Germany Gets Globalization

As much of the Eurozone has struggled to make ends meet during the recession, Germany has embraced global importing and exporting through a variety of thriving industries.  The country’s 3.6% growth in GDP over the last year can be attributed to a variety of factors in a time when the rest of the Eurozone barely topped 1% growth.  During this same time period, exports from Germany jumped by 21.7% including a 17% increase in sales to China. 

One key factor in Germany’s global growth has been the so-called Mittelstand.  These small and medium-sized firms are successfully specializing in uncommon products used for industrial manufacturing.  Other businesses that utilize machinery for increased efficiency and decreased dependence on human labor are often sourcing them from German companies.  Paying close attention to detail and promoting cooperation between managers and employees has allowed Mittelstand businesses to thrive in a challenging world economy.

Flexible labor scheduling has provided German businesses with a competitive advantage in many global markets.  Managers and employees have agreed upon established contracts where workers build up extra hours during peak production periods and then turn them into vacation time when demand subsides.  This has given firms the ability to maintain a stable workforce without paying excessive labor expenses to meet variable demand.  Many workers who would have lost their jobs during the recession were able to keep them during the recession albeit at a lower wage.

The composition of the German industrial workforce has also proven advantageous for internationally marketed goods.  While skilled laborers earning high wages are readily available to work on important production processes, nearby eastern European workers are willing to provide cheap labor for other menial tasks..  This has allowed companies such as Volkswagen to invest heavily in the noticeable aspects of automobiles without the losing cost advantages of standard assembly line workers.

While the outlook for German businesses is positive, there are many challenges left to overcome.  Volkswagen desires to become the largest automobile manufacturer in the world, but it will face a relentless challenge from established rivals in Japan and the United States.  Likewise, the Germany service economy has a lot of work to do if it intends to keep up with product-driven industries.  Many products that have driven Germany’s export successes are intended to modernize businesses in the emerging markets where they have thrived.  In the long-term, it is possible that they will create their own competitors.