Reviewing five features of German industrial excellence, past and present

When German economic miracle hit Europe in the second half of the 20^th century there were five features: namely innovation, quality, precise engineering, efficient performance and wide acceptance. Here is the review of these in today’s context:

Innovation

Undoubtedly, Germany was the forerunner in printing press in publication, diesel engine in motor vehicles & rolling stock and the globally known Idar-Oberstein in gemstone research as well as cutting & faceting. Pharma remained a keen interest with innovations such as Aspirin as base drug and X- Ray techno. Today, sadly, except shoes such as Adidas & Puma, German innovation is now taking a back seat.

Quality 

Once, the quality of German products was ever-present in the hard stuff of manufacturing. Automotives, machinery, mechanical tools and pharma products that too using chemical engineering of highest order took pride of place. At the intervening days Germany was indeed a path finder in consumer electronics and data processing. Today Germany concentrates on easy stuff like food & beverage sports & apparel where both quality and innovation take back seat.

Precise Engineering

 Earlier precise engineering was part & parcel of advanced technology born out of linkage between academia & industry. All these were in the hard side area such as automotives, aerospace and in medical technology. Today market competition dictates that Germany moves out of capital intensive industry towards soft side industries such as computer software and nano technology.

Efficient Performance

Then it was efficiency plus–plus with pronounced emphasis on export-led growth, strong high-quality manufacturing base supported by high skilled employees and a dedicated work culture. This led to Germany being the power-house of European economics. Today, the introduction of Euro as the common currency dampened the enthusiasm of both industrialists and workforce to turn out products of high-quality but products at affordable price, meaning lesser quality, to be marketed throughout European Union at one price.

Wide Acceptance

In the post WWII scenario, German products both industrial and otherwise commanded wide acceptance in the European market. With the dawn of 21^st Century this type of hero worship of German products started to disappear slowly & steadily. There are several reasons: Under-investment in the industrial- manufacturing line is chief amongst them, followed by demographic changes of larger immigrant community who did not share the same level of enthusiasm as the native Germans. Much more potent was the hitherto hailed techno-leadership of Germany has left the hands of the Germans and meandered towards Chinese and to lesser degree to Americans.

Panacea

Navigating business strategy amid geoeconomics is the only solution as I see.

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist

 

Why Germany needs another Ludwig Erhard?

Ludwig Erhard served in the German Army as an artillery man in a brief spell in WWI. After he was seriously wounded in 1918, he was discharged from military service. He then mastered the subject of economics and at the end of WWII got a new job as to steer German economic recovery. Today Germany needs another Ludwig Erhard!

Undoubtedly, Germany is in bad state today in terms her economic stability, low growth, high energy cost, sluggish demand for her exports that have collectively pushed the country into economic stagnation. From the coveted position of “Engine of growth in Europe” Germany is now a lesser mortal. So let us turn to the era of Ludwig Erhard and pursue what he did for this Prussian Land.

Post war Germany faced similar situation where a truck load of Reichsmark had to be exchanged for a pound of loaf. Chancellor Konrad Adenauer picked Ludwig to handle the economic portfolio in his cabinet. At that time Germany did not have any gold reserves, bankable foreign currency or for that matter any industrial production. Ludwig understood that no amount of foreign aid can recoup the lost production capacity. No chance of debt notes be issued by the treasury as there was no appetite for German bonds.

Ludwig quickly found a way out. He would issue a new currency called Deutsche Mark, just a pro note, to replace existing Reichsmark which was later rendered invalid in 1948. The holders of these Reichsmark can exchange these for the new Deutsche Mark notes in every banks. The new Deutsche Mark was not backed by gold reserves but by the guarantee of the State that it be accepted and valuable. A strong support by the treasury was the only backing the new Deutsche Mark had and nothing of intrinsic value for this legal tender.

That brought out the miracle. Germans started to put their shoulders to the wheel. Production started, shops were filled with goods. Demand was rising, labour is recruited and wages started to flow into the hands of workforce. Within two years Germany achieved the level production that existed before the start of WWII. Exports led growth began on the horizon afterwards. By the end of 1958 Germany once again became the leading economic workhorse in Europe even beating the British Isles.

As a keen proponent of the concept known as “Social Market Economy”, Ludwig established a business strategy that embodies twin aspects: Germans shall have trust on the state and belief in the new currency. On the other side of the bargain the state would ensure economic stability and at the same time ensuring the welfare of the people.

People were encouraged to increase production, enhance efficiency, and bring out quality outputs so that German products are valued domestically and abroad. The geoeconomics pressure over exports, more exports and better exports was the cornerstone resulting in the economic miracle of the 20^th Century.

Today Germany needs a re-incarnation of Ludwig Erhard to pilot the ship of German economy amidst the geoeconomics storm she is faced with. A re-think of the business strategy is also a sine-quo-non.

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist

 

 

 

Iran nuke explosion, round the corner

The recent explosive statement by Esmaeil Khatib, Minister of Intelligence of Iran that more than 50 Intel agencies co-ordinated attack on Iran during 13 to 25 last June cannot be dismissed as just info. It reveals the underlying issue of Iran getting ready to explode a nuke sooner than later. Details:

The 12 days attack by Israel had three objectives: de-capitation of the senior admin, provoking regime change by internal rebellion and balkanize the state so that Iran splits into regions on the basis of ethnicity or geography. Even though, Khatib did not reveal the parties involved, presumably the entire intelligence services of the collective West and quite a number of Arab countries along with the Turk-Azerbaijan combo are the prime suspects. Put it in other words it was a NATO exercise. The presumption however excludes Iran’s neighbours Qatar and Oman.

But the war seriously bolted the Supreme Council, Parliament and the Armed Forces. The stubborn objection by the Ayatollah Khomeini on the subject of exploding a nuclear device was the first casualty. He was confronted by all three constituents namely, Supreme Council of National Security, Supreme Council of the Cultural Revolution and Supreme Council of Cyberspace, all of them are of the unanimous view that Ayatollah Khomeini must rescind the fatwa regarding use of the nuclear weapon firstly as a test explosion and secondly as a pre-emotive attack or a second strike in case of war. Moreover, He was persuaded to set aside similar fatwa ordained by his predecessor Ayatollah Khamenei in an earlier instance.

This presupposes that Iran has unofficial nuclear devises that are so far un- exploded over or below the ground but tested in laboratories with proven result of its effectiveness, is now confirmed. The barring of IAEA to enter Iran has already taken place. The expected leaving from the NPT which Iran signed in 1968 and ratified in 1970 could happen at any moment.

For Iran this is of vital significance of the State and its constituent apparatus because once a nuke is exploded, she transforms from nuclear threshold state to a nuclear powered state and would be soon recognized as such by China, Russia and Pakistan. More than that she is transforming her un-official nuke devices as official ones.

But the question is why now? The answer is simple: all these years there was no threat to Iran as a unified country. The 12 days war un-masked the intention of the collective west to balkanise the country into several parts. The looming threat is not geography but geoeconomics. Iran cannot survive even a day if her economic corridors are gone. The bolt from the blue came not on the threat of regime change which anyway would take place in the normal course, but from the threat that she loses her geoeconomics clout.

Hence the need for strategy re-think about exploding a device and make it all official. Who is writing the script now? My guess is it is Donald Trump who wants Iran to explode her existing un-official nuke to close the Iran bomb case in his Oval Office.

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist