Small to medium companies keep German export machine humming

Coburg, Germany: From a sprawling plant near the town of Coburg, German firm Kaeser churns out tools for some 100 nations, one small cog among millions powering Germany's huge export engine.

With German exports topping the €1 trillion (Dh4.84 trillion) mark for the first time in 2011, the world's second biggest exporter after China relies heavily on small- and medium-sized firms like Kaeser to keep the motor humming along.

Employing some 4,000 people worldwide with a presence in 80 countries, Kaeser makes 70 per cent of its €560 million profits abroad.

"Germany is a country without many raw materials but we can sure produce machines," said boss Thomas Kaeser.

"Our domestic market is too small, so we owe our survival to exports."

Kaeser's main product is air compressors, used in industrial plants and public buildings and varying in price between a couple of hundred euros to €1 million, depending on size. Considered the "Mercedes" of the air compressor world, Kaeser's strength lies in its flexibility, its boss said.

"We can deliver air compressors made to measure, like a suit. We spend a few days with the client assessing the needs of the factory before providing tools that are tailor-made," he said.

"Our clients are prepared to pay for our efficiency and reliability. If the compressed air stops flowing, it's like a power cut, the factory stops working."

It is this nimbleness that sets German small- and medium-sized firms (SMEs) apart, said Sebastian Dullien, a researcher at the Council on Foreign Relations think tank.

"German firms excel in making high quality niche products. They react quickly to the needs of the client and immediately send technicians to the four corners of the globe if needed," Dullien told AFP.

"The staff of these SMEs is extremely qualified and specialised," he added.

Historical factor

There is another, historical, reason German firms have been able to conquer the export markets of the world, explained Jean-Louis Thieriot, a lawyer specialising in Germany.

"Stripped of their colonies, Germans were forced very quickly to find new markets abroad," he said.

They also quickly realised the need to speak English to thrive in the business world, he added.

Kaeser, who speaks fluent English and French in addition to his native German, said he did not share the view of Anton Boerner, head of the German Exporters Federation, who has said Germany could survive if the euro collapsed.

"Without the single currency which has removed exchange rate fluctuations, our firms would be less strong," he stressed.

And despite the temptation to shift production abroad to take advantage of lower labour costs, Kaeser has stuck to its home base, with almost half of its global staff based in Germany.

"Even if the product would be cheaper, I don't think it would be the same quality," he said.

Kaeser also places a strong emphasis on training up its 250 interns, despite costing the firm around €25,000 a year each, explained Michael Scheler, in charge of training.

"We cannot find people on the job market who can be put straight to work unless they have followed this training," he said.