Germany’s Mittelstand, 2

 
 

Vocabulary

avoid	laundry	successive
tumble	plant (3)	appliance
annual	muscle (2)	collectively
quake	provide	might (2)
posh	founder	in the face of
reform	area (3)	machine tool
adapt	curve (2)	constantly
niche	innovate	specialize
debt	evolve	vocation
expect	outskirts	cutting edge
refuse	growth	stick together
decide	stability	refuse (2)
design	flexible	think twice
scene	firm (2)	apprenticeship
decide	respond	motherboard
strict	maintain	outsource
rapid	inherit	automation
supply	settle (2)	value-added chain
plenty	glance (2)	heart and soul
dual	confront	blue collar worker
crucial	train (2)	operate (2)
role	attract	woodworking
admire	foundation	one of a kind

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Video

 
 
 
 

Transcript

On the outskirts of the sleepy town of Gutersloh in northwest Germany is Miele, a company that’s been making kitchen and laundry appliances in the area for over a hundred years.

Across the country, over ten thousand of its employees produce over a million washing machines and tumble driers every year. With annual sales of €2.8 billion, the company now has eight plants across Germany.

Miele is one of many small and medium-sized German businesses known collectively as Mittelstand. Firms like these provide the muscle to the country’s economic might.

Other nations may quack in the face of competition from Asia, but not Germany.

Its luxury manufacturers sell posh cars to the new Asian rich and the Mittelstand makes machines tools and equipment that Chinese firms use to make consumer goods.

But what makes the Mittelstand so successful?

In recent years, politicians have done a lot to help in reforming the country’s labor market, successive governments have been ahead of the curve, but so have Mittelstand companies themselves: constantly innovating, adapting and evolving.

By avoiding debt, specializing in niche markets, developing product-related services, and investing in vocational training, Germany’s small and medium-sized companies have remained at the cutting edge of global manufacturing.

Miele is still family-owned. Markus Miele, whose great-grandfather Karl co-founded the company in 1899, is one of its managing directors.

Like many Mittelstand businessmen, he refuses to settle the company with debt, even if it means slower growth.

Markus Miele, Managing Director, Miele: “I think the family is very, very important to Miele because that gives a lot of stability. All our investments are done long-term, and we decide on our own money.

This makes you think maybe twice or even three times more. It’s a very flexible, but on the other side, also very stable structure we have.”

Just a few miles down the road, Beckhoff Automation, another successful, family-owned company. It started out as an electrical installation shop in the 1950s, and has since turned itself into a multimillion euro company, selling specialized industrial computers to customers all over the world.

And Beckhoff doesn’t just design its products; it also makes them. Visit one of its production lines, and you’re confronted with scene you usually expect to see in China or Taiwan.

This is where it makes the motherboards for its computers. By its refusal to outsource jobs like these, Beckhoff maintains strict control over the quality of its products. But it also means the company can respond quickly to an increase in demand.

And that demand often comes from other German companies.

Hans Beckhoff inherited the business from his father, and has seen the company’s rapid growth over the past 30 years.

He says that by sticking together, Mittelstand firms have created a value-added chain.

Hans Beckhoff, Managing Director, Beckhoff Automation: “When I developed my first controls for woodworking machinery, and I supplied them to woodworking machine builders and they supplied them to kitchen builders.

So this value chain of doing controls, building machines, building kitchens is working quite well and this is typical for a lot of industries inside Germany.”

In other European countries, there are plenty of university graduates and unskilled workers — but not much in between.

In Germany, vocational training is much better: skilled blue-collar workers are the heart and soul of the Mittelstand, not only trained to operate the machines, but also to understand how they work.

And by offering academic apprenticeships, a dual system where university students spend as much time working and studying, firms like Miele play a crucial role in keeping Germany’s unemployment levels low.

The Mittelstand’s success has attracted admiring glances from the rest of Europe. But it’s built on foundations that may be hard to copy, from Germany’s family traditions to its skilled workers.

Like Silicon Valley, the Mittelstand remains one of a kind.

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Questions

1. Miele consists of one giant manufacturing plant. True or false? What does it produce? Is it a profitable company?

2. What is the Mittelstand? Firms like these (Miele) provide the muscle to the country’s economic might.” What does this mean? Give examples.

3. Why are the Mittelstands successful? What are the keys to success for the Mittelstand?

4. The Mittelstands are mostly publicly owned and traded enterprises. Is this right or wrong? What are the advantages of family owned and run companies?

5. Does Beckhoff Automation deal with contractors and suppliers? Does it outsource parts production to other companies? Does Beckhoff manufacture woodworking machines? What are the advantages of in-house production?

6. Do company employees come straight out of schools and universities? Where does the company workforce come from? How does it differ from other countries?

7. It’s simple to copy and duplicate Germany’s industrial success. Is this correct or incorrect?

 
 

A. What sort of things does your city, region or country manufacture?

B. Is there lots of trade, investment and partnership with German companies? Give examples.

C. Is manufacturing based on small and medium-sized companies or large, multinational firms? Has it changed over the years?

D. Are they mostly family-owned and run, or are they owned by shareholders and run by a board of directors, or both?

E. Does the labor pool consist mostly of university graduates and unskilled, uneducated people, or is there a large technically trained workforce?

F. Could the German Mittelstand system and culture be adapted elsewhere? Should it be adapted elsewhere?

G. What will happen in the future?