Arkansas Economic Development Commission

Five Takeaways from Deutschland

May 10, 2017

images covering the 5 topics listed in this blog

Though I have traveled to Germany several times, my visit there last month affirmed some of my former impressions but also gave me some fresh insights.  I remain impressed with the country’s culture and business practices, as well as their competitiveness.  Not unlike Japan, where I visited in February, Germany is a technological, manufacturing, and economic powerhouse in Europe and begs a few observations of their own. 
Germans know how to make things.  In the late 1800s, the "Made in Germany" label was a mark of inferiority, but over the past five decades, the label has become a point of pride and feeds Germany’s reputation for engineering, designing, and building some of the best automobiles and manufacturing machinery in the world.  They may measure three times before they cut once, but when they cut, it's precise and well respected.
German companies know how to export what they make.  One aim in every economy is to be a net exporter of the highest value and volume of products and commodities on the market, and fuel your own economy with other countries’ and companies' currency.  The math works - Germany's population is 25% that of the United States, but their trade surplus with the U.S. in 2016 was a record $270 billion.  Bo might know football, but Germany knows exporting (and trade surpluses).
With age comes adaptation.  Relative to many European countries, America feels like the new big box in the suburbs.  It reasons that with the age of a country comes businesses that have existed almost as long as Arkansas has been as state.  While we are most familiar with the BMW, Mercedes, and Volkswagen names, the backbone of Germany's economy is small- to mid-sized family-owned companies, many of them facing leadership, ownership, and strategic decisions - for their next 100 years.
Germany has some social issues to figure out, fast.  Their past understandably makes them hyper sensitive to immigrants, refugees, and border control issues, but Germany needs to develop a cohesive plan to address some of the current societal, political and practical issues such as employment, housing, and integration of immigrants into German society.  Tack on some taxation and environmental issues, as well challenges on the EU level, and business and government will be increasingly faced with some defining social and economic challenges.
Last but not least...yes, President Trump.  If your economy is heavily dependent on exports, border tax talk is very alarming.  “Not good,” as another U.S. president once said.  Tariffs and trade agreements  were discussed in virtually every meeting we had, and it is a very serious concern.  A prospective border tax and the uncertainty in the meantime will likely remain a sensitive topic for the foreseeable future…. related tweets, too.
I remain impressed with how determined and driven German business leaders are.  They have an admirable focus on excellence in manufacturing and processes that make them leaders in Europe and highly valued trading partners for both Arkansas and the U.S.

picture of Danny GamesABOUT DANNY GAMES

Danny Games, CEcD, is Executive Vice President, Global Business for the Arkansas Economic Development Commission.
He directs the Business Development, Business Finance, Community Development, Existing Business and Small & Minority Business divisions at AEDC.