increase without dispersal still isn't close to American productivity.

A proper economic evaluation of the German and American aircraft industries must take at least the foregoing factors into account. Germany drafted a far higher proportion of its aviation workforce and replaced them with less-productive unskilled labor. Contrary to some popular narratives, German aviation production did adopt modern production techniques even if they didn't go as far towards Fordist assembly-line methods as the Americans tried. The partial failure of the Willow Run plant, however, demonstrates that aviation wasn't an industry in which Fordism was necessarily the best industrial approach.

Oh, yeah, poor Germany again. Meanwhile, the American aviation industry had enormous turnover 1941-1944, and yet somehow managed to increase its productivity much better than did the Germans. In 1941, there were 114.7 new hires per 100 employees (prime contractors) and 39 separations per 100 employees, 3.7 of whom went into the military. In 1942 accessions increased to 123.9 per 100, but so did separations, 63.9 per 100, with 17.2 going to the military. It stabilized a bit in 1943, when 91.4 separations per 100, but there were even more separations, 68.6 per 100 with 11.1 going to the military. In 1944, separations dropped to 54.5 per 100,, but separations stayed at 74.0 per 100, with 6.6 going to the military.

Notably, Germany did not have to deal with labor actions to the extent the US did. In the US, there were 3,000 strikes in 1942 alone and it was calculated 13.5 million man-days were lost to strikes.

[Peter89]

Total German aircraft airframe weight produced in 1941 was 67,996,000 lbs. In 1944 it was 174,939,000 lbs, an increase of 2.57 times. Single engine fighters made up 11.2 percent of the total in 1941. In 1944, it was 43.6 percent. Approximately 291,000 employees, including direct contractors, were in the German aircraft assembly industry in July 1941, increasing to 460,000 in July 1944. Production in 1941 pound/employee was c. 233.7 and in 1944 was c. 380.3, an increase of 1.63.

Total US aircraft airframe weight produced in 1941 was 90,482,000. In 1944 it was 1,101,116,000, more than a twelve-fold increase. Single engine fighters were 18.9 percent of the total in 1941. in 1944, it was 18.8 percent. Approximately 203,000 were employed July 1941 and 1,063,000 in July 1944. Production in 1941 was c. 445.7 lbs/employee and in 1944 was c. 1,035.9, an increase of 2.32.

Part of the German problem was, of course, the bombing campaign, but its significant effects were not felt on the industry until 1944, while the rate of increase 1941-1944 versus the US remained low. Quite possibly more important was the simple lack of infrastructure. In 1944, virtually the same set of assembly plants were turning out aircraft, while in the US, about half the plants operating in 1944 did not exist in 1941.

I have always wondered whether the mention of engine production (piece) and the airframe production (weight) was sufficient on their own. I like to use both to highlight the absolute inadequate Axis production and the reserves in the Wallies' system. If the one and only way to achieve victory was the air superiority over the Reich, unlike the German production, the US production could shift towards single engine fighters, thus a greater output.

Of course the problem was a bit more complicated, because Milch was able to increase the aircraft production in a dramatic fashion from 1942, even when aluminium allocations were lowered. German production techniques were rarely competitive, thus, implementing new angles like efficiency could mean increased production. (Not on the envisioned scale above, ofc.)

The problem was rather the fact that German decision makers were not particurarly worried because of their low input, alarming attrition rates, deficiency in aircraft safety measures and obsolete equipment. Also, nobody really cared to pay attention to standardization, etc. until the defeat in the front of Moscow.

To increase German efficiency required the psychological blow, the breeze of defeat. Something that a gloriously advancing Reich would not do l'art pour l'art.

[Richard Anderson]

I have always wondered whether the mention of engine production (piece) and the airframe production (weight) was sufficient on their own. I like to use both to highlight the absolute inadequate Axis production and the reserves in the Wallies' system. If the one and only way to achieve victory was the air superiority over the Reich, unlike the German production, the US production could shift towards single engine fighters, thus a greater output.

Oh, exactly. but I didn't want to get into too many issues. Aircraft engines were an absolute bottleneck, especially given they depended upon effectively two engine types and two engine manufacturers for about 90 percent of their requirements. The rows of airframes without engines discovered at assembly plants at the end of the war was mute witness to that.

Then there are the fuel issues, already mentioned numerous times. The Germans absolutely depended on their synthetic fuel program for aviation spirit. Increasing aircraft operations means a major increase in fuel requirements, which could be solved by reducing the output of diesel, which was another major output from the synthetic fuel program...except they needed diesel too.

