Germany has developed a flexible and
effective way of moving its best ideas from the university labs to the factory
floor
Standing out: In the Global Competitiveness Index, Germany scores higher than the U.S. on several measures, including the quality of its institutions and infrastructure. See details on the scoring in the report listed in More to Explore.
Image:
Arno Ghelfi, SOURCE: “THE GLOBAL COMPETITIVENESS REPORT 2011–2012,” EDITED
BY KLAUS SCHWAB. WORLD ECONOMIC FORUM, 2011
In Brief
·
Germany owes its robust economy of recent years in part
to the success of its manufacturing sector, from basic materials to tools on
the factory floor.
·
The reason Germany has remained competitive against
cheaper manufacturers in Asia and elsewhere is that it has made good use of
new technology.
·
The Fraunhofer network of technical institutes is an
example of how researchers and manufacturers work closely together in industry.
·
The Germans have excelled in old industries such as
automobiles and are building centers of excellence in biotechnology and other emerging
areas.
Felix Michl and Philipp Stahl huddle over a gleaming new
three-armed robot in the sprawling laboratory at the Technical University of
Munich (TUM). The robot picks up tiny patches of carbon fiber, each less than a
tenth of a millimeter thick but containing 24,000 filaments, and quickly
assembles them into a triangular shape. The trickiest task, the investigators
say, is to write the software that translates a 3-D computer model of any
part—in this case a bicycle seat, but it could also be a medical prosthesis or
an automobile component—into instructions for the robot's intricate movements,
including the exact position at which the fibers will have their maximum
strength and durability. When the project is completed, Michl will use it in his
Ph.D. thesis, and Stahl will finish up his undergraduate studies. But the work
will get a second life in German factories, including a 70,0000-square-foot,
state-of-the-art BMW production facility 30 miles down the road near the
medieval town of Landshut, where engineers are crafting the next generation of
automobiles.
At the moment, the Landshut engineers are focused on the
BMW i3, which will be the world's first mass-market, all-electric car made from
lightweight components if its 2013 launch comes off as expected. The car's
passenger compartment is being built entirely out of carbon composites, which
researchers and students such as Michl and Stahl are helping to develop in the
Munich labs. The core innovation is a new technology that slashes the production
time of complex parts such as the car's side frame to as little as two minutes,
making these high-tech composites affordable for mass production for the first
time. Three gigantic presses, weighing in at 320 metric tons each, inject resin
into the preformed carbon-fiber parts, giving them stiffness. BMW says it has a
lead in this composite manufacturing technology over competitors such as Toyota
or General Motors. “The knowledge we have
in bringing all these elements together isn't something our competitors can
easily copy,” says BMW project manager Andreas Reinhardt.
That may be. The steady pipeline of innovation that runs
from university and government research labs to manufacturers such as BMW is
one of the secrets driving the booming German economy. Long belittled as lowly
metal bending, German manufacturing sailed through the financial crisis with
hardly a dent in profits and employment, even though its workers, among the
world's most highly paid, make 10 times what their Chinese counterparts earn.
German exports have held their share of the global market against China and
other emerging countries, even as the U.S. share has plummeted. Rising
industrial employment is one reason Germany, as of May, had a jobless rate of
only 5.6 percent compared with America's 8.2 percent, according to the
Organization for Economic Co-operation and Development. German manufacturers
have stayed globally competitive because their products—like the BMW i3—are
chock-full of science and innovation.
One
major factor for Germany's success is that it has managed to tap homegrown scientific
research and expertise to move up the technological ladder, concentrating on
innovative products and processes not easily copied or undercut by cheaper
wages. The textile industry is a case in point. Like America, Germany long ago
lost the bulk of its clothing and fabrics manufacturing to cheaper locales such
as China, India and Turkey. Still, German companies kept a commanding share of
the global market for the ever more complex machines that weave, braid and knit
textiles, riding the investment boom in low-wage countries. Meanwhile many of
Germany's former textile makers also went high-tech, shifting their specialty
to industrial textiles for the automotive and aerospace sectors. Today the
national textile industry is at the forefront of composites research,
cooperating with universities and government tech centers to develop the
precision machinery that braids the carbon fibers into strands—not unlike wool
or cotton, except on a microscopic scale. Had Germany given up this industry,
it would lack the basis for producing those next-generation composites now
being developed at TUM and other labs.
The key for getting this research
out of the lab and into the marketplace is the close partnership between
research at the universities and today's high-tech factory floors. Most German manufacturers have rich budgets for
research, which they often buy from others. Unlike many American firms that
might fund a professorship or make a general donation to a university
department, German companies
usually approach universities with very specific problems they want solved. At TUM, for example, the composites department is
funded by SGL Carbon, a German maker of carbon fibers that wants to know what
kinds of materials are best suited for the next generation of manufacturing
processes. BMW has about a
dozen of the department's Ph.D. students on its payroll; their dissertation projects are part of preproduction
research for the i3. Equipment makers such as KUKA (robots) and Manz
(composites presses) are deeply integrated into the university's research as
well.
Multiply this intense networking by dozens of
universities specializing in technology and engineering. At RWTH Aachen
University, more than 20
university institutes focus on state-of-the-art production techniques, cooperating with machinery makers,
robot companies and software developers to make manufacturing processes so efficient
that a high-wage country such as Germany can compete with the likes of China. RWTH Aachen is now building a $2.5-billion industrial
park for companies partnering in this research. The Karlsruhe Institute of
Technology specializes in nanotechnology and materials science, working with Germany's leading
chemicals companies, such as BASF, to
design new substances that will allow batteries to store renewable energy more
efficiently and cheaply. At the Technical University of Dresden, researchers
partnering with chipmakers and infotech companies are developing integrated
circuits that use one hundredth the energy of current-generation electronics.
