4 ms·

The article asks why there are so many successful mid-size companies in Germany, and it lists reasons such as continuity of leadership, scientific competencies,

The article asks why there are so many successful mid-size companies in Germany, and it lists reasons such as continuity of leadership, scientific competencies, system of apprenticeships and others. I don't see how this answers the question in the title. How does the school of mathematics of the University of Goettingen help make German factory workers competitive with Chinese ones? Why aren't these companies moving their production to cheaper markets like companies elsewhere do?

bootload 9y ago
"How does the school of mathematics of the University of Goettingen help make German factory workers competitive with Chinese ones?" The search for precision and applied scientific discovery. [0] Enlightenment drives every aspect of German manufacturing. Factory workers are in an environment that makes things driven by these processes. [0] An immediate example that comes to mind is the electric signal activation of the liquid suspension (magneto-rheological fluid) in the Audi R8. cf "The Audi R8: The Suspension" ~ https://www.audiworld.com/articles/the-audi-r8-the-suspension/ https://www.audiworld.com/articles/the-audi-r8-the-suspensio... This is an extreme example. It also highlights why Chinese/German manufacturing is different. One is aiming at mass market, low cost. The other high cost but desirable. The low cost German manufactured cars are measurably better than the Chinese.
- antnisp 9y ago
  Every A4 owner is crying over his repair bills reading this.
  - bootload 9y ago
    I mentioned R8 specifically (hand built), what's the A4 problem? How does this compare to Chinese cars (Great-Wall, Cherry) Especially where extensive asbestos is still used in brakes? [0] https://blogs.wsj.com/drivers-seat/2012/08/16/chinese-cars-recalled-in-australia-for-asbestos/ https://blogs.wsj.com/drivers-seat/2012/08/16/chinese-cars-r...
everybodyknows 9y ago
Wage suppression. Seen most obviously by simple comparison to other Eurozone states: http://fortune.com/2014/10/22/why-germany-is-the-eurozones-biggest-free-rider/ http://fortune.com/2014/10/22/why-germany-is-the-eurozones-b... This is not something Germans -- such as apparently the author of OP -- like to talk about.
- binarray2000 9y ago
  To add to less talked about downsides of the "German boom": Wage suppression has caused the fact that Germany has the largest low-wage sector in Europe. An article in English: http://www.nachdenkseiten.de/?p=18499 http://www.nachdenkseiten.de/?p=18499 > The share of low-wage workers (less than 2/3 of the median hourly wage) rose from 17.7% in 1995 to 23.1% of all workers in 2010. The number of low-wage workers increased from 5.6 million in 1995 to 7.9 million in 2010. Another article, from Süddeutscher Zeitung, in German: http://www.sueddeutsche.de/wirtschaft/bremse-fuer-die-wirtschaft-schattenseiten-des-deutschen-erfolgs-1.1737409-3 http://www.sueddeutsche.de/wirtschaft/bremse-fuer-die-wirtsc...
  - lispm 9y ago
    > has the largest low-wage sector in Europe . That's easy, since Germany is also the largest country in Europe (not counting Russia), has the largest number of employees, has a lot of people from East Europe coming for work, ... The alternative would be to move many of these jobs outside of Germany, which sits right next to a lot low-wage countries. The low-wage sector was also expanded, because politics wanted to reduce long-term unemployment and thought that a low-wage job with some social security is better than not working. We should also remember that Germany with now 80+ million people has taken in 20 million people from East Germany (with its economy mostly collapsing) and many of them have still a harder time to find jobs, which has a lot of reasons. One of the reasons is exactly that this eastern part of Germany now lacks this large based of mid-sized companies who are competitive.
    - binarray2000 9y ago
      (1) My comment was an addendum to the post which (partly) explained to another post(er) why German companies aren't moving their production to cheaper markets. I remind you of this because the author of the article and many people here have a rosy view of the economic situation in Germany. Seeing only the "positives" and blending out the "negatives" because they don't fit the official narrative isn't helpful for our discussion. (2) Germany is the biggest country in EU (EU != Europe), has the largest workforce and, thus, the largest low-wage sector. Yes, that is correct. But it is not "easy", as this Eurostat graph shows: http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Low-wage_earners_%E2%80%94_employees_(excluding_apprentices)_earning_less_than_two_thirds_of_the_median_gross_hourly_earnings,_2014_(%25_of_employees)_YB17.png http://ec.europa.eu/eurostat/statistics-explained/index.php/... You see Germany in the company with such economic powerhouses as Estonia, Poland, Lithuania, Romania, Latvia - all of them having a bit worse PERCENTAGE of low-wage workers than Germany. This is not someone's perception, or some narrative, these are hard numbers. (3) You obviously didn't read the articles I've posted. Especially that from Nachdenkseiten as it lists many other issues not widely spoken about in the mainstream media - neither in Germany nor in other countries. It is an analysis from Prof. Dr. Gerhard Bosch (Geschäftsführender Direktor Institut Arbeit und Qualifikation Universität Duisburg-Essen). While we discuss the article published oh hbr.org, which talks about the causes for the success of the German economy, Mr. Bosch mentions the elephant in the room: > German economic policy continues to be characterised by its excessive focus on exports. As a way of dealing with the euro crisis, the German federal government advises other countries to introduce their own labour market reforms on the model of the Hartz Acts. This policy, however, cannot be applied at will to other countries, since only by abolishing the laws of mathematics would be it possible for all countries to have export surpluses. Meaning: German model doesn't work for others. And, it only works for Germany because others take a hit while Germany "takes" a surplus. Yes, German economy/society has it's qualities. But would it be such a "success" without major influence in EU institutions, in ECB, without Euro, with other countries having their currencies (which they can devalue to make their good cheaper and imported - German - goods more expensive), with customs on its goods, with fairer wages in Germany? I highly doubt it.
flohofwoe 9y ago
I'm not an economy expert, but I'd say that the jobs that can be done with 'cheap labour' have already been moved to other countries long ago (at latest in the 90's after the reunification). If you look at a typical German 'Mittelstand company', many look more like high-tec laboratories than typical factories from the inside, lots of robots, high automation, the people working there need to know the technology inside out, troubleshoot and fix problems quickly. That's difficult to get from a manufacturer on the other side of the globe who needs to juggle many different clients from all over the world. And many German workers still have a certain loyalty to their company, since the company owner isn't some international celebrity CEO installed to squeeze the last bit of money out for 'shareholder value'.

