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Other countries would import the economic model of Germany, but his approach is much less sensitive to export the goods it produces.
The European Central Bank controls the euro Frankfurt, the financial center of Germany Beckhoff Automation, in a bucolic corner of Westphalia, controls the bank, or more precisely, its lighting control systems and ventilation of the bank Others Beckhoff gadgets raise the curtain and dim the lights at Teatro alla Scala in Milan Still, others are integrated into the luxury yachts in the dancing fountains outside Las Vegas hotels and in half of the wind turbines manufactured in China.
Omnipresent but obscure, a family business but never puny, Beckhoff is among thousands of hidden champions who represent a large part of the prowess of Germany as a manufacturer and exporter Its sales jumped from 34 to 465m 608m The last year is 2 billion by 2020, Beckhoff exports more than half its output, but its production is mainly high wages, Germany related rules.
Thanks largely to its Beckhoffs, Germany looks like a shining exception to the rule discouraging among developed countries is true, the economy more than most rich countries during the 2008-09 global recession seen Figure 1 But the unemployment rate increased less than in any other, peaking at 7 9 And nobody talks to downgrade the AAA credit rating of Germany; it can borrow money for virtually nothing.
Not all the news is good, the economy has declined in the last quarter of 2011; and although the first quarter figures do not reveal the Germany itself in recession, its economy will continue to suffer the drag of recession elsewhere in the eurozone and a slowdown in developing countries, but only one is sufficient growth to create jobs, according to Bert Rürup, former chairman of the government council of economic wise men in a book written with journalist, Dirk Heilmann, fat years Why Germany has a bright future, he predicted that by thoughtlessly 2030 Germany will become richer largest country in the world terms of income per head.
Such success is not universal admiration Germany is hated in some parts of Europe to demand overwhelming growth of austerity as the price for supporting the tabloids Greek euro accounted Angela Merkel, the Chancellor in a Nazi uniform current account surplus than China's as a share of GDP is a sign of pride for many Germans graph 2 But economists like Simon Tilford of the Center for European reform CER accuse them of fetish exports while low wage growth depresses their demand for other goods when countries Christine Lagarde 2010, then Finance Minister of France and now head of the International monetary Fund, asked if the model dependent on the export of Germany it is spoke for many sustainable.
Yet there are also many Spanish Minister of Education admiration is seeking dual vocational training system in Germany, which combines classroom instruction with work experience John Cridland, director of the Confederation British industry wants Britain to have its own version of the German Mittelstand, ie, companies like Beckhoff Nicolas Sarkozy began his campaign for re-election as president of France, sounding as if he would gladly swallow the entire work Germany prioritized model, jobs, jobs, he said that if it worked for them, why wouldn t it work for us.
But copyable model After a few days in East Westphalia-Lippe now sell to the world as OWL wondering Beckhoff and peers have global ambitions, but their corporate culture has deep roots Provincial They look back as far as the future , we exist since 1825 and have done the same since, says Dieter Brand, president of the Sparkasse bank or savings, in Bielefeld, the largest city in the region in a way is the same for its client companies in Germany perhaps reformed and reformulated its business model in recent years, but the underlying skeleton is old, and perhaps inimitable.
There are two decades, the country seemed distinctly arthritic The euphoria of unification in 1990 was followed by the worst recession since World War Some 500,000 manufacturing jobs have been lost business was threatened by an overvalued mark , nimble Asian competitors and huge costs of unification economy had become rigid and uncompetitive, moaned entrepreneurs the then President, Roman Herzog, captured the zeitgeist in 1997 when he spoke of loss of economic dynamism, the torpor of the company, a reformer of incredible mental depression clamored for elements of the German model, such as vocational training and centralized wage bargaining, be scrapped.
Rather, it was made more flexible outsourced production company in Eastern Europe; fear this process extract concessions German workers, who offered flexibility on wages and working hours in exchange for job security in the decade following the manufacturing share of GDP has increased although it table 3 fell elsewhere.
In the early 2000s, with even low speed growth and double-digit unemployment, then chancellor, Gerhard Schröder, a Social Democrat, began another series of grueling physical therapy reforms of the labor market has reduced unemployment benefits and liberalized temporary employment Since becoming chancellor in 2005, Merkel Christian Democrats raised the retirement age from 65 to 67 years and changed the constitution to require state and federal governments to reduce their structural budget deficits to more or less zero, the model of what is now a European agreement.
