How did Germany win manufacturing – now?
America needs to create more manufacturing jobs: it has always been Mr Trump’s usual practice, and one of the corporate tax cuts that congress recently passed and signed into law. The loss of manufacturing jobs is a problem for many countries, particularly the United States. It plays an important role in Mr Trump’s choice.
However, Germany continues to maintain a large share of manufacturing in its economy. It accounts for nearly a quarter of the German economy and about twice the share of manufacturing in the us economy.
How did the germans do that? Are there any lessons for the United States?
After the second world war, Germany made the financial support manufacturing and the system structure, but the economy’s emphasis on “manufacturing” far beyond the known as the Mittelstand is very capable of traditional small and medium-sized enterprises. In Germany, they are seen as the basis for the country’s manufacturing success.
Yvonne Schmittenberg said: “my grandfather was an engineer and mold maker, with technical knowledge, provided the money and my grandmother, so, I mean, yes, is a dream team, yeah. She was a petite woman with blonde hair; An unusual CEO in a male-dominated industry.
In the 1990s, schmittenberg worked in France, where her grandmother, who was running a family business, called and said she would be sold if she didn’t come home to take over.
Schmittenberg is proud of the company’s history. It was founded in 1932. It survived the second world war and began supplying parts for Germany’s auto industry. Volkswagen was one of the company’s first customers.
“From the public, the beatles were the first beatles to be supplied by Schmittenberg,” she said.
Welding nuts are small but important parts. Most of it is about the size of a silver dollar, and a small thread is attached to it. They are welded to cars and used to fix things like seats and seatbelts, so they must be able to withstand the violence of a car crash or collision.
They look very simple, just as they will now be produced in low-wage countries. In fact, they are highly engineered parts. Christian Rieder leads Schmittenberg’s sales team. He says the welded nuts made by the company are very strong.
“On this thread, you can put four Mercedes s-class,” he said. This is equivalent to 8 tons – you can weld this small thread to the steel girder, and then hang four large cars, the threads will not flatten, and the parts will not fail.
The focus on engineering and quality is the hallmark of German manufacturing. Yvonne Schmittenberg said, this let Schmittenberg and other companies considered competitive: “obviously we face pressure, every day we have to fight for market share, but the quality is still our main problem, we will not transfer to any place, no problem. ”
This is one of the strengths of Germany’s Mittelstand companies: they are usually family businesses focused on long-term success rather than maximising short-term profits. They focus on quality.
Yvonne Schmittenberg offers some advice: focus on your staff. Don’t assume that every child should go to college. Make them interested in making things.
“I think it’s very important for young people who are interested in manufacturing,” the chief executive said. “It started at school… Let the kids run around with their eyes open, be interested in technical issues, see how things are done, and really get them motivated on how to do that.
Lessons for America.
What is American company’s takeaway? Can the United States embrace these qualities and drive manufacturing?
Martin Baily, a former White House economic adviser and economist at the Brookings Institution, studied the problem. He said that if the United States have more manufacturing jobs, and can work for those who didn’t have received higher education, so he thought it would be a good thing, but such expansion can be difficult to achieve.
“I would not advise American companies or U.S. policymakers to try to replicate what happened in Germany,” he said. “In fact, I’ll look at Germany and say you’re going to have a tough time in the future, and in fact, you’ve had a tough time with some production going to eastern Europe.”
One big reason, says Baily, is that technology has improved so quickly that it can even replace high-skilled manufacturing workers.
Some germans worry too. Jeromin Zettelmeyer, a former German government economic official now at the Peterson Institute for International Economics, says Germany may soon find it too dependent on manufacturing.
“There is a very serious worry, we could manufacture advantage was lost in the next 10 to 20 years, and now with the United States in the same situation – unless during this period did not like IT department to develop new growth engine,” said Zettelmeyer.
As Germany and America face the future, they fall into the “always greener pastures”, and everyone sees what it doesn’t have. Even if Germany is really good at manufacturing, it may need to try to emulate America and start thinking about post-industrial jobs outside manufacturing to boost its economy.
At the same time, the United States faces the same difficult question of how to provide decent jobs for workers who once worked in manufacturing.