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Germany’s new strength has a foreign accent
Markets emerge for luxury goods
“The broad mass of people do not have money to buy these products,” he said. “Your target group is very limited, but it is growing because globalization is a reality.” In particular, “the target group is small in Germany but big worldwide,” so German manufacturers must keep seeking new markets outside the country.
Germany’s success holds some key lessons for struggling businesses in the United States and other countries, analysts say, particularly the nation’s renowned system of apprenticeship for training young workers to learn the highly specialized skills they need in German industries.
The U.S. has no comparable system, and U.S. manufacturers chronically complain that they cannot find workers with the skills they need to fill the specialized and complex jobs performed in factories today.
Germany’s success also points up the advantages of its system of close collaboration among business, labor and government. That system led to the adoption of apprenticeship programs in German industries and served to put a lid on unemployment during the recession by working out cooperative plans for workers to cut hours rather than jobs to weather the downturn in business.
Past its prime?
But some pundits dismiss Germany’s famed industrial machine and say its heyday is passing with the rise of new technologies.
“The source of German wealth is sputtering,” said Wall Street analyst Andy Kessler. “Germany’s industrial icons — Mercedes, BMW, Siemens, ThyssenKrupp — are so ‘80s.”
While Germans proudly shun the latest digital fads and incorporate only what they consider the most worthy technologies into their products, that stubborn old-fashionedness has left them far behind the economic curve, Mr. Kessler said.
“Teutonic efficiency hasn’t adapted well to modern-knowledge industries,” he said. “Germany doesn’t have an Apple or a Google or a Cisco, let alone a LinkedIn or Zynga. [German software leader] SAP is Oracle’s weak sister. There’s no Pfizer or Johnson & Johnson.”
Moreover, Germany’s population is shrinking, pointing to an inevitable decline in its economic power and wealth, he said. While it caters to the growing wealthy class in developing countries, Germany has not embraced immigration of talent from those countries as a way to help maintain its economic strength, he said.
“Go to Germany and you basically see Germans,” he said. “Entrepreneurial companies require the best, no matter the nationality. Silicon Valley feasts on a smorgasbord of international scientists and coders. The same in London.”
German businessmen acknowledge that they do not always know where they will find their future workforce, with the number of young German workers dwindling. Many are recruiting labor from Eastern Europe to keep their factories running.
Mr. Kessler suggested that this underlying weakness in Germany’s economy may be the reason Mrs. Merkel is looking to increase the country’s power and influence throughout the rest of Europe.
“It’s clear what Germany is up to,” he said. It is “dangling bailouts” and loans as “bait” for debt-stricken countries to give up sovereign control of their own budgets. In the end, he said, Germany will come to the rescue and end up “owning Europe.”
But the growth of German power will benefit the rest of Europe if Mrs. Merkel is successful at transferring some of Germany’s “Teutonic efficiency” to help streamline the less-productive economies of its neighbors, he said.
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