bootload 9y ago

"How does the school of mathematics of the University of Goettingen help make German factory workers competitive with Chinese ones?" The search for precision and applied scientific discovery. [0] Enlightenment drives every aspect of German manufacturing. Factory workers are in an environment that makes things driven by these processes. [0] An immediate example that comes to mind is the electric signal activation of the liquid suspension (magneto-rheological fluid) in the Audi R8. cf "The Audi R8: The Suspension" ~ https://www.audiworld.com/articles/the-audi-r8-the-suspension/ https://www.audiworld.com/articles/the-audi-r8-the-suspensio... This is an extreme example. It also highlights why Chinese/German manufacturing is different. One is aiming at mass market, low cost. The other high cost but desirable. The low cost German manufactured cars are measurably better than the Chinese.

antnisp 9y ago
Every A4 owner is crying over his repair bills reading this.
- bootload 9y ago
  I mentioned R8 specifically (hand built), what's the A4 problem? How does this compare to Chinese cars (Great-Wall, Cherry) Especially where extensive asbestos is still used in brakes? [0] https://blogs.wsj.com/drivers-seat/2012/08/16/chinese-cars-recalled-in-australia-for-asbestos/ https://blogs.wsj.com/drivers-seat/2012/08/16/chinese-cars-r...

everybodyknows 9y ago

Wage suppression. Seen most obviously by simple comparison to other Eurozone states: http://fortune.com/2014/10/22/why-germany-is-the-eurozones-biggest-free-rider/ http://fortune.com/2014/10/22/why-germany-is-the-eurozones-b... This is not something Germans -- such as apparently the author of OP -- like to talk about.

