german companies one

German Companies, one



debt edge (2) down to the wire
crisis fare (2) showcase
heap tension shape (2)
forge demand credit (2)
devote upholster work ethnic
bore backstop apprentice
tunnel chief (2) subterranean
adjust order (2) indispensable
cuckoo aptitude on the spot
exploit off-days craftsman
bailout evolution competitive
quarter oriented currency
loyal founder don’t mind
trainee rigorous equivalent
lay off plummet theoretical
melt make-up ingenuity
cruel revenue downturn
yacht upswing account for
chill prudent self-made
packed capacity nonsense





And now to Europe’s debt crisis.

Negotiations are going down to the wire on yet another bailout for Greece — one that would require German help.

From Germany, Margaret Warner reports on how on some of the people who help make it Europe’s richest country.

The restaurant Dionysus was packed on a recent night, heaping plates of Greek fare flying from kitchen to table.

But at this eatery, named for the goddess of wine, the drink of choice is German beer.

The Greek-born owner spent years building this showcase of his homeland’s cuisine for Frankfurt diners.

But now the economic crisis in Greece — and demands that Germany act as backstop to Europe — has him wishing that his old home behaved a little bit more like his new one.

Christos Kezetzidis, Owner, Restaurant Dionysus: “In Greece, it’s a totally different world. I came here to work. In Germany there’s just more order — and they do more work.”

That work ethic is forged in places like the Herrenknecht Factory in Germany’s booming Black Forest region.

Owner and founder Martin Herrenknecht grew up in a tiny village here, the son of an upholsterer.

Martin Herrenknecht, Chairman Herrenknecht AG: “My dream has been to always have more people employed than my father. And my father had 12 people.”

More than four thousand people work for him, from young apprentices learning to shape metal to master craftsman constructing the subterranean ground eaters built here — tunnel boring machines that can cost millions of dollars.

The secret to Germany’s success lies in small to medium-sized family firms like this one, that manufactures some highly specialized and indispensable piece of equipment.

The Germans like to say “we make the thing that goes inside the Thing that goes inside the THING.”

In Herrenknecht case, it’s a very BIG thing, some weigh thousands of tons: projects from the Beijing subway to New York’s Second Avenue Line, to a train bed under the Alps, all exploit Herrenknecht’s indispensable feature: a cutting head than can re-adjust to any material, on the spot.

The founder credits much of the success to the centuries old aptitude and ingenuity of the workers of his region.

Martin Herrenknecht: “Before, let’s say 300 years ago, we built cuckoo clocks, and today we build tunnel-boring machines.

So we changed from cuckoo clocks to tunnel-boring machines.”

That’s quite an evolution.

Most of Herrenknecht’s $1.25 billion dollars in sales are worldwide, helping make Germany an export powerhouse.

With just a quarter of America’s population and a quarter of its GDP, Germany exports more than the United States in total, notes Norbert Walter, former chief economist at Deutsche Bank.

Norbert Walter, Former Chief Economist Deutsche Bank: “We Germans have 1% of the labor force in the world; and we have 10% of the exports of the world.

That gives you an idea of how successful and how oriented towards international markets we are.”

The ten-year old common European currency also helps.

A third of Herrenknecht’s sales go to other Eurozone countries and pricing his machines in euros rather than what economists say would be a far stronger deutsche mark, makes them more competitive abroad.

Martin Herrenknecht: “If we were to have 17 different currencies, can you imagine every morning, I should study what is now, let’s say our relation to the Swiss, French francs to the peso to the lira? I couldn’t work like this.”

We’ve come to Germany to find out why it’s doing so much better than it’s European partners.

And part of the reason can be found here in the southwest state of Baden-Wurttemburg.

The castle behind me may date from the 1700s, but the economic model they’ve developed here is 21st century-plus.

Just outside the state capital, Stuttgart, is another one of Baden-Wurttemberg high performer, Trumpf. Customers from Harley-Davidson to Apple buy its laser-driven metal cutting machines, $2.7 billion worth last year.

The family-owned firm devotes 8% of revenues to R&D to keep its innovative edge. They invest ever more in their 9,000-person workforce, more than half here in Germany.

Like most German industries, Trumpf hires them young, after the equivalent of 10th grade for a rigorous three-year training and schooling program and a full-salary job afterward.

Most stay far longer.

And after college, paid for by the company, some go on to become manager.

Apprentice Simon Richter is 19.

Simon Richter, Trainee, Trumpf: “I applied to be a trainee because I like mechanical work, and not only the theoretical stuff at school. It’s always the same at school. And you don’t know what you need math for in your life later.”

