http://business.timesonline.co.uk/to...cle3644997.ece
Germany still the king of exports
Manufacturing is the key, Michael Woodhead reports from Frankfurt
...Last year manufacturing output grew by more than 6%. Exports rose more than 8%, making Germany the world export leader, ahead of even China, for the fifth year running, with total trade of €969 billion (£758 billion). Overall, the German economy expanded in 2007 by 2.5%, with external trade accounting for 1.4% of this growth.
In the past decade exports have been responsible for 80% of German GDP growth, in contrast to Britain, where consumer spending has easily outpaced manufacturing growth.
Germany is strongest in the emerging markets. Exports to Brazil, Russia, China and India grew by 31% in 2007 from €43 billion to €63 billion. Germany has also invested heavily overseas - its manufacturing companies account for 15% of Brazil’s economic output.
However, market jitters over the American economy have had an impact. “The weak dollar, rising oil prices, slowing American economy and the credit crisis are making the situation difficult for companies,” said Jurgen Thumann, president of the Federation of German Industries.
Trade with America was down 6% to €73 billion last year. But America is not a big export market for most German companies and this makes many German bosses think the looming US recession will hurt them no worse than the Japanese banking crisis did a few years ago.
The EU is Germany’s biggest market, about 60% of all exports. Most significant is the growth in the new eastern European member states. Combined trade with what in many cases were former territories of the old Germanic empire now exceeds that with Britain or America.
It could be argued that, 20 years after the end of communism, in terms of trade the old 19th century map of Europe is once more beginning to emerge, with Germany at the centre and Russia an increasingly significant trading partner. Throw in the German federal budget surplus of €200m and suddenly it seems the Germans are sitting pretty, astride Europe and conquering the world.
...
Yet, according to Thatcherite dogma, the Germans should be up the creek without a paddle: for failing to encourage consumer spending, neglecting to boost service industries, not pushing home ownership, marginal interest in financial services and shareholders and failing to curb trade unions.
So how come they are doing so well for all the “wrong” reasons? Krone said: “It’s not a question of who is doing it right but of different structures. The English structure was destroyed by Thatcher’s confrontation with the unions and goading them into a fight. A number of manufacturers went under as a result of the chaos.”
In a sense the German government’s innate caution actually did business a favour. Stability was preferable to constant state meddling in the name of vote-catching modernisation.
Instead, a combination of historical precedents and a national trait of sticking to what you know has seen Germany come good at a time when Britain fears a sharp economic slowdown. The Germans have always been sceptical of the Thatcher “snake oil” medicine - it does not cure all ills. They have never accepted its universality as an article of faith as every British prime minister has since the great lady’s departure from office.
Germany’s manufacturing might is down to family-owned firms that do not subscribe to Anglo-Saxon notions of “shareholder value”. They are paternal towards their workforces, the products they make, the interests of their customers and the sustainability of their companies.
A study of more than 1,000 such firms by Bernd Venohr of the Berlin School of Economics discovered that most are among the top three world leaders in their chosen markets, from mobile-phone ring tones to steel rolling mills.
“A family-owned business can adopt a long-term approach.
They do not face short-term pressure to maximise profits. Typical for these firms are classic products that are continually being refined. I estimate they invest between two and three times as much in research and development as comparable firms in the same sector abroad,” he said.
Thomas Hune of the Federation of German Industries added: “The motor industry is a good illustration. It is comprised of thousands of small companies that are the ones developing advanced technologies.
“This is not the case in Britain, where everything is outsourced. As a result, there is no core competence. The Germans have done their homework. They are competitive, efficient, innovative and, with the label ‘made in Germany’, renowned for quality.”
In his youth Heinrich Weiss resisted the temptation to become another playboy. He had the money to throw around. His family owned the SMS group, a plant construction and engineering company founded by his great-grandfather in 1871.
“You can’t become a playboy in an area where your family is a significant employer. No father wants his son known as a big spender. I lived next to the works, I knew all the people, I went to school with the children of our employees,” he said.
“I was so completely steeped in the company that there was no question - I wanted to work there, I wanted to be the boss and expand the business.”
