Now all we need is a commission to work out how to deal with short-termism in politics where politicians are too worried about making necessary, if unpopular decisions in case they lose the next election.

Most businesses think in terms of a decade or more – most politicians struggle to think further ahead than the next opinion poll.

For comparison, try this from The Economist last year on the long-termism of Germany’s Mittelstand – A model of success
http://www.economist.com/blogs/schumpeter/2012/04/germanys-mittelstand

Nice link Bob.

Tho Miele with 10,000 employees are hard to categorise as an SME / Mittelstand.

My wife is German, we speak German at home (here in the UK) with our kids – so Germany is of interest.

The economist does make two huge points:

a) Mittelstand companies think long term – they don;t borrow riskily
b) German has a tradition of skilled blue-collar workers – as a culture they just ‘get it’ when it comes to the importance of workers needing to keep adding to their skills.

Over here, we have (generalising rather!) workers with a culture of not learning, and of irresponsibility (jokily referred to in things like Poets day): and managers who don’t see the value in their workers: (lions led by donkeys)…

Coming up to a school leaving age in Britain and there are well-defined routes to an academic education along with clear, later opportunities for graduate employment – the big corporates, including the financial institutions, trawl the Russell Group universities for talent.

Routes to developing industrial vocational skills have never been transparent to early school leavers – and often, I suspect to teachers offering career guidance.

For various job reasons in the early 1990s, I followed reports from afar of Japanese electronics companies in South Wales trying to recruit apprentices in electronics and having great difficulty in attracting suitable candidates.

It turned out that one of the barriers was the insistance on the part of the companies that applicants for the apprenticeships must have at least 5 good GCSEs, including maths, English and the three sciences. I sought advice from an experienced school teacher – her comment was that 16 y-os with those GCSEs would most likely want to stay on in school and try for an academic education.

From experience and by asking around, for decades engineering departments in good universities have had difficulties in attracting quality candidates to read for undergraduate courses as compared with pure science departments. For some reason, engineering has long been regarded among undergrads as downbeat – ask a sample of students what they think of engineering.

To that we can add that financial institutions and the business consultancies have been eager to recruit top quality engineering grads.

The bottom line of all that is manufacturing businesses, especially middle-sized manufacturing businesses, have found it challenging to recruit quality engineers of both graduate and vocational varieties. I doubt that there is a simple and quick solution.

Surely the short-termism is only found in a subset of businesses? Private companies are far more likely to take a long-term view rather than looking for shareholder bonanzas every year.

In that clip on Germany’s Mittelstand @2, the man from Miele was saying that the company finances its own growth through retained earnings.

I’m not denying that financial markets and operators tend to have short-term horizons – partly born from scepticism and Britain’s observed relatively low productivity compared with peer-group countries. But I am saying that short-termism isn’t the only factor applying in manufactoring: there have been recurring reports of skill shortages. Btw why hasn’t short-termism been holding back growth of the service sector?

When I last found comparative figures, manufacturing contributed 12 pc to Britain’s GDP compared with 18 pc in Germany. But Germany is an outlier compared with other west European countries. The question is why does manufacturing in Germany flourish compared with its peers?

But Germany is an outlier compared with other west European countries. The question is why does manufacturing in Germany flourish compared with its peers?

Because German manufacturing now focuses on high-end, high-value products that aren’t yet produced in China. Look back 20-30 years, and we’d have been praising the middle-sized largely family-run manufacturing businesses in Italy, in product areas like white goods and textiles. These were the firms behind Il Sorpasso in 1987.

Where did they go? China. The question Germany needs to ask is whether their manufacturing sector is next.
http://cadmus.eui.eu/bitstream/handle/1814/22387/RSCAS_2012_26.pdf?sequence=1

In the news:

“BEIJING—China is losing its competitive edge as a low-cost manufacturing base, new data suggest, with makers of everything from handbags to shirts to basic electronic components relocating to cheaper locales like Southeast Asia.”
http://online.wsj.com/article/SB10001424127887323783704578245241751969774.html

Germany has retained manufacturing for longer than other west European countries so we should ask: how come?

Part of the answer is not just a matter of comparative unit labour costs or the structure and prevailing sentiments of financial markets and institutions. Germany has a competitive advantage is certain kinds of specialist machines – like printing machinery, some machine tools, bottle-labelling machines etc.

My concern is that the “short-termism” of financial markets will be used as a scapegoating factor to divert attention from other issues affecting competitive edge. Design, quality and skill shortages affect competitive edge, not just unit labour costs.

British companies used to design and build nuclear power stations but now we are hoping a French company (EDF) will invest to build Britain’s next nuclear power station when successive governments since WW2 poured multi-millions of taxpayers’ money into pioneering nuclear power.

OTOH Britain maintains a competitive edge in designing and building grand prix racing cars. Among Britain’s more successful big industries are pharmaceuticals and defense equipment – both of which are highly regulated and both depend very largely on sales to government agencies, which doesn’t say much for all that stuff about deregulation and the stifling effect of government bureaucracy, to mention other favoured scapegoats.

With the reports in the mid 1990s of the losses accumulated by Credit Lyonnais in France – the biggest bank there and state owned – I think we need to be a bit more sceptical about creating a public sector investment bank

Germany has sustained a culture in which being blue-collar is not disrespected. We have not.

The instructor I learnt plastering & bricklaying from is a 40-year, time-served tradesman. He’s got hands-on skills you have to see to believe, he’s plied his trade from Germany to Arizona, and he is automatically less respected in our society, and significantly less compensated, than a graduate student straight out of Uni who’s in their first year at a stockbrokers. Personally, I’d rather our economy had the literally thousands of residential and commercial properties the guy has built, than one more City barrow-boy.

He’s also chartered as a surveyor, having trained at Oxford Uni; he’s got nearly 12 years of advanced education in addition to his skilled trade. The guy is brilliant, but our society assumes he is worth less than an young dosser from the middle classes.

We chose to actively try stop people getting into practical trades, on the grounds that a trade isn’t ‘good enough’, you have to have a middle-class style, office-bound career instead. The Germans see the trades as a respectable and useful type of career in their own right.

@ 9 Chris

“We chose to actively try stop people getting into practical trades, on the grounds that a trade isn’t ‘good enough’, you have to have a middle-class style, office-bound career instead. The Germans see the trades as a respectable and useful type of career in their own right.”

When you say “actively”, are you thinking of any policy in particular? I agree that the snootiness is there, but I suspect the push towards less hands-on professions is down to a) some of them paying a hell of a lot more, and b) educational policy and social change making it easier for working-class kids to go to uni, which is in itself a good thing.