Changing Some Things With The Times

I recently had the opportunity to visit several of Germany's leading machine tool builders. It was interesting to see how these companies are dealing with recent challenges, yet maintaining their finer traditions.

To be sure, the German machine tool industry has seen its share of problems. The early 1990s treated the Germans much the same way that the 1980s treated the Americans. By last year, however, German production was booming again.

Like much of the American industry, the Germans looked heavily to cost reductions to regain their competitive footing and have made impressive gains. Virtually all the companies I visited now use more efficient modular construction techniques that rely on more common parts across multiple models, and that substantially reduces assembly time and inventory. One builder figured that the practice had cut its manufacturing costs by 30 to 40 percent.

What the German builders have largely resisted, however, is to design down to lower prices through stripped down functionality. If anything, they are going the other way, adding more processing capabilities so ever more complex parts can be machined in a single handling. Indeed, where Americans tend to obsess on how many units this or that manufacturer ships in a month, Germans tend to look much more at where a company fits in the technological scale, and the higher the better. That often translates to commercial success with Germany's engineering oriented users. Indeed, some builders reported that while their unit volumes were down, the total sales volume was up because customers are buying more sophisticated and consequently more expensive equipment.

Of course, the combination of Germany's high labor rates, high worker skills and relatively low turnover creates a fertile bed for growing higher forms of technology. But there is also a continuing emphasis on basic accuracy issues as well.

One thing German builders have not changed is their regard for knowledge. They look at the investment in training and education much like the investment in equipment—aiming low will only bring a low return. It's a long-held belief that has proven invaluable in good times and bad.