West - why is Germany still a producer? / Stefan Til

Germany has developed a flexible and efficient way to find the most successful ideas of the research laboratories and implement them in the halls of the industrial plants

Felix Michal and Philip Stahl hunched over a shiny new three-armed robot In the spacious laboratory at the Technical University of Munich (TUM). The robot picks up tiny pieces that are less than a tenth of a millimeter thick, even though they are made of 24,000 thin carbon fibers, and quickly assembles them into a triangular structure. The hardest part, the researchers say, is writing the software that translates the computerized 65,000D model of the component - in this case a bicycle seat, but it could just as well have been a medical prosthesis or a car part - into instructions that will guide the robot's complicated and delicate movements. and take into account the exact location where the fibers will have the maximum strength and durability. When the project is completed, Michal will use it in his doctoral thesis, and Stahl will complete his undergraduate studies. But the work will gain new life in German factories, such as BMW's advanced 50 square meter production hall located XNUMX kilometers away, near the medieval city of Landshut, where engineers are building the next generation of the automotive world.

Landshut engineers are currently focusing on the development of the BMW i3, the first car in the world that will be driven solely by electricity, will consist of lightweight components and will be sold in mass marketing, if its launch in 2013 goes ahead as planned. The passenger compartment of the car will be built exclusively from composite carbon materials, which researchers and students such as Michal and Stahl are helping to develop in laboratories in Munich. The main innovation here is a new technology that cuts the time required to produce complex parts, such as the side frame of the car, to a few minutes, and thanks to this, for the first time, it pays to use these high-tech materials for mass production. Three huge presses, each weighing 320 tons, inject resin into finished parts made of carbon fiber to harden them. BMW says that their company is a leader in these complex production technologies, and has an advantage over competitors including Toyota and General Motors. "The knowledge we have about how to put all these components together is not something that our competitors can easily copy," says project manager at BMW, Andreas Reinhardt.

And maybe he is right. The pipeline that connects the universities and government research laboratories to the manufacturers, including BMW, and continuously flows innovation to them is one of the secrets that drives the prosperous German economy. The German industry, which is usually looked down upon as nothing more than an inferior iron bender, managed the economic crisis almost unscathed in terms of profits and employment, even though its employees, whose salaries are among the highest in the world, earn 10 times more than their counterparts in China. German exports maintained their share of the world market in view of the growth of developing countries such as China, while the share of the United States shrunk greatly. Employment in industry has increased and this is one of the reasons why in May 2012 the unemployment rate in Germany was only 5.6% compared to 8.2% in the United States, according to data from the Organization for Economic Development and Cooperation (OECD). The German manufacturers have maintained competitiveness in the world market because the products they produce, such as the BMW i3, are full of science and innovation.

One of the important factors for Germany's success is that it was able to take advantage of the scientific research conducted there and the local expertise to climb the technological ladder. Its manufacturers focused on innovative products and processes that are difficult to copy or compete with through low labor wages. The textile industry demonstrates this beautifully. Like the United States, Germany long ago lost most of its clothing and fabric industry to countries where production is cheaper, such as China, India and Turkey. Still, German companies maintained a significant share of the world market for weaving, spinning and knitting machines, which are constantly being improved, and benefited from the sharp increase in funds flowing into the industry in countries where wages are low. At the same time, many of the German textile manufacturers also switched to high technology and became experts in the production of industrial fabrics for the automobile, aircraft and space industries. Today, the German textile industry is at the forefront of research in composite materials, and it collaborates with universities and government technology centers in the development of precise machines for braiding the carbon fibers into strands, a craft similar to spinning wool or cotton threads, except that it is done on a microscopic scale. If Germany had given up this industry, it would not have had a basis for the production of the next generation composite materials, such as those being developed at TUM and other laboratories today.

The key to getting research out of the laboratory and into the commercial markets is the close partnership between research in universities and today's sophisticated production halls. Most German industrial companies allocate generous budgets for research, and often purchase it from external sources. Unlike American companies, which may fund a professor position or make a general donation to some department at some university, German companies usually turn to universities with very specific problems they want to solve. At TUM, for example, the composite materials department is funded by the SGL Carbon company, a German manufacturer of carbon fibers that wants to know which materials are best suited for next-generation manufacturing processes. The BMW company pays the salaries of about a dozen doctoral students in the department, and the doctoral theses they will submit are part of preliminary research for the production of the i3. Device manufacturers such as KUKA (robots) and Manz (presses for composite materials) are also heavily involved in research at the university.

Now multiply this vigorous networking in dozens of universities specializing in technology and engineering. At the Rhine-Westphalia University of Technology in Aachen (RWTH Aachen) there are more than 20 institutes that focus on advanced production techniques. They cooperate with machine manufacturers, robotics companies and software developers and together develop efficient production processes to the extent that Germany, which is said to have high salaries, can compete in countries like China. The university is currently building an industrial park worth 2.5 billion dollars for companies related to its research. The Karlsruhe Institute of Technology specializes in nanotechnology and materials science. The largest German chemical companies, BASF for example, work with it. They are designing new materials that will allow batteries to store energy from renewable sources efficiently and cheaply More.At the Technical University of Dresden, researchers team up with electronic chip manufacturers and information technology companies to develop printed circuits that consume one hundredth of the energy consumed by the circuits used in electronics today.

The German government also plays a vital role. The state finances excellent laboratories for pure basic research, such as the network of Max Planck Institutes, which operates about 80 institutions dealing in diverse fields from particle physics to basic elementary biology. However, the most successful research institute from an economic point of view is the Fraunhofer Society. The company operates a network of 60 technology centers jointly funded by the government and the business community, therefore it is clearly market-oriented. Fraunhofer's annual budget of $2.5 billion is boosted by revenue from patents, the most prominent of which is the MP3 data transfer standard, invented in the 80s.