So build more plants? Except the system in existence in 1942 was already behind schedule, absorbed enormous amounts of money, steel, coal, and labor. Ditto the tetraethyl lead protection, also mentioned before. A third plant was planned, but never begun, due to the expense and lack of capitol and material.

Of course the problem was a bit more complicated, because Milch was able to increase the aircraft production in a dramatic fashion from 1942, even when aluminium allocations were lowered. German production techniques were rarely competitive, thus, implementing new angles like efficiency could mean increased production. (Not on the envisioned scale above, ofc.)

Yes, he achieved economies of scale by reducing everything to the bare necessities. Two 1-engine fighter types, effectively two 2-engine bomber types, two engine types for everything and hope for the best. The reductio ab adsurdam was to reduce production to just defensive fighters and then try to short-circuit the engine bottleneck by building jet engines that were simpler and used less material, but which also had lifetimes measured in hours...or even better, near-suicidal rocket designs that achieved little.

The problem was rather the fact that German decision makers were not particurarly worried because of their low input, alarming attrition rates, deficiency in aircraft safety measures and obsolete equipment. Also, nobody really cared to pay attention to standardization, etc. until the defeat in the front of Moscow.

Possibly true, but the way they desperately ping-ponged from one bad "solution" to another, shifting resources from one thing to another, would lead me to suspect they were worried, but that the more intelligent of them realized by late 1941 they were living in a house of cards and that it was on fire and in a windstorm.

To increase German efficiency required the psychological blow, the breeze of defeat. Something that a gloriously advancing Reich would not do l'art pour l'art.

Well, there was always the Udet/Jeschonnek way out...

[Peter89]

I have always wondered whether the mention of engine production (piece) and the airframe production (weight) was sufficient on their own. I like to use both to highlight the absolute inadequate Axis production and the reserves in the Wallies' system. If the one and only way to achieve victory was the air superiority over the Reich, unlike the German production, the US production could shift towards single engine fighters, thus a greater output.

Oh, exactly. but I didn't want to get into too many issues. Aircraft engines were an absolute bottleneck, especially given they depended upon effectively two engine types and two engine manufacturers for about 90 percent of their requirements. The rows of airframes without engines discovered at assembly plants at the end of the war was mute witness to that.

Then there are the fuel issues, already mentioned numerous times. The Germans absolutely depended on their synthetic fuel program for aviation spirit. Increasing aircraft operations means a major increase in fuel requirements, which could be solved by reducing the output of diesel, which was another major output from the synthetic fuel program...except they needed diesel too.

So build more plants? Except the system in existence in 1942 was already behind schedule, absorbed enormous amounts of money, steel, coal, and labor. Ditto the tetraethyl lead protection, also mentioned before. A third plant was planned, but never begun, due to the expense and lack of capitol and material.

Of course the problem was a bit more complicated, because Milch was able to increase the aircraft production in a dramatic fashion from 1942, even when aluminium allocations were lowered. German production techniques were rarely competitive, thus, implementing new angles like efficiency could mean increased production. (Not on the envisioned scale above, ofc.)

Yes, he achieved economies of scale by reducing everything to the bare necessities. Two 1-engine fighter types, effectively two 2-engine bomber types, two engine types for everything and hope for the best. The reductio ab adsurdam was to reduce production to just defensive fighters and then try to short-circuit the engine bottleneck by building jet engines that were simpler and used less material, but which also had lifetimes measured in hours...or even better, near-suicidal rocket designs that achieved little.

The problem was rather the fact that German decision makers were not particurarly worried because of their low input, alarming attrition rates, deficiency in aircraft safety measures and obsolete equipment. Also, nobody really cared to pay attention to standardization, etc. until the defeat in the front of Moscow.

Possibly true, but the way they desperately ping-ponged from one bad "solution" to another, shifting resources from one thing to another, would lead me to suspect they were worried, but that the more intelligent of them realized by late 1941 they were living in a house of cards and that it was on fire and in a windstorm.

To increase German efficiency required the psychological blow, the breeze of defeat. Something that a gloriously advancing Reich would not do l'art pour l'art.

Well, there was always the Udet/Jeschonnek way out...

Yes.

Long story short, if the Heer or the Luftwaffe were given a chance to recuperate during an operational pause, they better have gone to the defensive stance to sort out a few of their very serious problems.

Let's start with the most obvious one: the German pilot training system had to have access to 3-4x the avgas they received to keep up with the Wallies' pilots' flying hours with OTL production numbers. No such increase was possible.

With double or triple the aircraft production, if the Germans wanted to keep up pilot training standards with the Wallies, they'd need about ten times the avgas just for the training of the crews. Needless to say, this was well beyond any realities.

