Business Strategy –Glasbau Hahn could easily be mistaken for one of the auto repair shops or plumbing supply outlets that characterize a former factory district a few miles from Frankfurt’s banking quarter.
Yet the family-owned glassmaker, with 140 employees not counting a Hahn grandchild running loose around the front office, typifies the small, highly focused companies that may propel Germany back to growth.
The paradox is that such companies are also making life difficult for Germany’s European Union partners.
Glasbau Hahn is a miniature multinational, generating more than 60 percent of its sales abroad and dominating its narrow but lucrative niche: the global market for museum display cases. Even King Tut’s mummy lies in a climate-controlled vitrine made in Glasbau Hahn’s workshop, which sits inconspicuously next to a railyard and across the street from a Fiat showroom.
As Glasbau Hahn and thousands of other small German exporters rebound from a dreadful 2009, they give the European Union a much-needed shot of growth. Unfortunately, some of their success comes at the expense of countries like Greece, Spain and Portugal.
The so-called peripheral countries have racked up crushing debts in part because they bought too many Mercedes cars and other imports from Germany and elsewhere, without producing enough of their own export goods. In fact, goods from Greece, Spain and Portugal were often no longer competitive on world markets because in the past decade those countries had let wages rise faster than productivity and had become too expensive.
At the same time Germany, a country of savers, exported more than it consumed, profiting from its spendthrift neighbors but not reciprocating by buying equal amounts of imports.
“These bubbles that have been growing on the periphery are a mirror image of that surplus that Germany produces,” said Erik Berglof, chief economist at the European Bank for Reconstruction and Development in London. “It’s roughly akin to China and the U.S. It gives rise to many tensions.”
Germany’s trade surplus is by far the largest in Europe, reaching €135.8 billion, or $184.9 billion, in 2009, according to Eurostat, the European Union’s statistics office. Germany’s surplus was more than triple that of the Netherlands, which was in second place.
The countries with the biggest trade deficits are also the ones with biggest economic problems: Britain, Spain, Greece and Portugal. Only France, which also ranks among the top five trade-deficit countries, has a relatively healthy economy.
Glasbau Hahn helps explain why Germany is so competitive. The company and its like are sometimes called “hidden champions.” They learned long ago to compensate for slow domestic growth by expanding overseas. And to offset the high cost of labor in Germany, they concentrate on premium products that customers are willing to pay more for.
“We’re never the cheapest,” said Till Hahn, elder statesman of the family that has owned and managed the company since 1836.
But Mr. Hahn, a cheerful 72-year-old dressed in corduroys and an argyle sweater, points out that price is secondary to a museum curator entrusted with a Gutenberg Bible. “In 20 years no one will ask what the vitrine cost,” he said “What matters is the preservation of the object.”
In a characteristically German way, Glasbau Hahn applied an engineer’s mentality to a seemingly mundane object. Its vitrines have elaborate dust-protection and climate control systems. The glass panels slide open with the touch of a remote control.
Glasbau Hahn’s display cases are found in top museums around the world, including the British Museum in London, the Rijksmuseum in Amsterdam and the State Hermitage Museum in St. Petersburg.
The company has built cases to hold copies of the U.S. Declaration of Independence at the New York Public Library and the mummy of King Tutankhamen in Luxor, Egypt, where a custom-made glass enclosure from Frankfurt preserves the boy monarch in a nitrogen atmosphere.
Glasbau Hahn’s expertise and reputation has helped it beat competitors in Italy and Belgium, just as other German companies have beat their European rivals.
The problem that policy makers are wrestling with is how to correct the economic imbalances that German competitiveness creates.