The benefits assumed to be sacrosanct were cut Income inequality increased but as the fundamental jobs of workers in industrial enterprises muscle behind the German manufacturing prowess are not affected directly, but the increase in low paid insecure jobs held, the cost of services, making it easier for plant workers to accept modest wage increases, says Anke Hassel of the Hertie School of Governance in Berlin.
The original assembly of the German model also goes back to a recessionary crisis that followed in the wake of a merger of a starting long recession of 23 years in 1873, two years after Bismarck finally managed to pull Germany together in one state it Gründekrise and subsequently extended forged new ideas on how capital, labor and the state should relate to each other.
A 1884 law created the system double-edge corporate governance in its current form, with a Vorstand management accountable to a separate Supervisory Board Among the supervisors were bankers, who provided patient capital, and scientists whose expertise has been assessed as highly professional training system, introduced in 1880, provided the new producers of chemicals and machinery with qualified and loyal workers Bismarck created the welfare state in part to meet their needs and the health insurance system collaborated necessary capital and labor to cooperate, opening the way for works councils and almost a century later, mandatory representation for workers on the advice of big business monitoring.
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The coordinated market economy has resisted the dictatorship, wars, revolutions and globalization, the confidence of prices, based on the principle that no one will make full use of his freedom by grabbing all he can said Werner Abelshauser, an economic historian at the University of Bielefeld its elements are so closely meshed, he wrote, it would be difficult to replace one of them with a foreign element.
The trust and coordination can be national properties, but their roots are usually quite local before Bismarck provinces of Germany, principalities and palatinates often had leaders who were eager to create local industries in 1678 the Great Elector of Brandenburg gave Bielefeld the certification privilege the quality of the local machine, cementing its position as a center for textile trade centuries later first Beckhoff customers makes machinery for the furniture industry that has developed from the cash-trade that had grown up with the export of textiles.
Dozens of other regions can recount similar stories, and these concentrations have become part of the contemporary success of the country on a list of 100 grapes picked by the European Cluster Observatory for their size, level of specialization and localization in innovative regions, Germany holds 30 seats.
Germany experimented with standardized production of American-style during and after the Second World War, which was one of the reasons for imported unskilled guest workers from Turkey and elsewhere The siren across the Atlantic called again in the years 1990 and 2000, urging Germany to deregulate, embrace services and to maximize shareholder value when this call was silenced by the financial crisis, Germany's consensus model to return to, said Gustav Horn EU related Institute of macroeconomic policy.
Hans Beckhoff, head of the automation company that bears his name, does not come off as Throwback His silver-gray hair is modishly long, his collar unbuttoned But some of its habits seem distinctly old Take his approach to debt, it is against investment in the company is financed by him and his three siblings, the only shareholders it is the same Miele nearby, an elderly manufacturer of 113 years of kitchen equipment and white goods, with annual sales of 3000000000 These are not the most effective way to run a business more indebted Mittelstand companies could increase their profit before tax of several points, notes Armin Schmiedeberg of Bain, a consulting firm, he thinks they are not wise.
The point is not to maximize profit in the short term, says Markus Miele, a managing director of his company, but to aim where we want to be when we shall return to the next generation M. Beckhoff said he pushes the monthly offers to buy his business the lack of financial ambition goes hand in hand with respect for unwritten sumptuary laws behind the Mittelstand families live in an acceptable way, modest and healthy, said Beckhoff.
Perhaps because they lean so heavily on skilled workers in the country is so good to produce about half of German students attend dual training in one of the 344 trades, tanner technician Most courses are set by the unions and employers' State and local government federations provide schools where apprentices get their trade theory rooms and run industry exams When foreigners ask why youth unemployment is so low at only 8 2 compared to Spain's 50 5 aged Germans boast the dual system.
The young Germans are not so sure; it is the first choice of only one-fifth of high school students, said Swen Binner room Bielefeld trade and the number of young people leaving school OWL is down 2 per year while demand for skills increases business is adaptation by blurring the previously clear distinction between professional Beckhoff and university education now offers academic learning, which combine practical experience with study at a technical university.
