Led by Germany, Manufacturing in Europe Is Stronger Than Expected

[pampango]

Source: New York Times

Euro zone manufacturers met with unexpectedly strong demand for industrial goods in June, a report showed Tuesday, suggesting Germany’s export-driven factories will continue to strengthen output — even as the American economy slows and fears linger that the debt crisis could return to hamper the Continent’s recovery.

Eurostat reported from Luxembourg that industrial new orders in the 16 countries sharing the euro rose 2.5 percent in June from May, and 22.6 percent from June 2009. Excluding the volatile transportation-related sector, orders grew 1.6 percent from May. Demand for capital goods was the largest component of the increase, rising 5.3 percent in June.

The report came as the German government said gross domestic product expanded 2.2 percent in the second quarter from the first quarter, confirming its earlier estimate, showing growth well above its European peers and the fastest pace of expansion since East and West Germany were reunified in 1990.

German exports rose 8.2 percent in the quarter, aided by the 12 percent decline in the euro against the dollar this year. That juggernaut performance helped the overall euro area economy to grow by 1 percent in the second quarter, Eurostat, the European Union’s statistics office, said Aug. 13, the fastest in four years.

Read more: http://www.nytimes.com/2010/08/25/business/global/25euecon.html

[bluestateguy]

1. A few months ago we were told Europe was headed for collapse

Some people just love bad news I guess.

[conspirator]

8. The UK, Portugal, Ireland, Greece and Spain ARE headed for colapse. Germany is a world apart n/t

[Muddy Waters Guitars]

51. I wouldn't say it's that bad in UK and PIIGS countries

They have some serious issues-- especially Great Britain, which bought into the Thatcher Kool-aid so much that they've outsourced their tech and other industries and gutted their own manufacturing, all to kowtow to the super-rich who want to profit even more at British worker's expense. But growth throughout the other countries has actually been OK recently, to most everyone's surprise. Even Greece had a much less severe contraction than expected (while reducing its sovereign debt), and also boosting up its own competitive and export industries. Portugal and Ireland registered some growth, while Spain isn't even in the same category. They do have an austerity push, but Spain has very low household debt and a decent number of competitive industries, so Spain will stay in good shape and continue to improve.

[OHdem10]

2. Germany never gave in to the Free Market send your jobs overseas

crowd.

Germany built a strong manufacturing base and looks out for
Germany's interest---looks like it paid off in the long run.

[pampango]

4. Germans, with their powerful unions, rarely go on strikes because they have a real voice in their

employment. Social democracy may let us live nicer lives; it also may be the only way to be globally competitive.

http://www.huntingtonnews.net/columns/100807-kinchen-columnsbookreview.html

In Germany—an economic model with more bottom-up worker control than that of any other country in the world. The present-day system of worker involvement with their employers was put in place by American New Dealers and British Labour Party socialists after the defeat of Nazi Germany in 1945. They wanted to prevent a repeat of the close collaboration of the country's manufacturers with the Nazi regime and figured that with workers on the board of directors, this wouldn't happen.

OK, some facts about Germany, the largest economy by far in the European Union and the fourth largest in the world, measured by gross domestic product per person (GDP), with a thriving export-oriented manufacturing sector -- like the kind we used to have when we manufactured goods that were desired around the world.

Germany, with 83 million people and few natural resources, is the world's second largest exporter, with $1.170 trillion exported in 2009. You know who is the largest exporter and it ain't us. Hint: It begins with C and ends in A. and has more than 1.3 billion residents. Germany's service sector contributes about 70 percent of the total GDP of Germany, with industry another 29.1 percent and agriculture less than 1 percent. Most of the country's exports are in engineering, automobiles, machinery, metals and chemicals. Germany is the world's leading producer of wind turbines and solar power technology.

...the average number of paid vacation days in the U.S. is 13, compared with Germany’s 35. New mothers in the U.S. get three months of unpaid job-protected leave and only if they work for a company of 50 or more employees, while Germany mandates four months’ paid leave and will pay parents 67% of their salary to stay home for up to 14 months to care for a newborn. U.S. life expectancy is 50th in the world, compared to Germany’s 32nd.

