The engineers who forged Germany's industrial might were never much given to doubt, a weakness they considered limited to their country's politicians. Now, however, there is a doubt epidemic raging through the industrial heartland. In common with most sectors of German manufacturing, machine tools are reeling under the unprecedented harshness of a double crisis - a vicious recession that has suddenly exposed deep structural problems.
'Machine-tool producers are facing the worst crisis since the Second World War,' Helmut von Monshaw, head of the manufacturers' association, VDW, said. The industry that, along with cars, is the very symbol of 'made in Germany', is in trouble.
Although not large - there are some 300 mainly small and medium-sized firms, employing 90,000 people - the machine-tool sector is the engine-room of the German economy. Yet last year turnover slumped from DM16bn to DM13.5bn (pounds 5.8bn).
'These are the people who make the things that every other industrialist needs to manufacture his products. When they face problems, then it means there are problems everywhere,' Mr von Monshaw said.
Some of Europe's biggest machine-tool names, such as Maho, Gildemeister and Deckel, are running up excruciating losses. Maho's turnover has already dropped 25 per cent in the first half of 1992/3. The industry's losses in 1991/2 amounted to nearly DM160m. 'We can try to shrug off a 20 per cent decline in orders, but with the 50 per cent drop we have had over the past two years, then it is no longer possible,' Gildemeister's chief executive, Axel Kemna, said.
The disappearance of the traditionally important eastern European market has been a catastrophe for the Germans. Production across the industry fell 16 per cent in 1992 and is expected to drop by almost the same amount again this year, taking it below the level of the last recession years in 1982/3. Just 5 per cent of the industry association's members had introduced short-time work a year ago; now the proportion is heading for a third.
That the big Japanese producers have also been battered by the international slowdown provides only small comfort to the Germans. Many see themselves facing a more fundamental problem that a pick-up in demand would temporarily alleviate but not remedy. 'Our basic weakness is that Germany has become too expensive a place to manufacture standard or series machine tools,' one executive said.
The challenge comes not just from the Japanese, but from the rising number of other Asian makers, including the Chinese, who are crowding into the market for series machines tools with their cheaper products, relentlessly squeezing the German share.
'Our big producers are not exactly in a dead-end street, but the way out is looking increasingly narrow,' said Hans-Gunther Vieweck, an industry expert at the IFO economic institute.
Maho, one of the large German manufacturers of standard machines, sought to beat the Japanese at their own game, building up large economies of scale. It is now one of the most bloodied among a field of walking wounded, carrying punishing capital costs while its new DM160m production plant in Kempten stands half-empty.
'It was a strategy doomed to failure. Size offers no way out, for you cannot compete against the Japanese and Koreans with series machines made in Germany. The costs will always be 10-15 per cent higher,' says Dieter Weidemann, chief executive of Europe's largest machine-tool group, Pittler.
Such devastating criticism stems from Mr Weidemann's confidence that 'Pittler has already done what many of its rivals are only beginning to talk about'. In the second half of the 1980s, Pittler turned away from manufacturing series machine tools, turning itself into a holding company for 18 smaller units covering a broad range of specialised machine-tool making. 'Given Germany's costs, you have to be able to offer the client that something more,' said Mr Weidemann, who is widely recognised as one of the sharpest brains in the business.
Pittler has become a 'problem-solving' company, manufacturing tailor-made machine tools for particular tasks required by customers, such as the big car makers. It can draw on the rolling, milling, grinding and turning experience of its different companies, based mainly in Germany but also in the US, Switzerland, Brazil and France, all of which have retained their own names and considerable autonomy.
Given the miserable prevailing climate, Pittler has done remarkably well, according to the IFO's Mr Vieweck. Turnover was down 14 per cent to DM750m last year, but ruthless cost control has limited the damage. The group found savings of DM80m, shedding 13 per cent of its workforce and forcing a 10 per cent price cut from suppliers. The combined pressures from the big machine- tool manufacturers and car producers is provoking the growing exodus among suppliers, who are seeking cheaper sourcing and production facilities beyond Germany's borders.
Mr Weidemann's confidence in Germany remaining the international leader in specialist machine-tool manufacturing is unshakeable. But if this is good news for Pittler, it amounts to grim tidings for much of the remainder of the country's flagship industry. For it is not specialist tools that offer the growth market, but the standard machines increasingly dominated by the Asian producers.
No matter how well Pittler and others defend the specialist corner, if Mr Weidemann's analysis is right, then Germany, (and probably Italy and Switzerland too), will cease to be a large player in machine-tool manufacturing. For firms like Deckel and Maho this is a punishing prospect. The big German banks, unwilling to accept Mr Weidemann's death sentence for large-scale series manufacturing in Germany, are urging the main standard machine companies to get together.
Gildemeister and Deckel, and Maho and Traub, recently started joint marketing ventures. Gildemeister's Axel Kemna warns, however, against expecting too much of these links. 'The difficulties must not be underestimated.' In early March, Maho and Traub suddenly scrapped their co-operation agreement after just three months.
Mr Vieweck of the IFO does not rule out the possibility of one or more of the big companies crumbling. 'An eventual market cleansing may be needed to allow others the chance to acquire the necessary market share,' he said.
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