The relationship between conscientious owners and zealous craftsmen are not without conflict, but it is located in a governance framework that contains disagreements without stifling, and can provide flexibility in the metals sector and electrical engineering, heart of manufacturing, employment contracts still tend to be set to a basic difficulty of outsourcing across the industry, as some employers see.
Entrepreneurs OWL are convinced that global trends continue to go their way 5 billion people can realistically join the 1 billion who are already well off, said Beckhoff It will take much engineering to remove it without ruining the environmental and resource conflicts, and still provide more opportunities for manufacturers.
While the aerospace industry is turning to new materials like titanium shrink and car manufacturers to improve efficiency engines, they provide the machine tool manufacturers with new markets and antique markets can be refined as that they grow WP Kemper baking equipment manufacturer near Bielefeld, expects demand for pulp to double over the next ten years, consumers in developing countries to expand their diet the new generation of bakers be unfamiliar with the mysteries of European bread if Kemper is working on a smart who knows when kneading the dough is ready.
Many Mittelstand companies are oligopoly says Mr. Schmiedeberg, occupying slots so narrow they attract few rivals Increasingly, opportunities are defended with services, in this context, not the term of derision, it is often in manufacturing environments Beckhoff built its own sales and service networks, relying little on dealers unlike some of its non-German competitors.
The next step is the hybrid value, in which the product is a result that the customer wants rather than the good that the Wolf Heiztechnik product of Bavaria is developing a contract under which it sells the temperature control rather than equipment heating Each Chinese company can do the industrial part, not all hybrid, said Karl Lichtblau IW Consult, consulting services related to metering industry, he believes, the share of manufacturing in GDP is more like 30 20.
In places like Bielefeld future looks like an extension of the past does not change everything at once, and the institutions are there to help when the engineering department at the University of Applied Sciences Bielefeld looked in danger of closing, industry drummed the interest of students to hold open iT S OWL, a new initiative by machine builders, car parts suppliers and electronics companies, enlisting universities to add intelligence to regional products, like kneading Kemper smart we are successful because we have companies behind us and the future business from us, said Beckhoff His advice to politicians don t break the chain, but the success he's just pretty proud and is- something that other countries can learn.
The platform for the success of Germany seems precariously narrow vehicles, machinery, electronics and chemical products account for more than half of Germany's exports, and exports provided virtually all of the growth Germany from 2001 to 2007 Optimists think Germany can maintain its share of world trade, which grows twice as fast as world output, and thus remain in the lead, it's a big bet on a thin slice of use of the economy in the appropriate manufacturing is less than a fifth of total unglamorous service oriented non-export Germany is in a state much Sorrier services stunted depress income and investment the OECD projects that, as aging population, potential growth will decline, falling below 1 2020 issue underlying increase in productivity in services and incr tion of wages in line with that, said M. Tilford ERC.
Germany could do much more to perk up domestic demand Deregulation of professional services increase productivity and investment barriers for working women, including tax and social-kill incentive and a shortage of nurseries, must be removed and M. Tilford is surprising that a country with a current account surplus as large as Germany's emphasis on balancing its budget.
The demographic decline could be first a blessing, transfer power to the workers that the labor decreases, with the subsequent increase in labor costs stimulating domestic demand see Table 4 Verdi, the union services, extract a 6-3 pay increase for federal and municipal last month in the engineering sector, where negotiations are underway, bosses face a stronger union domestic demand should enable the growth of any this year, in part because European trade partners are Germany so bad.
Many of them enjoy more like Germany in terms of building business success, but there are limits Any leader with the support and courage can mimic some of what Germany has done when his joints were stiff, like raising the retirement age that France has just begun or cut social security contributions, M. Sarkozy speaks to the emergency program of Southern Europe structural reform was partly inspired by Germany's dual system can be exported, but not overnight.
But there is another question to excel in high-end equipment or to assign to the company, the unions and the roles of the state that Germany has been the practice with disastrous interruptions for over a century during the crisis Italy presented a short program of work such as Germany's, but the results were disappointing Italian companies and their workers could not imitate Germany 's Germany has ordered the flexibility to offer lessons on how to get in shape; but the essence of the model is too deeply rooted to be copied with ease.
Correction In the original version of this story an off day estimate of IMF GDP was used in the first graph The graph uses now displayed IMF estimates published in April this year This was corrected April 19, 2012.
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