Journalist: “So do you think you have a good future ahead of you?”
Simon: “Yes I have.”

Trumpf keeps the apprentice program going even in hard times, as when the 2008 global financial crisis melted down the company’s sales.

Nicola Leibinger-Kammuller, CEO, Trumpf: “It just hit us. We really went from one hour to the next, we didn’t have any orders. At the same time, all over the world — no orders.

That was really cruel.”

CEO Nicola Leibinger-Kammuller watched as sales plummeted 40% in two years. And she had to drastically cut production. For most firms, that would have meant layoffs.

But not here.

Nicola Leibinger-Kammuller: It’s just a terrible thought of having to lay off people, because we like our employees. And we need them. And they are well-trained. And they’re loyal. And they have been working for us for decades, some of them, or many of them have.

And it’s just a terrible thought to have to send them away.”

Instead, Trumpf turned to a new German program called Kurzarbeit, or short work, cutting its employees’ work hours and pay.

The government made up part of the difference. And they got extra training on their off-days.

Judith Schonemeyer and Sebastian Frederick say they didn’t mind reduced wages. At least they kept up their skills.

Judith Schonemeyer, Trumpf: “We noticed that the financial figures were declining. Right from the beginning, it was clear. For me, it was one or two days a week I didn’t work.

We accepted less money so that once the situation improved, we won’t have to start all over again.”

Sebastian Frederick, Trumpf: “It gave us a secure feeling, especially the people with families, that they have job security, that the company stands behind them and that you get to keep your job.

So everybody was happy to do without the five percent or extra hours.

Peter Leibinger, Vice Chairman, Trumpf: “The desire for security and safety is the most, so to speak, strongest driver in German culture.”

Nicola’s brother, Peter Leibinger, vice chairman of Trumpf, said the short work program, readily accepted by the German workers, positioned industry to restart quickly after the downturn.

And it paid off big-time for Trumpf.

Peter Leibinger: “If we hadn’t had this opportunity to use Kurzarbeit, we wouldn’t have had the upswing that we saw, meaning 50% growth within one year for a company that makes a very difficult and complicated product and has to deliver that into the world.

This wouldn’t have been possible without us having our workforce on board.”

The Leibingers’ financial caution also helped them weather the global credit crisis. Trumpf carries no major debt, they say, and in good times, they bank the extra profits to reinvest later.

Nicola Leibinger-Kammuller: “No yachting, no, no horses, no racing cars and stuff like that.

And that’s why usually we have enough money to reinvest with our money for research and development and buildings and acquisitions and so on and so forth.”

But even Trumpf is feeling a chill wind now from other EU countries, who account for half its sales.

Since the euro crisis hit big last summer, there’s been a slowdown in orders from customers in Italy and Spain and even France.

Peter Leibinger: “They said, we’d like to invest, we could use the extra capacity, but we’re just so unsure about the future, we’re going to wait for awhile.”

Martin Herrenknecht, with his European customer base, is torn over what to do about the crisis. This self-made man is frustrated that Germany is being asked to bail out less prudent and hardworking neighbors.

Martin Herrenknecht: “It’s nonsense. They should control it in a better way. And it cannot be that we get retirement at 67, and the Greeks at 50.”

But then there’s economic reality.

Do you think that Germany is going to have to help support some of these countries?”

Martin Herrenknecht: “I would say that’s quite clear.”

That tension, how to shore up the euro zone on which Germany depends, without endangering its own hard-won prosperity is one the Germans haven’t yet resolved.

*     *     *     *     *     *     *


1. The Greek restaurant owner thinks that Greeks and Germans have the same character, ideals, values, culture and behavior. Is this correct or wrong?

2. Does Martin Herrenknecht comes from a family of industrialists?

3. Are most German firms large multinational corporations or small and mid-sized?

4. What product does Martin Herrenknecht manufacture? Is this the traditional product of the region?

5. German businesses in favor of the euro. True or false? What does Martin think about the euro?

6. How do the workers start and develop in the company?

7. German companies lay off their employees during economic slowdowns. Yes or no?

8. Does the company spend its profits on yachts, horses and luxury cars, or dividends to investors?
A. Is there a lot of trade and partnership between your country and Germany?

B. Do you think other countries should follow the German economic and industrial model?

C. Or should everyone just accept their situation and let Germany specialize in what it does?

D. Is is impossible to duplicate German success due to cultural, historical and geographic factors. What do you think?

E. What will happen in the future?

Share Button

Email this page

Comments are closed.