Magazine article Management Today

Cutting Room

Magazine article Management Today

Cutting Room

Article excerpt

Germany sheds its factory overalls - but union protocols persist; trains that are the pride of Hull; loaded issue for cash machine operators ... Evan Davis at large.

It has been a month of touring industrial landscapes. Or, more accurately, post-industrial landscapes. First, to Germany. Have you ever been to Oberhausen, a mining-and-metal town in the Ruhr district? I wouldn't recommend it as a tourist destination, but I went there nevertheless to uncover the mystery of why Germany's economy is doing so badly at the moment.

One theory is that its failure to move out of old industries explains its recent sluggish growth. About 30% of the German economy is industrial, compared to about 25% in Britain.

And Germany's strength in manufacturing may be its economic weakness. There is global overcapacity in many manufactured sectors, and manufacturing prices are falling. In Britain, the price of manufactured goods has gone down by 1% since 1996, while that of services have gone up by 25%. Profits in manufacturing in Britain and the US are hopelessly low. Could all this be why the German economy, which is so manufacturing-oriented, is feeling the pain?

Well, it might be. But Oberhausen didn't give that impression. Sure, it was once an industrial town, but it seems to be losing its old industry about as fast as the North of England under Margaret Thatcher. For example, the old gasometer on the edge of town is now a spectacular visitor attraction (you can go inside and on top, and at night it's decked out in blue lights). And the old Thyssen steelworks is now a spanking new retail park, with a Warner Village cinema and a kilometre-long strip of American-type fast food chains attached.

So here's my theory. Germany's lacklustre performance is down to its reliance on old industries that are becoming less attractive. But it's also down to the fact that, contrary to the usual perception, Germany is adapting out of those industries, and that process is intensifying all the pain.

As if watching a city de-industrialise was not enough of a nostalgia trip back to 1980s Britain, we saw a telling scene in Oberhausen. Before filming at a large bankrupt engineering company that is in the midst of being salvaged, we arranged with a friendly employee to show him at work on camera. …

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