Besides, it wouldn't make much sense at all. If by any means the Germans were able to slow down the unbearable attrition, the production of more and more aircraft wouldn't even be the first choice of any prudent decision maker.

The German arsenal was full of obsolete equipment and they only produced them because the Ostfront swallowed everything. Stukas were by all means obsolete. And the Panzer II production until 1944? And the high number of Panzerjägers and StuGs instead of tanks? Are we certain that was the way the Germans would choose given an operational pause? Are we sure that measures like pressing heavies and jets into service with full of teething problems is a choice the Germans would make without the hopeless situation?

[TheMarcksPlan]

You keep missing that "cost" is effectively irrelevant in this measure. Yes, a P-51D "cost" X more than a B-17G, but that was the contract price, which itself was a very flexible figure.

See next post.

I have to wonder if Tooze was working from the CBO Intelligence Reports?
The actual results of the attack on Marienburg?

Tooze discusses Bomber Command's Ruhr campaign, you're discussing discuss 8th AF raids. More context:

Reading contemporary sources, there can be no doubt that the Battle
of the Ruhr marked a turning point in the history of the German war
economy, which has been grossly underestimated by post-war
accounts.
...
In the summer of
1943, the disruption in the Ruhr manifested itself across the German
economy in a so-called 'Zulieferungskrise' (sub-components crisis). All
manner of parts, castings and forgings were suddenly in short supply.56
And this affected not only heavy industry directly, but the entire armaments complex.
Most significantly, the shortage of key components
brought the rapid increase in Luftwaffe production to an abrupt halt.

Bomber Command damaged the Ruhr generally; 8th AF hit specific targets. You're looking in the wrong places.

The total US employment in the aircraft industry as of 30 June 1944 (the USSBS figures were reportedly for 1 July 1944) was actually counted as 1,910,000, of which 1,255,000 were prime contractors and 655,000 were subs and parts suppliers. Wagenfuhr counted 935,000 in the German aircraft airframe, engine, and equipment manufacture in 3Q43. US employment for 3Q43 was 1,935,000. So? You want me to calculate the productivity indices for you based on that data?

The caveat remains necessary until you or someone else provides an index that we know contains an apples-apples definition of "aircraft industry".

Aside from the sub-contractor issue, there's an intra-firm labor accounting issue. I.e. what portion of an "aircraft industry" firm's labor force was actually working on building planes? How do we divide Henry Ford's labor time between Willow Run and his other concerns? How do we divide time in shops that contracted to various industries? Scherner et. al. cite this issue in their work, as does Tooze, as would any good economic analysis. An easier accounting is via price, as discussed in my Econ 101 post.

you may want to look at Lutz Budraß, Jonas Scherner, and Jochen Streb, Demystifying the German "Armament Miracle" during World War II, New Insights from the Annual Audits of German Aircraft Producers, from January 2005?

Link here: https://poseidon01.ssrn.com/delivery.ph ... 70&EXT=pdf

I've cited and discussed extensively the work of Budrass, Scherner, and Streb. viewtopic.php?f=66&t=252374#p2295474 Besides the "Demistifying" article, I'd also recommend their 2009 collaboration, "Fixed-Price Contracts, Learning, and Outsourcing: Explaining the Continuous Growth of Output and Labour Productivity in the German Aircraft Industry During the Second World War." Scherner and Streb also co-wrote "Das Ende eine Mythos" (no Budrass this time), which I've also cited on this forum. Scherner is, IMO, the best economic historian writing about Germany in WW2 right now.

If you think the authors contradict Uziel or me, however, you simply don't understand the article. Here's the abstract's conclusion from "Demystifying":

The government decided in 1938 that aircraft producers had to concentrate on a few different types, and in 1937 that cost-plus contracts were replaced with fixed price contracts. What followed was not a sudden production miracle but a continuous development which was fueled first by learning-by-doing and then by the ongoing growth of the capital and labor endowment.

You of course don't specify how that contradicts Uziel or me saying:

Contrary to some popular narratives, German aviation production did adopt modern production techniques even if they didn't go as far towards Fordist assembly-line methods as the Americans tried.

...because Scherner et. al. don't contradict me. Because I've already read that paper.

you're confusing money with physical infrastructure again. There were five German aircraft plants...

I don't think you follow the argument. The number of factories is irrelevant. The capital stock - denominated in RM at real prices - is what determines installed productive capacity. Believe it or not, real prices have real connection to real resources.

Meanwhile, a 30% increase without dispersal still isn't close to American productivity.