...
Germany still the king of exports
Manufacturing is the key, Michael Woodhead reports from Frankfurt
...Last year manufacturing output grew by more than 6%. Exports rose more than 8%, making Germany the world export leader, ahead of even China, for the fifth year running, with total trade of €969 billion (£758 billion). Overall, the German economy expanded in 2007 by 2.5%, with external trade accounting for 1.4% of this growth.
In the past decade exports have been responsible for 80% of German GDP growth, in contrast to Britain, where consumer spending has easily outpaced manufacturing growth.
Germany is strongest in the emerging markets. Exports to Brazil, Russia, China and India grew by 31% in 2007 from €43 billion to €63 billion. Germany has also invested heavily overseas - its manufacturing companies account for 15% of Brazil’s economic output.
However, market jitters over the American economy have had an impact. “The weak dollar, rising oil prices, slowing American economy and the credit crisis are making the situation difficult for companies,” said Jurgen Thumann, president of the Federation of German Industries.
Trade with America was down 6% to €73 billion last year. But America is not a big export market for most German companies and this makes many German bosses think the looming US recession will hurt them no worse than the Japanese banking crisis did a few years ago.
The EU is Germany’s biggest market, about 60% of all exports. Most significant is the growth in the new eastern European member states. Combined trade with what in many cases were former territories of the old Germanic empire now exceeds that with Britain or America.
It could be argued that, 20 years after the end of communism, in terms of trade the old 19th century map of Europe is once more beginning to emerge, with Germany at the centre and Russia an increasingly significant trading partner. Throw in the German federal budget surplus of €200m and suddenly it seems the Germans are sitting pretty, astride Europe and conquering the world.
...
Yet, according to Thatcherite dogma, the Germans should be up the creek without a paddle: for failing to encourage consumer spending, neglecting to boost service industries, not pushing home ownership, marginal interest in financial services and shareholders and failing to curb trade unions.
So how come they are doing so well for all the “wrong” reasons? Krone said: “It’s not a question of who is doing it right but of different structures. The English structure was destroyed by Thatcher’s confrontation with the unions and goading them into a fight. A number of manufacturers went under as a result of the chaos.”
In a sense the German government’s innate caution actually did business a favour. Stability was preferable to constant state meddling in the name of vote-catching modernisation.
Instead, a combination of historical precedents and a national trait of sticking to what you know has seen Germany come good at a time when Britain fears a sharp economic slowdown. The Germans have always been sceptical of the Thatcher “snake oil” medicine - it does not cure all ills. They have never accepted its universality as an article of faith as every British prime minister has since the great lady’s departure from office.
Germany’s manufacturing might is down to family-owned firms that do not subscribe to Anglo-Saxon notions of “shareholder value”. They are paternal towards their workforces, the products they make, the interests of their customers and the sustainability of their companies.
A study of more than 1,000 such firms by Bernd Venohr of the Berlin School of Economics discovered that most are among the top three world leaders in their chosen markets, from mobile-phone ring tones to steel rolling mills.
“A family-owned business can adopt a long-term approach.
They do not face short-term pressure to maximise profits. Typical for these firms are classic products that are continually being refined. I estimate they invest between two and three times as much in research and development as comparable firms in the same sector abroad,” he said.
Thomas Hune of the Federation of German Industries added: “The motor industry is a good illustration. It is comprised of thousands of small companies that are the ones developing advanced technologies.
“This is not the case in Britain, where everything is outsourced. As a result, there is no core competence. The Germans have done their homework. They are competitive, efficient, innovative and, with the label ‘made in Germany’, renowned for quality.”
In his youth Heinrich Weiss resisted the temptation to become another playboy. He had the money to throw around. His family owned the SMS group, a plant construction and engineering company founded by his great-grandfather in 1871.
“You can’t become a playboy in an area where your family is a significant employer. No father wants his son known as a big spender. I lived next to the works, I knew all the people, I went to school with the children of our employees,” he said.
“I was so completely steeped in the company that there was no question - I wanted to work there, I wanted to be the boss and expand the business.”
...
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