Studio Guest

Our studio guest this week is Prof. Dr. Gerhard Bosch, employment expert, at the Institute for Work, Skills and Training, University of Duisburg-Essen. DW-TV: An encouraging story from the glass-manufactory in Thuringen. Now, the company we just heard about is investing a lot of money. Is that representative for companies in Germany? GERHARD BOSCH: Definitely for the last 3 years. German companies were investing a lot --6 or 8 percent gross in investment each year from 2005 to 2007, so it was not an exception, especially in the manufacturing industry we are export company number one in the world and there were many bottlenecks. So, German companies made money and they had orders so they invested a lot. DW-TV: You just mentioned bottlenecks because the investments seems to come or have come rather late. Because a lot of companies say that their order books are full and they complain about not having the capacity to actually meet demand. So, have they created this problem that they're facing now themselves ---it is homemade? GERHARD BOSCH: Yes, it's partly homemade. They were so pessimistic about their own future after some very bad years in Germany. Investment went down, not only investment in machines but also in training. So, we have all kinds of bottlenecks: skill shortages, not enough capacities -- therefore companies are investing now. DW-TV: But we didn't start in a pessimistic way --the year 2008, quite the contrary, we started. Everything was looking bright, but now productivity has actually plummeted, causing German businesses to clearly revise their outlook for this year. And the latest Ifo business climate index shows a substantial drop since July 2007. Well how serious is this situation? GERHARD BOSCH: I think we are still far away from an economic crisis. We still have growth here and we expect growth next year, but we will have less growth than in the past and less investments. I think the German companies are very much afraid of the long-term consequences of the strong euro. We are an export country and if the Euro is rising and this makes German goods much more expensive on the world market and therefore the companies are not sure about the future. DW-TV: Ok, so it's also a question of mentality because obviously the German economy is not the only one which has somewhat lost steam --when we look at other countries in Europe or worldwide. What's the biggest problem, the biggest hurdle that we are facing now? GERHARD BOSCH: I think the biggest hurdle internationally is the coordinated financial policy to avoid these insecurities which may give incentives to companies not to risk anything for the future because they don't know if the economy is growing. So some secure future needs to be created. DW-TV: OK, so that German companies can invest again. Interview: Monica Jones

DW-World | July 29, 2008

Tags:. .strong. .growing. .clearly. .serious. .industry