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“Our lead times are four to 12 working days. If we are not able to meet these, we will no longer be competitive, because the competition does not sleep.”
Carina Schneppenheim is the HR director — and managing director-in-waiting — of a manufacturing and design company founded by her grandfather nearly 50 years ago in Pulheim, between Cologne and Düsseldorf.
Trying to improve productivity at the company, Kunststoffverarbeitung Schneppenheim, is an unrelenting challenge.
It is a challenge that has been made even tougher as Asian economies and companies improve productivity at a much greater pace.
But it is one in which Germany’s economy and companies have pulled ahead of rivals in Europe, most notably the UK.
At current rates, according to global consultants McKinsey, by 2025 the UK will be nearly a third less productive per hour worked than Germany.
Paul Wenham, managing director of Geometric Manufacturing near Tewkesbury in the UK, which makes precision-machined components for the defence industry and other sectors, says British companies face big hurdles in a country where the productivity challenge is often described as a “puzzle”.
This is because no British sector or region can be singled out as responsible for the slowdown.
However, comparisons between Germany and the UK in terms of the managerial skills, institutional support, and historical legacy their companies enjoy cast light on what both countries’ businesses can learn from each other.
“It’s clear that Germany has very distinct differences in its business structure and cultural make up,” says Tony Danker, chief executive of Be the Business, which campaigns to disseminate best practice to British companies seeking to improve their productivity.
“There is real interest in continuous improvement and building business networks and institutions that focus on this. This spirit and activity feels eminently replicable even if the institutions are not.”
Mr Wenham thinks it is not just having the financial firepower to make investments, but “having the people who can see the need and buy in to it”.
“We want to look at robotics, but it’s a big capital investment as well as a big learning curve,” he says.
Geometric uses the Kanban stock management system, which involves an email being sent once a customer uses a container of their products which triggers the company to replace it. The system has speeded up response times, as well as reducing inventory.
But for Mr Wenham, the key to improving productivity has been less about adopting new processes and more about the training and insight that he himself has gained and then disseminated to his team.
Indeed, a difference between the UK and Germany lies in the training that workers receive.
Although German managers are less educated than British ones in terms of secondary and tertiary education levels, they have often received vocational training that builds workplace expertise. And despite the UK having more tertiary-educated managers than Germany, OECD data show their actual skills, in literacy and data management, are lower.
Tera Allas, a senior fellow at the McKinsey Center for Government, says that the UK has one of the highest skill mismatches in the OECD.
“We spend too little on training as a percentage of GDP,” she says. “It is a ticking time bomb.”
In comparison, the apprenticeship system in Germany is far more developed than in the UK, which is still struggling to find a delivery system that works. Half of German school leavers have a vocational qualification, and 327 different training occupations are recognised in the country’s dual vocational and educational scheme.
Employers themselves play a key role. While the government pays for vocational schools and the teaching in them, employers pay other costs such as apprentices’ wages.
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