[Muddy Waters Guitars]

50. Yeah, that history is interesting

The current, very effective German industrial system-- with workers on the boards of major corporations, strong unions that nonetheless work collaboratively with management for mutual benefit, financial and insurance systems that benefit the people and small business rather than profiting at their expense-- it actually began during the Weimar Republic, and was itself spawned from prior reforms that began with Otto von Bismarck, as they always used to teach during my old World History Class. It more or less disappeared during the 1930's, but the German resistance figures in the anti-Nazi movement (led by people like Konrad Adenauer, who of course took power after 1945) helped to revive it in the late 1940's, with valuable assistance from the FDR-Truman New Dealers and their British counterparts who had overlapping policies.

It's an irony that Germany's systems preserves the spirit of FDR's New Deal far better than the US and UK do today. The Germans have combined US-style New Deal-ism with clever German innovations and a focus on technology to become so competitive, while the USA and Britain have succumbed to the crass laissez-faire stupidity of Friedmanomics and anti-government stupidity which the rest of the world wisely never bought into. We should learn from their example.

[Lightning Count]

5. So how does that translate to demand for German goods?

Do they just make better stuff?

[JackRiddler]

14. I think you answer your own question.

A highly trained, well-paid, motivated work force who know they get job security and fine benefits for their labors (shorter hours than elsewhere, vacations, full health care, pensions, child care and nearly free higher education, continuous training as adults, strong unions with wage contracts covering entire regions and industries, worker seats on the board of directors, a real safety net -- all this still exists and remains the political consensus). Ideal for an economy specialized in high-end complex machinery and full industrial systems as well as automobiles, trains, etc. Plus it's become the European land transport hub. Their reputation precedes them; customers who can afford it want to buy German engineering.

Written from Berlin!

[Lightning Count]

15. So American workers just make crap?

And that reputation precedes them?

Would be news to the workers at GM and Ford.

[pampango]

16. He was explaining why Germany is such a large exporter even with a well-paid workforce.

My guess would be that Americans would be every bit as good as Germans if we invested in and treated our workers in the same way that Germans do theirs.

"A highly trained, well-paid, motivated work force who know they get job security and fine benefits for their labors (shorter hours than elsewhere, vacations, full health care, pensions, child care and nearly free higher education, continuous training as adults, strong unions with wage contracts covering entire regions and industries, worker seats on the board of directors, a real safety net -- all this still exists and remains the political consensus). Ideal for an economy specialized in high-end complex machinery and full industrial systems as well as automobiles, trains, etc."

Is there some part of the system that empowers and motivates German workers that you think would not work in the US if we provided our workers with the same power, safety net, education and health care? Or do you have another explanation as to why Germany exports more than we do (with 1/4 of our population) even though their workers are well-paid and have better benefits than American workers?

[Lightning Count]

17. I'm talking about demand for German goods compared to American goods.

This is the crux of the article. Are German goods just that much better than American goods?

[brentspeak]

22. You're deliberately asking a false question

There already is demand for GM and Ford cars, so your question makes no sense.

As for the matter of German goods being "much better" than American goods -- the US no longer makes many of the type of goods that Germany still manufactures. That is because Germany has not farmed out much of its industrial base while the US has. There is not as much demand for US-made goods simply because there aren't many US-made goods in existence any longer, American-made cars being the exception (though, even US cars are having their production moved overseas now).

Does that answer your question?

[Lightning Count]

26. The US leads the world in manufacturing.

The previous poster said that German goods were in high demand because their reputation preceded them. I was responding to that.

[Commie Pinko Dirtbag]

29. So you think stuff by Mercedes, Siemens etc. sucks?

(See, two can play that game.)

[Lightning Count]

32. Mercedes quality has been garbage the last few years.

I would much rather buy a Lincoln.

One think I do know is that when I am in Germany, you are hard pressed to see many American or Japanese cars.

[Commie Pinko Dirtbag]

33. So you think Germans buy German cars out of misplaces nationalism, and they should instead buy...

...the vastly superior rugged individualist freedom American cars.

(This is FUN!)

[Lightning Count]

34. Not at all.

I think quality is comparable in a lot of areas. I think that nationalism is a quality that Americans are sorely lacking though.

[No Elephants]

47. Let's hear it for German nationalism!

[pampango]

24. As an American I'd like to say our goods are as good as theirs, but foreigners are buying more

German goods than American goods. Since that's probably not because German goods are cheaper, the perception (accurate or not) must be that German goods are of higher quality.