The German government, too, plays a crucial role. Whereas
the country funds excellent labs for basic science, such as the Max Planck
network of 80 institutes covering disciplines as disparate as particle physics
and evolutionary biology, Germany's most economically successful research institution
is the Fraunhofer Society. Its network of 60 technology centers is cofinanced by the
government and businesses and
thus is strictly market-driven. Fraunhofer's $2.5-billion annual budget is also flush
with patent income, most notably from its invention of the MP3 data format in
the 1980s.
A unique trust
Closely partnering with nearby universities, each
Fraunhofer center acts as a transmission belt to an entire cluster of
companies networked with the center—and with one another—through collaborative
research designed to find its way into processes and products. There are centers for every
conceivable industrial sector, including polymer research for chemical
companies, precision optics for the makers of
sensors and lasers, and nanoelectronics to produce next-generation IT
components.
Several centers, such as the Fraunhofer Institute for
Production Technology in Aachen, focus on developing cost-efficient
manufacturing techniques to keep Germany competitive with China. And for
composites research, there is a Fraunhofer project group in Augsburg near
Munich that grew out of a cold war–era rocket propulsion lab. Partnering with
TUM and more than 50 companies, including BMW, Audi and Airbus owner EADS, the
Augsburg center is already working toward the next generation of composite
fibers derived not from petroleum but from lignin, an inexhaustible by-product
of the wood and paper industries.
What also speeds up the transmission of these
technologies is the encouragement of job-hopping of researchers and engineers. The average Fraunhofer scientist, for example, switches
to an industrial company after five to 10 years, and many of the best corporate
engineers also do stints as professors or Fraunhofer directors. Klaus Drechsler, professor and head of the Institute
for Carbon Composites at TUM, spent part of his career at EADS developing
composites for the Airbus. Now he is in charge of setting up the new Fraunhofer
center for composites in Augsburg. This kind of job-hopping, crucial in
diffusing expertise and technology, is much rarer in the U.S., where a
government researcher usually stays in one place for life.
This intense and
complex collaboration is typical of German innovation. Much of it grew over decades among companies large and
small that are now so used to working together they know instinctively what
information they can share and what is best kept proprietary. “This trust between companies and
institutions that cooperate but also compete is unique—you don't see that in
very many countries,” says Beñat Bilbao, an economist at the World
Economic Forum in Geneva and co-author of the latest “Global Competitiveness
Report,” which every year shows Germany outranking the U.S. in industrial
innovation. Most of these clusters of companies and their suppliers grew
organically over decades (in some cases over centuries, such as the former
clockmakers in the Black Forest that are now the world's leading producers of
precision surgical instruments), which makes them not so easy to copy.
Still, the Germans manage to keep creating such networks
in newly emerging industries. One of the latest is the BioEconomy Cluster near
Leipzig, where a network of more than 60 companies and research institutes is
developing ways to produce chemicals and plastics from biomass, replacing
costly and CO2-spewing petroleum not just for energy but for other
products now refined from oil. When Fraunhofer sets up new tech centers, it
identifies companies and institutions that are already strong in their fields
instead of trying to create something from scratch. “Our philosophy is to take something that's already
working and water it
so that it grows,” says Fraunhofer
Society president Hans-Jörg Bullinger. In setting up the new carbon composites
cluster, for example, Fraunhofer identified existing companies and university
departments and provided funding, staff and a facility to encourage
collaborative research.
The second lesson, Bullinger says, is to commit to the
long haul. New Fraunhofer centers have their funding secured indefinitely and
are left to themselves, with no evaluation taking place for the first five years
beyond the requirement that they raise double their seed money from private
companies. The companies, too, are invested for the
long term; many of Germany's most innovative and tech-driven manufacturers are
family-owned companies that do not worry about quarterly reports. A typical
German tech company looks like Trumpf, an almost invisible, family-owned firm
that has been a world leader in industrial laser technology for over a
generation and now has annual sales of almost $3 billion. Fraunhofer, too,
added 3,000 new researchers in the worst phase of the financial crisis. “Many countries
have tried to copy us,” Bullinger says. “But their efforts fail because they
think short term.”
That may be the fatal flaw in President Barack Obama's
proposal, unveiled in March, for a $1-billion National Network for
Manufacturing Innovation that is explicitly modeled after Germany's Fraunhofer.
If Congress approves it, the network will be a public-private partnership in
cooperation with manufacturing companies to put in place up to 15 manufacturing
technology centers around the country—so far so good. But the funding is only
set up for the first four years. In Bullinger's view, that is much too short
for the best companies and researchers to commit to serious projects. “The
likely result is a scramble for project money instead of something sustainable,”
Bullinger says. Still, he says, it is a step in the right direction.
The German system has its weak sides, of course. The country's precision culture
can be better at perfecting existing technologies than inspiring radical
innovation. And the nation has had its periods of
“technophobia,” during which politicians and protest movements chase away
promising high-tech industries, such as biotech in the 1980s. But Germany's
drive for industrial innovation has put to rest the old cliché that manufacturing
is low tech and has set an example of how to go head-to-head with China. Those
graduate students reinventing manufacturing in a university lab in Munich are a
model to learn from.This article was originally published with the title Why Germany Still Makes Things