4 ms·

The analysis is incomplete. It does not take services into account. Yes, Germany has a positive trade balance in goods. But the trade balance in services is ne

by jpfr 7y ago

The analysis is incomplete. It does not take services into account. Yes, Germany has a positive trade balance in goods. But the trade balance in services is negative. This ... well ... balances the balances. The UK has shifted its economy from production to services. Hence the negative trade balance for physical products excluding services.

ChuckNorris89 7y ago
This! Germany's manufacturing supremacy can't last forever with lower cost countries catching up fast. UK realized earlier it can't be competitive in manufacturing anymore. Knowledge work is the future in the West, not volume manufacturing.
- thenaturalist 7y ago
  The number of "Hidden Champions" (SMEs most often in manufacturing of high tech machinery & components which are world leaders by market share in their respective niche) in Germany speaks to the contrary. Same situation in Japan.
  - ChuckNorris89 7y ago
    Indeed, I myself worked for one such niche high tech machinery German company. The problem is, due to the thin margins in these hardware gigs, the salaries are piss poor compared to the skills needed (M.Sc. and up) as even making iOS Apps paid better. Only the execs and the couple of grey beards who were with the company since its inception were well paid, everyone else not so much. That's the reason youngsters aren't gravitating towards these gigs anymore and prefer to be web devs instead. The margins are higher and the entry bar lower. I'm not saying they'll go bust tomorrow, not at all, I'm just saying they don't have an easy future ahead, due to low margins and unattractive career paths for youngsters, especially once their patents expire and China will be able to make the same stuff at half price. That's why the UK's decision to focus on services/consulting is a better long term bet IMHO.
    - noobdood 7y ago
      The same stuff? What about quality? Newb here.
      - yorwba 7y ago
        China probably has more people at every level of education than Germany, they're just more sparsely distributed. So the one person with really in-depth manufacturing knowledge spends their time supervising a bunch of greenhorns who barely know how to operate the machines, making lots of cheap crap. But they're learning something new every day and may eventually become skilled enough to cost-effectively manufacture high-quality goods instead. Of course at that point they won't be happy with rock-bottom wages anymore, so it's not clear that prices will drop much.
        noobdood 7y ago
        Thanks
- jotm 7y ago
  So, you can buy good quality springs from China and Russia. Yet German suppliers are preferred, because they have better quality guarantees/control, I guess. You realize that it's insanely easy for "knowledge work" to be replicated? Much more so than any manufacturing. China already does it. What does that leave European and American companies with? Quality. It can apply to tangible and intangible goods equally well.
- indemnity 7y ago
  Knowledge work isn’t something people in the West are uniquely qualified to do, and so much of this work has already left or in the process of doing so. It will be interesting for my children when either automation or outsourcing has removed the last rung for a typical middle class lifestyle.
toyg 7y ago
This. I stopped reading when the author claimed the UK was the biggest exporter in 1993 and now it's not - well, duh: this country doesn't export low-margin widgets anymore, because it makes more money into high-margin services. A lot of those services are sold to... Germany.
- ChuckNorris89 7y ago
  Exactly, that's why IT salaries(especially contract rates) are higher in UK than in Germany. UK values knowledge work more.
IfOnlyYouKnew 7y ago
Adding in services doesn't change much: https://upload.wikimedia.org/wikipedia/commons/0/03/Balance_of_trade_in_goods_and_services_%28Eurozone_countries%29.gif https://upload.wikimedia.org/wikipedia/commons/0/03/Balance_...
- alasdair_ 7y ago
  >Adding in services doesn't change much: https://upload.wikimedia.org/wikipedia/commons/0/03/Balance_.. https://upload.wikimedia.org/wikipedia/commons/0/03/Balance_.... The link you posted doesn't show the UK on it. It just compares four Euro countries.

by jpfr 7y ago

ChuckNorris89 7y ago

This! Germany's manufacturing supremacy can't last forever with lower cost countries catching up fast. UK realized earlier it can't be competitive in manufacturing anymore. Knowledge work is the future in the West, not volume manufacturing.

thenaturalist 7y ago
The number of "Hidden Champions" (SMEs most often in manufacturing of high tech machinery & components which are world leaders by market share in their respective niche) in Germany speaks to the contrary. Same situation in Japan.
- ChuckNorris89 7y ago
  Indeed, I myself worked for one such niche high tech machinery German company. The problem is, due to the thin margins in these hardware gigs, the salaries are piss poor compared to the skills needed (M.Sc. and up) as even making iOS Apps paid better. Only the execs and the couple of grey beards who were with the company since its inception were well paid, everyone else not so much. That's the reason youngsters aren't gravitating towards these gigs anymore and prefer to be web devs instead. The margins are higher and the entry bar lower. I'm not saying they'll go bust tomorrow, not at all, I'm just saying they don't have an easy future ahead, due to low margins and unattractive career paths for youngsters, especially once their patents expire and China will be able to make the same stuff at half price. That's why the UK's decision to focus on services/consulting is a better long term bet IMHO.
  - noobdood 7y ago
    The same stuff? What about quality? Newb here.
    - yorwba 7y ago
      China probably has more people at every level of education than Germany, they're just more sparsely distributed. So the one person with really in-depth manufacturing knowledge spends their time supervising a bunch of greenhorns who barely know how to operate the machines, making lots of cheap crap. But they're learning something new every day and may eventually become skilled enough to cost-effectively manufacture high-quality goods instead. Of course at that point they won't be happy with rock-bottom wages anymore, so it's not clear that prices will drop much.
      - noobdood 7y ago
        Thanks
jotm 7y ago
So, you can buy good quality springs from China and Russia. Yet German suppliers are preferred, because they have better quality guarantees/control, I guess. You realize that it's insanely easy for "knowledge work" to be replicated? Much more so than any manufacturing. China already does it. What does that leave European and American companies with? Quality. It can apply to tangible and intangible goods equally well.
indemnity 7y ago
Knowledge work isn’t something people in the West are uniquely qualified to do, and so much of this work has already left or in the process of doing so. It will be interesting for my children when either automation or outsourcing has removed the last rung for a typical middle class lifestyle.

toyg 7y ago

This. I stopped reading when the author claimed the UK was the biggest exporter in 1993 and now it's not - well, duh: this country doesn't export low-margin widgets anymore, because it makes more money into high-margin services. A lot of those services are sold to... Germany.

ChuckNorris89 7y ago
Exactly, that's why IT salaries(especially contract rates) are higher in UK than in Germany. UK values knowledge work more.

IfOnlyYouKnew 7y ago

Adding in services doesn't change much: https://upload.wikimedia.org/wikipedia/commons/0/03/Balance_of_trade_in_goods_and_services_%28Eurozone_countries%29.gif https://upload.wikimedia.org/wikipedia/commons/0/03/Balance_...

alasdair_ 7y ago
>Adding in services doesn't change much: https://upload.wikimedia.org/wikipedia/commons/0/03/Balance_.. https://upload.wikimedia.org/wikipedia/commons/0/03/Balance_.... The link you posted doesn't show the UK on it. It just compares four Euro countries.