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In the discussion thread: Germany Explodes Republican Myth [View all]

Response to kpete (Original post)

Fri Dec 23, 2011, 04:56 AM

21. I was just reading a post on a technical forum about this..

Scroll about halfway down the page for the article about German manufacturing.

http://www.cnccookbook.com/

<snip>

1. Focus on high quality products customers will pay extra for rather than cheap products. As Time says, the Chinese make chainsaws, but they don't make Stihl chainsaws. Likewise with Mercedes automobiles and many other products. When you build high quality products, the margins are higher and you can afford higher-priced employees. In addition, you're making products that are much harder to reproduce elsewhere.

2. Family-owned firms are committed to domestic production rather than outsourcing. German executives have been unusually focused on keeping jobs in Germany. It's not clear whether this is just a cultural tendency, or if there is more at work, but it certainly has been helpful to their economy. Part of it has to be that many German manufacturers are small and mid-sized family owned firms that have a greater commitment to their workers than corporate behemoths. This is especially impressive when you consider that labor costs in Germany are actually higher than they are in the US--it's an even greater burden to keep domestic workers than it would be for the US.

3. Subsidies rather than lay-offs with unemployment benefits. When the recession hit, the German government subsidized wages so companies could keep their valuable employees in place and productive rather than unemployed, on the dole, and looking for jobs. This enabled German firms to put the workers on projects that would yield dividends in the future, and to keep the worker's valuable skills and knowledge in house. Where lay-offs were still a problem, German companies went to reduced hours instead of lay-offs.

4. Successive German governments have been clear and consistent in their support for Manufacturing. Somehow the US government has always seemed to favor the Financial and Energy sectors more. The Germans have also had extremely strong ties between the University system and manufacturers.


<snip>

Read the rest of the piece at the link.

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