There is an article appearing In the March 7th edition of Time magazine titled, How Germany Became the China of Europe,  which I highly recommend to our Supply Chain Matters readership.

This article, authored by Michael Schuman in Stuttgart provides insightful conclusions as to why Germany has been able to bounce back so quickly from the global recession.  Germany’s export surge allowed the country to respond far more quickly than major industrialized countries to global-based  market opportunities, and the country’s unemployment rate has actually improved in 2010.

Three of the important takeaways that I came away with from this article are:

  • A firm belief that maintaining and enhancing manufacturing capabilities are the key to global competitiveness. German exports to China actually surged 45 percent in the first ten months of 2010, while other countries continued to struggle with their export volumes. German companies concentrate on equating market opportunities with competitive value-chain capabilities.
  • While companies in the U.S. were quick to shed experienced workers, Germany’s industrial and government leaders came-up with innovate ways to retain workers, allowing for much more responsive plans for responding to global market opportunities. As an example, in late 2008, when demand for ethylene declined to a mere 14 percent of existing capacity, BASF tasked engineers to come-up with ways to keep the facility operating through complicated recycling schemes.  The article notes that while Germany’s middle-class may not be benefitting in parity with the current export boom, German workers are pragmatic in accepting smaller pay raises in return for forms of job security as opposed to “employment at will” arrangements.
  • German companies understand the critical importance for being at the center of a network of regional suppliers and for nurturing value-chain capabilities not only in Germany, but in other countries as well.  The article notes that Germany’s imports from the rest of the Eurozone are expanding more quickly than exports.

While German corporate and political leaders do understand that problems still remain, including more growth in domestic product demand, they are willing at least to work together toward developing common and collaborative corporate and legislative policies.

That seems completely different than the constant litany of U.S. and Wall Street related executives who continue to bash political leaders for being “anti-business”, or for translating increased competiveness and job growth into needs for less regulation or lower corporate taxes.

The appointment of a U.S. presidential commission for manufacturing competiveness and jobs was long overdue and this advisory body needs to quickly redouble its efforts.  Applying some learning from Germany’s current track record of corporate and legislative collaboration would also be some required reading.

Bob Ferrari