Even if one conceded that much of Germany's exporting success is based on perceptions that their quality is very high, even if their prices are not cheap, that is an indictment of our society and its (lack of) support for our workers, not of our workers' abilities. We have proven historically that we can compete with anyone, including Germany, if our workers get the kind of support that is commonplace in Europe and Canada.

Our individual workers are as good as anywhere in the world, but need the kind of support that German workers get to be their most successful. I can be the best in the world at what I do, but if I work for a bad company or am demoralized for the lack of a social safety net, weak/no union, etc., what I produce may suffer.

[Commie Pinko Dirtbag]

25. And, of course, if I say products A are of higher quality than products B...

...that must mean I'm calling all the makers of products B lazy bums with a crap reputation who only make crap. :eyes:

[Lightning Count]

27. So you agree that German products are just better? nt

[Commie Pinko Dirtbag]

28. Wheee, another front in the War on Straw!

:bounce:

[Lightning Count]

31. It seems that pampango understands the point just fine. nt

[No Elephants]

48. LOL!

[Lightning Count]

30. Good analysis.

I also think Europeans take pride in buying European goods much the same way that Japanese people take pride in buying Japanese goods.

[Commie Pinko Dirtbag]

18. Sigh.

[Lightning Count]

19. The article is about demand for German goods.

Why is demand for German goods higher than demand for American goods? A strawman this is not.

[Commie Pinko Dirtbag]

20. Yeah, and Asafa Powell lost to Usain Bolt because he's slow and lazy.

:eyes:

[Lightning Count]

21. If you have no answers than I understand. nt

[Commie Pinko Dirtbag]

23. OK, what about this?

You wrote as if JackRiddler had said "American workers just make crap, and that reputation precedes them." He did not. THAT is straw.

[JackRiddler]

36. There is absolutely no basis for this response.

Certainly I implied nothing remotely of the sort.

Perhaps you need to examine the source of this reflexive anger and irrationality.

If you were to opt for logic and sobriety, this is what you would conclude:

American workers should organize to fight for the same benefits, rights and privileges as those enjoyed by German workers -- or better.

[Lightning Count]

38. See post 35 for the basis.

I don't agree with the post, but that seems to be the sentiment of a lot of people.

[jschurchin]

37. Mercedes, Porche, Bosch

Krupp, BMW, Hanz-Grohee. I don't know, you tell me?

[Lightning Count]

39. So we should concentrate on the luxury market?

You tell me?

[jschurchin]

40. Not at all brother.

It's only in the United States that these goods are considered Luxury. In the rest of the world they are considered quality products produced at a resonable price.

The thing is, the German people take great pride in producing a top QUALITY product for their people. And they still MANUFACTURE things. It seems that the only things we manufacture anymore is poverty and unemployment. Both of which, we seem to be doing a excellent job of.

The Germans learned their lesson well after WW1 and their runaway inflation and depression. We, as a nation, have not learned our's. And, although we take great pride in the things we produce, these things are getting fewer and fewer, every day.

[Lightning Count]

41. I have been to Asia many times.

And rarely see BMW, Mercedes, or Bosch. I guess they do not recognize the quality? Even when I was in Germany, everyone did not own BMW's and Mercedes. There were a lot of Renaults and Peugeots.

And the American people do not take similar pride? Because that is what you are implying. We are still the #1 manufacturer in the world. Not to mention that we do make cars that sold worldwide.

[jschurchin]

43. #1 maufacturer of what exactly Lightning?

Cars? Nope, Japan http://en.wikipedia.org/wiki/Template:World_motor_vehicle_production_by_country_in_2008

Steel? Nope, China
http://en.wikipedia.org/wiki/List_of_countries_by_steel_production

Timber? Yea!!! Wooohooo, USA
http://www.mapsofworld.com/world-top-ten/countries-with-most-timber-producing-countries.html

I could go on and on Lightning, but you get my drift. To claim we are the #1 manufacturing counrty in the world is foolish. At one time we were, but not anymore. Do we still produce things here? Yes, lots of things. Do we still have a major manufacturing base? No we do not, and the little we do have gets smaller and smaller everyday.

