Germany: master of the forces of globalisation?
20 December 2006, Berlin (dpa) - German business is ending the year in a buoyant mood amid signs that the top companies in Europe's biggest economy have mastered the forces unleashed by fast-paced globalisation.
20 December 2006
Berlin (dpa) - German business is ending the year in a buoyant mood amid signs that the top companies in Europe's biggest economy have mastered the forces unleashed by fast-paced globalisation.
Indeed, some 15 years after corporate Germany embarked on a round of restructuring to face up to the pressures of a fast-paced global economy, a string of surveys and company earning results have served to underscore the growing international competitiveness and sense of confidence of the nation's powerful industrial giants.
Business confidence in Germany unexpectedly surged towards a record high in December, the closely-watched ifo survey released Tuesday showed, as optimism grows that the nation's economy will be able to withstand next year's expected global economic downturn.
"In our view, this underlines that after several years of heavy restructuring German corporations are in better shape than the overall economy in rising to the challenges and opportunities of globalisation," said Elga Bartsch, economist with the US investment bank Morgan Stanley.
Meanwhile, underpinned by this year's solid global economic and profit performance, analysts are expecting the total dividend payouts by the country's 30 leading blue-chip companies to hit a new record in 2007 of 21.5 billion euros (28.3 billion dollars).
This represents an 18-per-cent increase over the record dividend payout set in 2005 with the companies' booming foreign orders helping to boost the groups' balance sheets and propel the Frankfurt stock exchange towards a year-end rally after a 20 per-cent gain so far this year.
The upbeat mood in the nation's industry was "an indication of corporate Germany's flexibility and its ability to diversify into different areas," said Rainer Guntermann, senior economist with the investment house Dresdner Kleinwort.
Corporate Germany's revamp over the last decade or more is in stark contrast to the nation's political establishment which has struggled to reach a consensus on long-overdue economic reforms needed for overhauling the country's inflexible labour market and its creaking social state.
More to the point, the German companies' foreign order books have helped the nation to secure its position again this year as the world's export champion with data prepared by the Berlin-based Transparency International showing German exports representing about 10 per cent of total global exports.
Germany's robust export outlook has been a key factor in helping to power business confidence in the country to its highest level since the nation's historic unification in 1990.
In addition, it is also evidence of how the nation's export sector has broken free from the country's broader economy, which has been battling to lay aside a protracted run of less-than-sparking growth rates.
A survey this year of Germany's so-called Mittelstand, the nation's small-to-medium sized business sector which represents the backbone's of the country's economy found that 98 per cent of those responding have export markets, a rise of 15 per cent over the last decade.
What is more, the pace of corporate restructuring in Germany is showing no sign of slowing.
While giant German electronics group Siemens AG is completing what its chief financial officer Joe Kaeser described as a year of restructuring, carmaker Volkswagen AG is in the process of trimming a staggering 20,000 employees as part of a rolling cost-cutting drive.
But the series of revamps that German industry has launched since the early 1990s has come at cost, resulting in more than two million manufacturing industry jobs being axed over the last ten years alone.
More than 17 years after the fall of the Berlin Wall, there are now less manufacturing jobs in united Germany than there were in what was West Germany.
In addition, while the implosion of communism across Central Europe has opened up new fast-growing markets and low-cost highly skilled investment destinations, it has resulted as well in the emergence of new industrial rivals.
This also coincided with the rapid change that has taken hold across Asia, notably the burgeoning economic power of China and India, which has added to the global competitive pressures facing Germany.
Globalisation has also helped to undercut Germany's once powerful trade union movement which along with high unemployment has helped exporters to keep the lid on labour costs through moderate wage rises and the introduction of longer working hours.
This in turn has further helped the nation's companies to boost their global competitiveness in the face of a strengthening euro.
One in every five jobs in the nation is now dependent on the export sector compared to one in every six about a decade ago, official data shows. Nevertheless, German unemployment continues to hover around 10 per cent.
That said, however, the new corporate era that has taking shape in the country has resulted in a growing shortage of skilled workers, which is likely to be accentuated in the coming years by the nation's ageing and shrinking population as well as a migration of people out of the country.
According to the Federal Labour Office the number of job vacancies in the country soared by 44.4 percent in November compared to October.
Subject: German news