Porsche make the best sports cars in the world and we're proud of that... But without the workers, there wouldn't be a company

Uwe Huck Porsche plant workers' council

The 2.7 million member union, representing engineering, electronics and metal working staff, is asking for a 6.5% pay rise to compensate for productivity and earlier moderation.

But some analysts - not to mention some of the politicians, with a tight general election due in September - say the action could snuff out the nascent recovery in Europe's biggest economy.

Rolling action

Unlike previous strikes, IG Metall is trying out a new tactic with "flexible strikes" spread across the country.

Monday's action, which shut down luxury carmaker Porsche's Stuttgart plant and affected about 20 other companies, was kicked off by workers who failed to turn up for the night shift at a Daimler-Chrysler Mercedes factory in Sindelfingen.

Zwickel: 'We're ready to talk straight away'

The strike is likely to be felt beyond the targeted firms because many manufacturers depend on just-in-time delivery of parts.

Speaking in sub-zero temperatures early on Monday, union leader Klaus Zwickel told to the strikers sipping coffee that he was open to new talks as long as employers were ready to beat their previous offer of 3.3% over 15 months.

But amid cheers he said that the strike would continue "until we get an acceptable result, acceptable to those who voted to strike".

Even louder acclamation greeted the head of the plant's workers' council, Uwe Huck.

"Porsche make the best sports cars in the world and we're proud of that," he told his colleagues.

"Zwickel won't get a new offer from us... We went to the upper limit of what we could manage with our offer

Ottmar Zwiebelhofer employers' chief negotiator

"But without the workers, they'd never reach the sales margins they do. Without the workers, there wouldn't be a company."

With margins of 13%, he said, "How can they say there's no money there?"

Nothing more to offer?

The company, meanwhile - along with the rest of the employers' federation - says it can't afford to do more.

"Zwickel won't get a new offer from us," said Ottmar Zwiebelhofer, the chief negotiator for the employers in the southern state of Baden-Wuerttemberg, on ARD television.

"We went to the upper limit of what we could manage with our offer."

And employers also warn that the system of nationwide pay bargaining which still persists in Germany could suffer a fatal blow as a result of the strike.

More and more companies were giving up on the system, and the strike could drive sector-wide agreements to the wall, one employers' representative said.

As for the politicians, Chancellor Gerhard Schroeder's Social Democratic Party is traditionally an ally of the unions.

But given September's stiff challenge from conservative leader Edmund Stoiber, he trod carefully, he pushed for talks to resume immediately.

"I hope they can return to the negotiating table quickly to reach a result that is reasonable for the economy but takes into consideration the expectations of the employees," Schroeder told the Leipziger Volkszeitung newspaper.

Pay talks

IG Metall called the strike after its demand for a 4% pay increase was met with an offer of a one-off payment of 190 euros for the first two months, and a pay rise of 3.3% for the next 13 months.

In a secret ballot, union members gave strike action their overwhelming support

The union, which had modified its earlier official demand for a 6.5% rise, has accused employers of failing to deliver extra jobs as promised despite wage restraint by workers.

Economists have called for wage restraints, insisting that any rise above 3% would pose an inflationary threat.

Rolling on

Later in the week the union plans to target another 60 firms in the east German states of Berlin and Brandenburg.

The IG Metall union, which has 2.7 million members, said Monday's strike would mean 2,100 fewer cars would be produced.

Monday's action in Germany's industrial heartland could cost the country up to 40m euros, according to IG Metall.

Gesamtmetall, the metal industry federation, has threatened lock-outs if the strikes escalate.

Election year

IG Metall exerts a powerful influence on annual pay negotiations in Germany's key manufacturing and engineering industries.

Pay deals in the metals industry have a wider importance, as they tend to set the tone for settlements in other industries.

And the strike could well be affect the future of Chancellor Gerhard Schroeder, who faces a general election this September.

Already, economic issues have moved to the top of the election agenda.

Germany is Europe's largest economy, accounting for more than a third of the eurozone's economic activity.