[Lightning Count]

44. So you're saying that we need to shift our industries to foster demand.

I'm just curious what your suggestions are.

[jschurchin]

45. I would like to buy an

American made TV. Maybe an American made Cell Phone. How about an American made washer and dryer. Or even an American made Refrigerator. Try to find any of these products Lightning.

Me and my wife recently purchased a new matress and we had to buy new sheets. Guess how many companys manufacture linen's in the United States. I'll give you as hint, it starts with a Z and ends in a O.

I am a union member and very proud of it. I will pay pretty much whatever something costs to keep Americans working. There are to many products today that we just do not make. American corporations take the manufacturing process away from us, build it with inferior labor and materials and then sell it to us at a price designed to maximise their profits. There is nothing wrong with making a profit, somehow German companys make one on their products while paying their employees a very good wage and giving them outstanding benefits. How does taking care of ones own citizens get lost on someone such as yourself.

Wal-Mart just called, they need you to go spend some money and keep Cho Lin happy in their hut. I have to go climb in my Cobalt and go to work for the railroad. You know, be an American and keep our nation running.

[Lightning Count]

46. I would like to buy a German TV or cell Phone.

I guess German washers and dryers are propping up their economy. Maybe it's German mattress exports. Maybe we should shift our economy to focus more on these exports.

[LanternWaste]

49. It seemed less like a proposition for suggestion,

It seemed less like a proposition for suggestion, and more a counter to your claim.

It does appear to beg the question though, what are *your* suggestions?

[LTX]

53. A snapshot of the U.S. manufacturing sector:

http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf

And why are you sarcastic about timber? Are you equally unimpressed by all U.S. agricultural production and exports?

[WingDinger]

3. Lucky Bostids!

[Safetykitten]

6. They are envious of our top notch health care system though!

[quakerboy]

7. But they are part of the WTO

And we all know that its impossible for the US to protect our jobs because of the WTO courts. How is this possible?

[pampango]

12. They have the same WTO tariffs (low) that we have and more "no tariff" trade.

Citizens of countries that were at war with each other 65 years ago (and frequently before that) now cross borders that have not controls and are open. Even though they are relatively wealthy "socialist" countries, international trade is a much larger part of their economies than it is of ours.

Their "secret" seems to be that they invest in their people through strong social safety nets, strong unions (they are on corporate boards of directors in Germany), progressive taxation and effective national health care. Their income distribution is much, much more egalitarian than ours. Ours is the most unequal in the developed world.

[bhikkhu]

9. Kind of kills the whole "no one can compete against cheap labor" theory

...which we seem to have swallowed hook line and sinker here, as all our manufacturing is shut down, decent union jobs disappear, and all you can buy in the stores is stuff made overseas.

[onehandle]

10. Europe will always recover long before us. They respect their workers and provide a safety net.

Meanwhile we are in a tizzy about Guns, Gays, and God.

[JDPriestly]

11. Europe prioritized protecting manufacturing jobs not financial institutions.

One prominent economist, the Nobel laureate Joseph Stiglitz, argued Tuesday in a radio interview that the focus on deficit reduction was exaggeratedly counterproductive.

“Cutting back willy-nilly on high-return investments just to make the picture of the deficit look better is really foolish,” Bloomberg News quoted Mr. Stiglitz as telling RTE radio in Ireland.

“Because so many in Europe are focusing on the 3 percent artificial number, which has no reality and is just looking at one side of a balance sheet, Europe is at risk of going into a double-dip,” Mr. Stiglitz said.

http://www.nytimes.com/2010/08/25/business/global/25euecon.html?_r=1

[xchrom]

13. Recommend

[dipsydoodle]

35. Germany makes cars that the world wants

whereas the US makes cars that only the US wants - apart from Jeeps.

[Romulox]

42. "Ford Motor Maintains No.2 Position in Europe"

http://www.beaconequity.com/ford-motor-maintains-no-2-position-in-europe-2010-08-13/

Ford happens to produce most of its models for Europe in Europe, just like the majority of VWs sold in the US are made in Mexico. Nevertheless, if you live in the UK and don't see Fords and Opels (just one of many GM brands) on the road, you are deliberately participating in your own fantasy world.

[Psephos]

52. Yet somehow this has been accomplished without a major stimulus. n/t