I never claimed German productivity would approach American, quite the opposite:

I don't mean that there's any argument that the German aircraft industry as a whole was as efficient as the American. It wasn't. But there's no reason to use that measuring stick: America was a wealthier, more efficient country than Germany before, during, and after the war. http://www.rug.nl/research/events/raine ... oltjer.pdf (comparing American versus European productivity, with a focus on Britain).

---------------------------------------------------------------------------------

Well, yes, but then who said German productivity did not improve?

Not everything is addressed to you. Many AHF members believe popular notions of antiquated LW production techniques, as I will address downthread.

Do you teach your Granny to suck eggs too?

Oh, yeah, poor Germany again.

if you actually would like an honest conversation.

Richard I would love to have a calm, rational conversation with you. One in which you separate analysis of German capabilities from sympathy with Germany. Your published work demonstrates that capability; I wish you'd display it here as well.

These kinds of responses, however, tend to derail things.

I hope it doesn't result in yet another of our threads being locked. Let's both cool the rhetoric a bit.

[TheMarcksPlan]

You keep missing that "cost" is effectively irrelevant in this measure. Yes, a P-51D "cost" X more than a B-17G, but that was the contract price, which itself was a very flexible figure.

This is a very big topic on which I have long planned a thread.

The popular notion that currency-denominated wartime weapons prices were untethered from real resource consumption arises repeatedly on AHF. It is a completely false notion but has superficial plausibility given the compulsive power of governments in wartime and typically voluntary character of price exchanges.

Unfortunately, the long thread/post will require some Econ 101 and I don't have full time/energy for that. So a somewhat abridged version for now, with mostly wikipedia cites to general concepts for time's sake. This will be an outline for a longer post.

--------------------------------------

TL;DR: Wartime prices reflected, albeit imperfectly, the resource commitments to various weapon systems.

----------------------------------------

What is the relationship between price and cost generally?

In a competitive market economy, producers sell at a price composed of cost plus a small profit margin. https://en.wikipedia.org/wiki/Price#Market_price "Cost" here is a monetary value that conveys the amount of resources embodied in a certain good or consumed during its production.*

*Note the caveats. In monopolistic markets the profit margin is higher and the relationship between price and resource embodiment less secure. And as will be discussed below, when government has monopsony control as a purchaser, the market mechanism tying price closely to cost is somewhat less secure. https://en.wikipedia.org/wiki/Monopsony

Were labor homogenous and the only production factor, a $200,000 plane would embody 4x as much labor as a $50,000 plane. Of course labor is not homogenous and, pace Karl Marx, is not the only production factor - there's raw materials, capital, etc. In a competitive market, price and therefore cost reflect the input of these factors as well.

Given disparate and heterogenous inputs, comparing the cost of a good in terms of those inputs would be impossible:

• Weapon A embodies 2 labor, 10 raw materials, 6 capital.
• Weapon B embodies 12 labor, 3 raw materials, 4 capital.

Does Weapon A or B cost more? Well we'd obviously need some common denominator between labor, capital, and materials to answer the question. Karl Marx's solution was roughly to reduce capital and materials to the labor embodied in them. https://en.wikipedia.org/wiki/Labor_theory_of_value This has some intuitive appeal but it obviously falls apart at certain points - for example when considering rare materials like gold or oil. Clearly these materials' prices are untethered from their labor inputs. In addition, because labor is heterogenously productive, a labor cost accounting would have to include the productivity figures for each person contributing to the good.

So at a practical level, translating all costs into labor (man-hours or some such) becomes immensely difficult. Tooze's Statistics and the German State, 1900-1945, for example, focuses on Germany's long effort to track inputs (most saliently labor) and attendant outputs. This valiant effort culminated late in the war but was unsuccessful, as discussed more here: viewtopic.php?f=66&t=167018&start=15. Centrally-planned economies likewise tried non-price cost accounting with dismal results. https://en.wikipedia.org/wiki/Material_balance_planning https://en.wikipedia.org/wiki/Input%E2% ... tput_model

At base, any non-price cost accounting encounters an insuperable calculation problem, as Austrian economist Ludwig von Mises* identified 100 years ago.** https://en.wikipedia.org/wiki/Economic_ ... on_problem

*Not an endorsement of Mises' political beliefs.
**Perhaps supercomputers will solve the calculation problem and inaugurate luxury communism.

The virtue of price is its way around the calculation problem. Instead of a central planner needing to know the inputs all the way down, market price embodies the required information at each instance of exchange - from miner, to shipper, to refiner, to employer, to worker, to industrialist, to buyer, etc.

What is the relationship between price and cost in wartime?

Richard appears to be expressing the common popular notion that prices/costs don't convey real resources information in wartime - though he wisely hedges by saying contract prices were "very flexible" instead of saying they were completely unrelated to resource consumption/embodiment.

