South By North Strategies, Ltd.

In a paper for the New America Foundation, Katherine Newman of Johns Hopkins University asks what American manufacturing can learn from Germany.

Why is Germany able to do this when the US, which had the lead in so many of these fields for so long, has had trouble turning the same corner? The answers are not simple, but they start with an industrial policy that favors high end manufacturing and the high skilled, well trained labor force that goes with it. The country invests heavily in tertiary education in general and industrial apprenticeships in particular. Banks provide ready capital for the expansion of export industries and the country’s elites re-invest the returns into precision manufacturing. Instead of railing about unions and working overtime to drive them out of business, the Germans have perfected the corporatist model of industrial bargaining. Whatever their differences, German unions … partners in growth.
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We cannot attribute these happy outcomes to something in the German water supply. As Michael Schulman has pointed out, service workers in Germany are looking at shrinking pay packets. But in manufacturing, wages are rising and some firms … are forking over a share of firm profits to the line workers. The American romance with the unregulated market is no match for the German approach, which aligns the interests of firms and high skilled workers, invests in education to produce the labor force that is taking the country to the top, and knows how to target markets that are growing, especially the industrializing, developing world.