1) You really don't have an economy without manufacturing. Making money by making things is orders of magnitude more difficult than organizing a financial fraud, but over time doing the very difficult very well is by far the most reliable route to generalized prosperity.
Germany's new boom: making money by making stuff
While the UK and US increasingly relied on the financial sector, Germany concentrated on manufacturing
Larry Elliott in Munich
guardian.co.uk, Monday 14 March 2011
Strolling the broad, prosperous streets of Munich, it is worth recalling the times over the past decade when Gordon Brown used to boast in his budgets about how the UK economy was leaving Germany for dead.
Now – following the most successful year for Europe's biggest economy since the euphoria that followed reunification two decades ago – that looks like the sort of prediction English football fans make ahead of each World Cup: premature, based on little more than wishful thinking – and wrong. "We will have a golden decade now," says Hans-Werner Sinn, president of Munich's Ifo Institute, one of the country's leading thinktanks. Sinn wrote a book early in the last decade, when unemployment was high and pessimism rampant, called Can Germany be Saved? His view then was that it could be. Now he says it has been.
The phrase "crisis, what crisis" also springs to mind outside the Audi plant an hour up the autobahn in Ingolstadt, where a happy band of German motorists have turned up to pick up their new cars, fresh off a one-kilometre production line churning out 2,500 vehicles a day, six days a week.
"2010 was our best ever year," says Jurgen de Graeve, Audi's head of communications. "At the beginning of last year it was clear the market was about to turn up but we didn't expect it to happen so fast."
Current trading conditions for Audi, as for the rest of German industry, have been transformed since the long, hard winter of 2008-09, when some factories slashed output by up to 90% as the financial crisis threatened a second Great Depression. Overdependent on its export sector, Germany suffered a 20% drop in manufacturing output in 2009.
But government wage subsidies meant companies could keep highly skilled workers employed part-time rather than throwing them on the dole, enabling industry to respond quickly to the pick up in global demand. There is now confidence the traumas of 2008-09 will help the country reinvent itself after a troubled period in which the economy was hobbled first by the costs of reconstruction in the former East Germany, then by the uncompetitive rate at which Germany joined the single currency, and finally by the collapse of the IT bubble in 2001.
It was then that the rumours of inexorable decline started to circulate. The list of defects was long: pampered workers; an over-generous welfare state; a too cosy relationship between companies and their bankers; the lack of a venture capital industry; too high a reliance on family-run manufacturing businesses; a population that was getting older and starting to shrink. Put together, the view was that for decades Germany had been living on past glories – the explosive growth of the Wirtschaftswunder, or economic miracle, in the 1950s and 1960s – and had allowed its economy to become sclerotic.
Now there is belief the good times are coming back, and that some of the weaknesses flagged up in the 1990s and 2000s have turned out to be strengths. more2) Green technologies will only be produced by folks who are already good at producing the existing technologies. There are no shortcuts. Merely wanting to be green is NOT enough. You must have skills. And skills are most often gained by doing things the hard way and are NEVER gained by cutting corners.
German plans for zero-emission car to win over petrolheads
BMW is one of the manufacturers working to design electric car from scratch, rather than converting existing model
Julia Kollewe and Larry Elliott in Munich
guardian.co.uk, Monday 14 March 2011
Germany's world-class cadre of car designers are searching for the holy grail – a zero-emission car that wins over the world's petrolheads. "There are so many concepts," said one Audi executive. "We're not sure what the customer is willing to pay for."
At the moment, even with oil prices soaring, the cost of a battery pack adds €10-15,000 to the cost of an electric vehicle, and even then it has a limited range.
"We've not yet gone far enough to break through with this technology," said Audi. "People only change to new technology if they have all the benefits of the old plus something extra at the same cost. We assume that one day all cars technology will be electric: maybe not in 2020 or 2030, but by 2050."
Not surprisingly, carmakers are focusing on hybrid vehicles, which combine a conventional combustion engine with an electric powertrain. The best-selling hybrid is the Toyota Prius.
Progress is being made in reducing the weight of the car through carbon fibre, but the key to winning the hearts of motorists is coming up with a battery that lasts for the equivalent time of a tank of petrol.
While Renault-Nissan has led the way with its €27,000 Leaf, already on the market, with the cheaper Zoe to follow soon, BMW is one of the manufacturers that have decided to design an electric car from scratch, building it around new electric components rather than converting existing conventional cars.
Tobias Hahn of BMW explains that while a traditional car has a big engine and a small tank, an electric car is the reverse, with small electric components and a giant battery. This calls for a new architecture, BMW argues. It will launch its i3 model – a pure electric car – in 2013, followed by the i8, a hybrid. more