So this raises the question - does the price mechanism break down in wartime, severing its relationship to resource-denominated costs?

The answer is broadly "no," with some caveats.

First, just test the price-cost theory intuitively with real world examples:

• The Tiger II cost more than Panzer IV and embodied more labor, steel, and capital.
• The B-17G cost more than P-51D and embodied more labor, aluminum, and capital.
• BB's cost more than DD's and embodied more labor, steel, and capital.
• The USN's base construction program cost more than the KM's and embodied more labor, concrete, steel, and capital.

Hopefully your intuition is that the above notions cohere with a decent relationship between price and resource embodiment/expenditure.

Now let's dig just a little into how war economies worked - did prices convey information all the way down the production chain or just in finished military goods?

First up, capital: According to Rutgers economist Hugh Rockoff, market prices drove the initial conversion to military economy through at least the end of 1942:

For the most part conversion was coordinated in the old-fashioned way, by the market. Reliance on the market was a matter, mostly, of timing. Mobilization was set in motion by a flood of highly profitable war contracts in 1941 and 1942 that inaugurated a great building boom. By the time government agencies could be set up, policies thought through, and problems of interagency coordination resolved, construction of the war economy had largely been completed. From "Price and Production Controls in World War II"

That would cover at least the capital allocations for most of the war: private industries responded to price signals regarding where to direct capital resources. A monopsony buyer can make allocative pricing mistakes, however, and that occurred in WW2. For example the WPB discussed on November 24, 1942 that production of machine tools for aviation industry was curtailing naval production. The WPB recommend government intervention to align price-based allocations with strategic goals.

Prices predominated in the allocation of labor resources as well:

In World War II the U.S.
relied on wages to draw workers to production centers, and the same
could be said for other factors of production.

------------------------------------------------------------

In sum, labor and capital were allocated primarily by market pricing mechanisms. As most raw material prices were fixed, weapons prices probably closely mirrored the real resources embodied by them.

...in the nascent fuller version of this post I'll discuss the German and Soviet cases.

----------------------------------------------------------

The only hope of saving Richard's claim is by stretching the definition of "very flexible" wartime contracts. It's essentially an argument that profit margins were sufficiently high to materially untether weapons prices from underlying resource commitments. Is there any evidence that was the case?

------------------------------------------------------------------------

Yes, indeed it is difficult to quantify, for the Germans, but not the Americans where data are monthly.

No, the economic calculation problem is not solved by monthly aggregate data. These data do not convey the productivity-adjusted man-hours, raw materials, and capital embodied in each weapon except very grossly and via the information in subsidiary prices.

This amounts to a statement that the economic calculation problem applied to Germany but not to America and entails that America achieved socialism's wildest dreams in WW2, thereby proving wrong von Mises and the other prophets of capitalism. Certainly an original take.

The Germans were not going to get more Bf 109 or FW 190 simply by spending more Reichsmarks, unless those first went into either building new plant or expanding existing plant.

Hopefully everyone can see from the foregoing the irrelevance of this point. Nobody has claimed that simply "spending more Reichsmarks" leads to more planes, or has even raised the issue of alternate histories of LW production on this point.

Rather, the claim in this thread was:

This shift from general to specific machine tools (operable by less-skilled workers) required massive investment.

Furthermore, each new type of plane required massive investment in type-specific capital such as finely-tuned jigs for assembly.

I.e. the claim relates production to investment (inter alia).

I suspect Richard is confusing this thread with others in which I've projected higher LW production had Germany defeated the SU. In those other threads, such production results from greater labor input and LW investment (in part because of greater overall investment, in part because of less investment in Heer production) - not from merely printing RM.

As the economic calculation problem is serious, however, additional capital and investment would be denominated in RM through a partial market mechanism. The RM-denominated additional production would reasonably reflect amplified resource expenditure.

[TheMarcksPlan]

With double or triple the aircraft production, if the Germans wanted to keep up pilot training standards with the Wallies, they'd need about ten times the avgas just for the training of the crews. Needless to say, this was well beyond any realities.

It's odd to claim that X was beyond German capabilities without having a value for X.

IIRC the actual fuel budget for LW training was surprisingly low. Anybody have the figure at hand?

[TheMarcksPlan]

And the Panzer II production until 1944?

Not for frontline duty. SP guns and command tanks.

And the high number of Panzerjägers and StuGs instead of tanks?

StuG's instead of tanks assigned to infantry support, which everybody else had but the Germans generally did not (a few limited exceptions). If it was such a terrible idea you'll surely address US TD's and SU's next.

