That was background. These are my own thoughts on the matter.
There have been articles published periodically in the UK about these German midsize companies, but they tend to focus on the "impending demise" of the whole system as the family patriarch leaves his company without heirs. That is less of an issue now -- the patriarchs nowadays are far more willing to leave control of the company to their daughters than the generations previous.
The far more interesting articles, though, question how these companies thrive so vigorously in Germany, yet fail to be established anywhere else. Britain
tried to emulate the success of these companies by government support of small business; while funding did increase the number of small and midsize companies (SMEs) in the UK, British SMEs are not the market leaders of the German
Mittelstand type.
But what does this concern the US?
The German
Mittelstand, as a specific business model, is hardly known in the US or even reported on, unlike in Britain. Additionally, the
Mittelstand model
conflicts with the Silicon Valley business model that is so powerful in the US: small businesses (above the derisive 'mom-and-pop' level) are 'supposed' to grow into monopolistic behemoths with enough venture capital or after a hyped up IPO. And the US in general listens to the big guys over everyone else and pays scant attention to mid-caps anyway.
There are further issues.
The US has shed a great deal of its manufacturing capacity, in a dramatic fashion, from 2000 on.
The largest companies faced this onslaught the best while the smallest the worst. The technological base of the firms that remain is (comparatively) primitive in operation and low in productivity. Company performance is given in terms of sheer volume sold and not in terms of product quality or reputation.
I tried to find material on the current strength of small US manufacturing companies like the list of he German
Mittelstand champions, but was coming up short. One US company that is comparable in size and scope and 'feel' of a
Mittelstand company (but not in management!) is
Bose. Another that I knew was Sigma-Aldrich, but that was bought up by the German Merck. If readers know others let me know.
Just for reference, here is the list of the
50 best US manufacturers (see article for criteria). It's hard to make a comparison between these companies and those of the German
Mittelstand since these are multinational market listed companies, some of them relatively recent divestments of even larger companies. In general these companies dominate their respective markets by being behemoths like I mentioned before.
I accept that the US should develop a manufacturing base that is more widespread, more comprehensive, and less monopolistic than what is most common now, and doing that through the mechanism of small business creation should not be impossible. But I have no illusions that rebirth of small and midsize manufacturing companies will be easy. Foremost, our image of small business in general as meaning "small potatoes" has to go, and quickly, since small companies are easier to start, capitalize, and respond to the market better than large ones.
Our image of manufacturing has to change as well: the image of sweaty guys punching metal in a hot dark place is dated yet widespread. Likewise, the simplistic image of 3D printing as the panacea of US manufacturing needs to go as well: the products made by the typical
Mittelstand company cannot be 3D printed!
Manufacturing in Europe and East Asia 'looks like' the engineering facility of a university, and I expect the same to be true in the US. Technicians will need to be at least as competent as university undergraduates.
Another major issue is funding. The Silicon Valley model, or even the Wall Street quarterly earnings "model", is poisonous to manufacturing ethos and ethics over the long term (see Boeing). A source of funding away from Wall Street and Silicon Valley and its equivalents has to be created for US manufacturing to come back in any meaningful sense. (Why should manufacturing "come back" at all? Answer: because the US will not magically stop needing physical goods). Here, the comparison of a plant with a university engineering department is apropos -- federal grants could be given to engineering facilities which allows engineers to research materials and devices with less risk than the open market. The same model is used with pharmaceuticals and biotechnology research. It's an open question, though, whether firms founded from university research will be able to escape EU rules about "illegal" subvention, but the US has to do
something.
Even with these difficulties, I think there is some hope to exploit US a competitive advantage. Germany's Mittelstand is heavily concentrated in machinery, auto parts, chemicals, and electrical equipment. Note that computers and digital media are not on this list, but that classification is listed several times on the list of 50 best US manufacturers.
That is America's competitive advantage. America's rebirth of manufacturing should (re)start in general -- I think it poor that a supposedly advanced country can't make its own razor blades and washing machines -- but with particular focus on small and medium sized companies focused in digital media that won't be so easy for Germany to outcompete.