binarray2000 9y ago
To add to less talked about downsides of the "German boom": Wage suppression has caused the fact that Germany has the largest low-wage sector in Europe. An article in English: http://www.nachdenkseiten.de/?p=18499 http://www.nachdenkseiten.de/?p=18499 > The share of low-wage workers (less than 2/3 of the median hourly wage) rose from 17.7% in 1995 to 23.1% of all workers in 2010. The number of low-wage workers increased from 5.6 million in 1995 to 7.9 million in 2010. Another article, from Süddeutscher Zeitung, in German: http://www.sueddeutsche.de/wirtschaft/bremse-fuer-die-wirtschaft-schattenseiten-des-deutschen-erfolgs-1.1737409-3 http://www.sueddeutsche.de/wirtschaft/bremse-fuer-die-wirtsc...
- lispm 9y ago
  > has the largest low-wage sector in Europe . That's easy, since Germany is also the largest country in Europe (not counting Russia), has the largest number of employees, has a lot of people from East Europe coming for work, ... The alternative would be to move many of these jobs outside of Germany, which sits right next to a lot low-wage countries. The low-wage sector was also expanded, because politics wanted to reduce long-term unemployment and thought that a low-wage job with some social security is better than not working. We should also remember that Germany with now 80+ million people has taken in 20 million people from East Germany (with its economy mostly collapsing) and many of them have still a harder time to find jobs, which has a lot of reasons. One of the reasons is exactly that this eastern part of Germany now lacks this large based of mid-sized companies who are competitive.
  - binarray2000 9y ago
    (1) My comment was an addendum to the post which (partly) explained to another post(er) why German companies aren't moving their production to cheaper markets. I remind you of this because the author of the article and many people here have a rosy view of the economic situation in Germany. Seeing only the "positives" and blending out the "negatives" because they don't fit the official narrative isn't helpful for our discussion. (2) Germany is the biggest country in EU (EU != Europe), has the largest workforce and, thus, the largest low-wage sector. Yes, that is correct. But it is not "easy", as this Eurostat graph shows: http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Low-wage_earners_%E2%80%94_employees_(excluding_apprentices)_earning_less_than_two_thirds_of_the_median_gross_hourly_earnings,_2014_(%25_of_employees)_YB17.png http://ec.europa.eu/eurostat/statistics-explained/index.php/... You see Germany in the company with such economic powerhouses as Estonia, Poland, Lithuania, Romania, Latvia - all of them having a bit worse PERCENTAGE of low-wage workers than Germany. This is not someone's perception, or some narrative, these are hard numbers. (3) You obviously didn't read the articles I've posted. Especially that from Nachdenkseiten as it lists many other issues not widely spoken about in the mainstream media - neither in Germany nor in other countries. It is an analysis from Prof. Dr. Gerhard Bosch (Geschäftsführender Direktor Institut Arbeit und Qualifikation Universität Duisburg-Essen). While we discuss the article published oh hbr.org, which talks about the causes for the success of the German economy, Mr. Bosch mentions the elephant in the room: > German economic policy continues to be characterised by its excessive focus on exports. As a way of dealing with the euro crisis, the German federal government advises other countries to introduce their own labour market reforms on the model of the Hartz Acts. This policy, however, cannot be applied at will to other countries, since only by abolishing the laws of mathematics would be it possible for all countries to have export surpluses. Meaning: German model doesn't work for others. And, it only works for Germany because others take a hit while Germany "takes" a surplus. Yes, German economy/society has it's qualities. But would it be such a "success" without major influence in EU institutions, in ECB, without Euro, with other countries having their currencies (which they can devalue to make their good cheaper and imported - German - goods more expensive), with customs on its goods, with fairer wages in Germany? I highly doubt it.

flohofwoe 9y ago

I'm not an economy expert, but I'd say that the jobs that can be done with 'cheap labour' have already been moved to other countries long ago (at latest in the 90's after the reunification). If you look at a typical German 'Mittelstand company', many look more like high-tec laboratories than typical factories from the inside, lots of robots, high automation, the people working there need to know the technology inside out, troubleshoot and fix problems quickly. That's difficult to get from a manufacturer on the other side of the globe who needs to juggle many different clients from all over the world. And many German workers still have a certain loyalty to their company, since the company owner isn't some international celebrity CEO installed to squeeze the last bit of money out for 'shareholder value'.