If by any means the Germans were able to slow down the unbearable attrition, the production of more and more aircraft wouldn't even be the first choice of any prudent decision maker.

Are we sure that measures like pressing heavies and jets into service with full of teething problems is a choice the Germans would make without the hopeless situation?

As I've said elsewhere, Germany probably wouldn't build >10,000 planes/month. Rather, they'd switch to more expensive, more capable, less-numerous models.

Absent the '41 winter defeat, perhaps Germany sticks with the long-barreled Mark IV as its only tank. Perhaps it delays something like Tiger and Panther for production of a standardized family with shared engines, road wheels, etc.

On the whole I don't think it makes much difference. I find the obsessions and debates about Tigers et. al. largely irrelevant and uninteresting.

Me-262 was a promising plane though. Well worth, say, 20% of ATL production effort. OTL its production and performance were hampered by manpower and material shortages resolved by beating the SU.

From Arming the Luftwaffe:

The manpower shortage affecting the Me 262 program was not solved even after the
Jägerstab took over. Friedrich Wilhelm Seiler, Messerschmitt’s chairman, later estimated
that at that time only 30 percent of the necessary manpower was supplied, but this figure
looks far too low.

Surprisingly, even with its ultra-high status, the Me 262 program could not escape
emergency call-up drives initiated in late 1944 in order to fill the ever dwindling ranks of
the Wehrmacht. Conscription was not the only reason for the loss of workers. By May 1944
Messerschmitt declared the loss of around 500 workers since 25 February 1944 due to
Feindwirkung (enemy action), health problems and social needs.
Only a limited number of replacements arrived to replace them.

During the same month [March 1944]
Messerschmitt lost several hundred of its workers to the Wehrmacht and was left
short of the 2,700 workers it required, especially for Me 262 production. This requirement
was only partially covered by the delivery of 1,400 concentration camp inmates.

Towards the end, a
large proportion of the German workforce was unskilled too, composed of elderly men unfit
for military service, unskilled women of all ages, and Hitler-Jugend boys, as one slave worker
observed at Junkers’ jet-engine factory in Zittau.

...all this happened while Me-262 had the highest priority.

Later the He-162 got higher priority than Me-262, which didn't improve things.

In addition, cobalt from Russia would have greatly alleviated the reliability/endurance of Jumo engines.

Me 262 had ~4:1 aerial kill ratio (including those shot down while landing). Allies didn't have anything to match in 1945, maybe not in 1946 either - certainly not in large numbers.

[Terry Duncan]

The one slight issue here is that the US and Britain have more of everything than the Germans, more resources, more money, more infrastructure to commit to war production, and more people to serve in the armed forces. No matter what Germany spends and builds the Allies can at least double it. How do you overcome that when German manpower has already taken losses from its more experienced units?

[TheMarcksPlan]

The one slight issue here is that the US and Britain have more of everything than the Germans, more resources, more money, more infrastructure to commit to war production, and more people to serve in the armed forces. No matter what Germany spends and builds the Allies can at least double it. How do you overcome that when German manpower has already taken losses from its more experienced units?

Hi Terry,

I've started putting together threads to address broad topics like this that come up repeatedly and are highly involved.

On manpower resources: viewtopic.php?f=76&t=251476 As discussed in that thread, Germany takes "only" ~500k dead if the Eastern Front ends during 1942 and is less bloody than OTL for Germany in the preceding 16 or so months. An ungodly toll for any sane nation but a decimal point for Nazi Germany. As also discussed in that thread, Germany's industrial labor resources would actually exceed the W.Allies after SU's fall. I'd invite you to further discussion in that thread but somebody locked it.

We've discussed India's role as production reservoir in the past, the thread includes my post valuing Indian war production at <1% of W.Allied production. viewtopic.php?f=76&t=251476&start=15#p2291462 It also includes discussion of British attempts to train Indians for industrial work ("Bevin's boys") - only 1,000/year envisioned even during Britain's nadir of May 1941.

On money I'll assume you mean the real value of production that is denominated in money via the price system. Unless you mean something like credit financing ability. That's a forthcoming thread, starting from manpower resources and incorporating labor productivity and raw materials bottlenecks. Can't promise that one before 2022.

Not sure what you mean re "infrastructure" as distinct from production. America certainly had a lot of transport capacity but then again if you want California's production deployed against Germany you've got to move it ~3,000 miles by rail and sea each. So that great transport capacity is partially just a response to the fundamental problem of distance confronting the U.S. - an IMO under-remarked factor in WW2.

