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...The small, often family-owned enterprises that make up the backbone of German manufacturing have historically specialized in the unsexy side of the industrial spectrum: not smart phones or iPads but machinery and other heavy equipment, metal bashing infused with sound technology and disciplined engineering. But in recent years, German firms, aided by farsighted government reforms, have turned that into an art form, forging the most competitive industrial sector of any advanced economy......
... While the Spanish, Irish and other Europeans were gorging on debt, building too many houses and giving themselves fat pay raises, Germans were busy fixing their economy. German companies poured money into R&D and cut expenses. Loosening up the tightly regulated labor market to make it easier for firms to hire and fire helped. Union cooperation meant Germany was the only major European economy that reduced labor costs for several years after 2005. Germany churns out specialized products of such superior quality, from BMW sports cars to Kärcher cleaning equipment, that customers will pay extra for the "Made in Germany" label...
... German executives and policymakers also found inventive ways to ensure that factories kept their edge during the Great Recession. And the nation prevented the sort of large-scale layoffs the U.S. endured during the recession with a short-term work program in which the government subsidized firms to keep workers. At the program's peak, in 2009, more than 1.4 million workers were involved.
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