Can UK learn lessons from German manufacturing? | RBS Invoice Finance

Can the UK learn lessons from German manufacturing?

According to World Bank figures, Germany’s manufacturing sector is more than double the relative size of the same sector in the UK, reports The Guardian.

In fact, the manufacturing sector in Germany accounts for 23% of its national gross domestic product (GDP), while the same World Bank figures suggest that UK manufacturing makes up just 11% of the country’s GDP. Nevertheless, German steel has yet to show any signs of buckling under the pressure of cheap exports from China, despite running a large surplus on trade in such goods.

Germany also boasts more world-class companies in a far broader range of sectors than the UK. Take Siemens, BMW and Bosch as examples. That’s not to say the UK doesn't have its world-leading manufacturing firms — Rolls-Royce and BAE Systems are just two examples. What’s different is the diversification, as well as a more densely packed network of small to medium-sized companies, known natively as Mittelstand, underneath them.

Germany’s industrial might is largely based on family-run businesses operating out of small towns, and these firms often date back to the 19th century. These manufacturers also have a built-in ethos of quality over everything else, as well as a social obligation to the local communities from which they employ the vast majority of their staff. This cannot, on such a large scale at least, be said about British industries.

The educational structure is vastly different in Germany too, and it places a heavier emphasis on vocational courses, which often combine traditional academic studies with plenty of on-the-job apprenticeships and other hands-on training. And while there have been calls to increase the amount of apprenticeships offered within the UK manufacturing sector, such schemes currently lag far behind their German equivalents.

Additionally, German firms are more closely tied to the banking sector in the country, which has the knock-on effect of ensuring longer-term funding. This is not the case in the UK, which would do well to follow the German example to a greater extent than it currently does.

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