---------------------------

Another thread documents that American leadership viewed defeating Germany as unlikely if the SU fell. viewtopic.php?f=11&t=252647

While you (and pretty much everyone else here) view W.Allied triumph as obviously predetermined by economic/demographic factors, might I suggest scrutinizing that view for whether it contains hindsight and giving my quantitative analysis of the headline manpower numbers another look? If what seems obvious to AHF now was far-fetched to FDR and the Joint Chiefs, one of those two groups is probably overlooking something. Might FDR and the Joint Chiefs have seen something that AHF is missing?

[Richard Anderson]

Tooze discusses Bomber Command's Ruhr campaign, you're discussing discuss 8th AF raids.

Yes, more context. The USSBS and I discussed the "CBO". The CBO = Combined Bomber Offensive, not the "8th AF". It is a discussion of strategic bombing, not the "8th AF".

It would help if you understood the meaning of the language used in the discussion, rather than making assumptions about the context.

Bomber Command damaged the Ruhr generally; 8th AF hit specific targets. You're looking in the wrong places.

No, the CBO damaged the Ruhr generally. Yes, the lack of sub-components was a critical issue, as was their lack of production of spares. The problem is you cannot really demonstrate how much it affected production except by looking at assembled output, which flatlined for approximately two months before increasing again, but how does that demonstrate a tripling of production was possible?

The caveat remains necessary until you or someone else provides an index that we know contains an apples-apples definition of "aircraft industry".

Ah, of course, contractors, direct and indirect sub-contractors isn't definition enough, neither is airframe, engine and propeller, and aviation equipment manufacturing. When in doubt, argue definitions rather than numbers.

Aside from the sub-contractor issue, there's an intra-firm labor accounting issue. I.e. what portion of an "aircraft industry" firm's labor force was actually working on building planes? How do we divide Henry Ford's labor time between Willow Run and his other concerns? How do we divide time in shops that contracted to various industries? Scherner et. al. cite this issue in their work, as does Tooze, as would any good economic analysis. An easier accounting is via price, as discussed in my Econ 101 post.

Let's see, the German economists like Wagenführ and the American economists of the Aircraft Industries Association of America didn't actually know how to classify the labor force? Good to know.

I've cited and discussed extensively the work of Budrass, Scherner, and Streb. viewtopic.php?f=66&t=252374#p2295474 Besides the "Demistifying" article, I'd also recommend their 2009 collaboration, "Fixed-Price Contracts, Learning, and Outsourcing: Explaining the Continuous Growth of Output and Labour Productivity in the German Aircraft Industry During the Second World War." Scherner and Streb also co-wrote "Das Ende eine Mythos" (no Budrass this time), which I've also cited on this forum. Scherner is, IMO, the best economic historian writing about Germany in WW2 right now.

Good, but how do you know Scherner is the "best"? What about Budeaß, Streb, Harrison, Tooze, and others?

If you think the authors contradict Uziel or me,

Um, yes, I have no problems with all that, but I do have a problem with you stating all that says the German aviation industry would have no problem tripling its historic production rates in 1943.

I don't think you follow the argument. The number of factories is irrelevant. The capital stock - denominated in RM at real prices - is what determines installed productive capacity. Believe it or not, real prices have real connection to real resources.

So then if you stack up Reichsmark high enough they will eventually produce aircraft? Interesting notion. Meanwhile, capitol input into existing infrastructure is limited to the capacity of that infrastructure and the manpower working there. The US invested much more capitol stock - denominated in $ at real prices - into expanded productive capacity, additional labor, and more raw material, and also had the advantage that a large fraction of its industrial capacity was unused at the beginning of the war. The number of factories and workers is highly relevant, because the US had them and built many more, but the Germans did not.

None of that is an indicator that Germany had the capacity to triple its aircraft output in 1943.

I never claimed German productivity would approach American, quite the opposite:

I know, but you keep claiming that the Germans could easily triple their output, then keep referring to sources that you claim support that claim, but they don't.

Not everything is addressed to you. Many AHF members believe popular notions of antiquated LW production techniques, as I will address downthread.

Oh, good, then we now agree that the Germans were incapable of tripling production in 1943 or matching American efficiency in the context of the war?

Richard I would love to have a calm, rational conversation with you. One in which you separate analysis of German capabilities from sympathy with Germany. Your published work demonstrates that capability; I wish you'd display it here as well.

These kinds of responses, however, tend to derail things.

I hope it doesn't result in yet another of our threads being locked. Let's both cool the rhetoric a bit.

Sure, and I will be the first to admit that I like a good argument and can get carried away by the shear fun of arguing - its a family thing, so sue me. Nevertheless, sarcasm is sarcasm, I try to use it to mock notions I find silly or unsupportable, such as in this case, where you appear to be arguing that the economists compiling labor statistics did not know what the people they labeled as aviation workers did. It is not ad hominem, a straw man argument, or argumentum ab auctoritate, or any of the other intellectual biases I used to teach analysts about.