Trust is rare

Each Fraunhofer center maintains a close partnership with nearby universities and is used, similar to a belt to transmit power in an engine, to drive an entire cluster of commercial companies networked with the center, and with each other, through joint research that should eventually reach the production processes and products. Every possible branch of the industry has a center dealing with it, including polymer research for chemical companies, precision optics for sensor and laser manufacturers, and nanoelectronics for the IT components of the future.

Some of the network's centers, such as the Fraunhofer Center for Manufacturing Technologies in the city of Aachen, focus on developing cost-effective manufacturing techniques to keep Germany competitive with China. And as for composite materials research, there is a Fraunhofer project group in Augsburg near Munich. The project grew out of a rocket propulsion laboratory that operated during the Cold War. Together with TUM and 50 other companies, including BMW, Audi and EADS, the parent company of Airbus, they are already working today at the center in Augsburg on the next generation of composite fibers, produced not from oil but from lignin, a byproduct of the abundant wood and paper industries.

The transfer of this technology is also accelerated thanks to the encouragement of researchers and engineers to jump from job to job. A scientist at Fraunhofer, for example, moves to work in an industrial company after an average of five to ten years, and many of the company's best engineers work "on the side" as professors at the university or as managers at Fraunhofer. Klaus Drechler, professor and head of the Institute for Composite Carbon Materials at TUM, worked for a time at EADS, where he developed materials for Airbus. Today he is responsible for establishing the new Fraunhofer Center for Composite Materials in Augsburg. These job-hopping, most important for the diffusion of expertise and technology, are much rarer in the United States, where a researcher at a government institution typically stays in one job for life.

This intensive and complex collaboration is typical of German innovation. A large part of it has grown over decades of joint work between large and small companies that are already used to working together with a skill that allows them to instinctively know what information they can share with each other and what they should define as their intellectual property. "This trust between companies and institutions that both cooperate and compete with each other is unique - you will not come across something like this in many countries in the world," says Beniat Bilbao, an economist from the World Economic Forum based in Geneva, one of the authors of the latest "Global Competitiveness Report". Every year the report shows that Germany surpasses the United States in industrial innovation. Most of these groups of companies and suppliers have grown and developed naturally over decades (sometimes even centuries, like the watchmakers from the Black Forest region, who are today among the world's leaders in the production of precision surgical instruments), so it is difficult to imitate them and put together similar groups elsewhere.

Still, the Germans manage to add and create such networks in new industries as well. One of the newest networks is a bioeconomy group that arose near Leipzig. A network of more than 60 companies and research institutes has come together to develop ways to produce chemicals and plastics from biomass and replace expensive oil, which results in CO emissions₂, not only in the field of energy, but also in the chemical industry that is produced from its refining. When establishing a new Fraunhofer center, the companies and institutions that are already prominent in the relevant field are identified instead of starting from scratch. "Our approach is to take something that is already working and water it so that it grows," says Fraunhofer President Hans-Jörg Bollinger. For example, when Fraunhofer put together the new carbon composites group, she found companies and university departments already working in the field and provided them with funding, faculty and conditions that encouraged collaborative research.

The second lesson, Bollinger says, is to make a long-term commitment. Each new Fraunhofer center is guaranteed funding for an unlimited time, and is allowed to operate without interference. The new center does not undergo an audit in the first five years and is only required to raise double the amount of its initial funding from private companies. The companies also invest for the long term; Many of the most innovative and technologically advanced companies in Germany are family owned, so they are not afraid of quarterly reports. The Trumpf company is an example of a typical German technology company, a family company that operates almost inconspicuously and has been one of the world's leaders in industrial laser technologies for more than a generation and its annual turnover today reaches almost 3 billion dollars. Fraunhofer also added 3,000 new researchers at the height of the economic crisis. "Many countries have tried to imitate us," says Bollinger, "but in vain, because they think in the short term."

This is perhaps the decisive flaw in the proposal that President Barack Obama revealed in March 2012: the establishment of a national network for manufacturing innovation at a cost of one billion US dollars, to be built specifically according to the model of the German Fraunhofer network. If Congress approves the plan, the network will operate as a public-private partnership that will integrate commercial manufacturers and establish up to 15 manufacturing technology centers across the United States. So far so good. But the funding will only be given for the first four years. According to Bollinger, this is too short a time to attract the best companies and researchers to commit and invest in projects. "The expected result is fights over funding and not something sustainable," Bollinger says. And yet, he adds, this is a step in the right direction.

The German system also has its drawbacks of course. The precision-loving German culture is perhaps better at perfecting existing technologies than inspiring brand new inventions. The German nation has also known periods of "technophobia", in which politicians and protest movements banished promising high-tech industries from the country, such as the biotech industry in the 80s. But Germany's push for industrial innovation disproved the old cliché that manufacturing is low-tech and showed the world how to go head-to-head with China. These students, inventing production methods in the university laboratory in Munich, are the example to learn from.

About the author

Stefan Til (Theil) is a journalist living in Berlin. He was editor of the European economics section of Newsweek.

in brief

Germany's economic strength In recent years, it has been based, among other things, on the success of the manufacturing sector, starting with the basic materials and ending with the work tools in the production halls.

The reason That Germany is still competitive with countries in Asia and other places where production is much cheaper is a wise use of new technology.

Fraunhofer network of technological centers is an example of the way in which researchers and manufacturers work together, Nablus to Nablus, in industry.

The Germans are excellent In the old industries, such as the automotive industry, and they are building centers of excellence in biotechnology and other new industries as well.

And more on the subject

The Global Competitiveness Report 2011–2012. Edited by Klaus Schwab. World Economic Forum, 2011.