Despite further signs of a weakening US economy, demand for German products remains defiantly strong with exports seeing their fastest growth for 16 months, rising by 3.8 per cent in January over December. Manufacturing remains strongly at the heart of the German economy. But, what gives German manufacturers the determination to manufacture close to home, rather than outsource to China or perhaps closer to home, East Europe?
Following a recent visit to a German racking and shelving manufacturer I feel that I may have gained a small insight into this conundrum. BITO Lagertechnik, a family owned business that has been making storage products since 1959, has just completed a €16 million investment into a highly automated pallet racking fabrication plant, located on home turf in Meisenheim. The investment is a strong commitment to the company’s newly designed pallet racking system called PRO, which is a modular product that has been created with automated fabrication in mind.
The company carefully considered taking advantage of lower wages in East Europe, but decided the right way forward was to utilise the existing local skills combined with a heavy investment in automated production. The plant is impressive, with beams and uprights being coaxed into form from steel coils, passing through automated metal forming and punching systems before being manoeuvred by robot on to finishing and painting operations.
Such a commitment to a new product is brave and will require substantial orders to get a reasonably fast return on investment. Perhaps the fact that the final decision to move ahead came from one key individual from the owning family helps, such courage on a collective basis may be more difficult to come by.
But it’s the company’s resolve to invest in people, as well as plant, that may well be indicative of German manufacturing’s desire to keep production close to home. The family owned company provides professional qualification courses to six per cent of their staff and presently employs 34 apprentices and trainees who are trained in 13 professions. Among the range of training options are three academic degrees which can be obtained in a duel system of practical work and academic studies at Mannheim University.
All in all, German manufacturers seem to place a high value on their manufacturing heritage and are prepared to invest in people and machines for the attainment of a long-term vision, rather than the more widely adopted approach of achieving a short-term financial goal. The big question is, are you in it for the long run?