So then rather than trying to demonstrate your research capabilities or sarcastically piggybacking off the work of others who have been doing this professionally much longer than you, instead please try to demonstrate that the sources you've found in your research actually support your argument. When the argument you make sounds too much like the standard "poor Germany, they were only defeated because those mean Allies had too many bombers, men, tanks, and et cetera", then it looks too much like apologia for the Nazi regime. I did notice you got burned using a known holocaust denial site, which is the extreme version of what happens when googling to find support for an argument...its the modern version of availability bias. Combining that with a tendency to confirmation bias, which to be fair we all too easily indulge in, can pretty easily run you astray.

[Richard Anderson]

This is a very big topic on which I have long planned a thread.

Sometimes it is better if it is discussed in the thread where it comes up in...context, right?

The popular notion that currency-denominated wartime weapons prices were untethered from real resource consumption arises repeatedly on AHF. It is a completely false notion but has superficial plausibility given the compulsive power of governments in wartime and typically voluntary character of price exchanges.

Who is that notion popular with? Not me. Again this appears to start as a straw man, which does not bode well for the overall argument.

What I am arguing is that "contract prices" do not actually reflect the cost of producing a particular item in this context. As an example, you can demonstrate that an American Medium Tank "price" was $82,723, $58,197, $47,339, $55,125, or $81,324. Guess which was the "price" for the Medium/Heavy Tank T26E3?

I'll try to come back to this later, but must run.

[TheMarcksPlan]

Yes, more context. The USSBS and I discussed the "CBO". The CBO = Combined Bomber Offensive, not the "8th AF". It is a discussion of strategic bombing, not the "8th AF".

It would help if you understood the meaning of the language used in the discussion, rather than making assumptions about the context.

This is simple. You claimed bombing didn't damage aircraft production significantly until 1944 and that's wrong. Blame the mayhem on RAF, AAF, CBO, or Burger King, the damage happened.

On the subsidiary point of who caused the damage, I'm with Tooze that it was primarily Bomber Command. Their resources were much greater in that period. I don't have the tons-dropped at hand but surely the British did the lion's share. If I'm wrong you'll surely correct me.

The problem is you cannot really demonstrate how much it affected production except by looking at assembled output, which flatlined for approximately two months before increasing again, but how does that demonstrate a tripling of production was possible?

You're confusing our discussion of what happened in OTL 1943 (Bombing impact bit at least a year earlier than you claimed) with our discussion of what could happen in ATL 1944. The tripling of LW production is feasible only a couple years after SU's fall.

Let's see, the German economists like Wagenführ and the American economists of the Aircraft Industries Association of America didn't actually know how to classify the labor force? Good to know.

Well you have a choice of which economic analysts are wrong: 1945's or today's? Here's Tooze on Wagenfuhr's labor classification efforts:

Nevertheless, WagenfuÈhr's Gesamtplan was far from complete. The
problem of attributing inputs to outputs remained unsolved. The rows
in WagenfuÈhr's table purported to show the labour, iron, energy and
transport consumed in the production of each type of weapon. In fact,
they recorded only the resources consumed in the final process of
assembly.

From Statistics and German State, p.278.

So then if you stack up Reichsmark high enough they will eventually produce aircraft?

you appear to be arguing that the economists compiling labor statistics did not know what the people they labeled as aviation workers did

I've worked with a lot of economists - some renowned - and in a past life took steps on the path to becoming one. So it's not at all foreign to me, finding economists to have tripped up in their analysis. As a group, economists combine great insights with great blindness. Maybe that's the difference in our approaches here.

It's obvious to me that Wagenfuhr's input accounting is missing things and its obvious to me that Tooze is right in pointing that out. Note that when I think Tooze is wrong I point it out and bring the receipts. viewtopic.php?f=66&t=252374#p2295663

Sure, and I will be the first to admit that I like a good argument and can get carried away by the shear fun of arguing - its a family thing, so sue me.

That's fine with me and shared. I just don't want our threads locked. Mods - can Richard and I be allowed to play rough with each other?

When the argument you make sounds too much like the standard "poor Germany, they were only defeated because those mean Allies had too many bombers, men, tanks, and et cetera", then it looks too much like apologia for the Nazi regime.

Yeah I'm not going to attempt rebutting an impression that analysis implies sympathy. It's beneath me and should be beneath you. This runs off me like I'm sure it runs off you whenever someone claims that TDI's evaluation of German combat effectiveness implies Nazi apologia.