Surviving the pandemic: Lessons from Germany’s Mittelstand

BERLIN/FRANKFURT (Reuters) – In Germany’s industrial heartland, engineering firms have come up with a recipe for surviving the coronavirus pandemic.

Keep spending on research and development even if sales drop, build a financial buffer so you can craft a long-term business plan, be flexible with dealers to keep supply chains intact, have an innovative mindset and see crises as opportunities.

It’s certainly a strategy that is paying off for some of the small and mid-sized “Mittelstand” companies (SMEs) that together provide almost 60% of all jobs in Germany, according to Reuters interviews with six chief executives.

Commerzbank, the biggest lender to Mittelstand firms, also told Reuters that the number of companies going into “intensive care” was lower than it had feared and there was no rush by its clients to get new credit lines.

Stihl, for example, took an unusual step when lockdowns hit sales of its chainsaws, lawn mowers and hedge trimmers – it carried on making them and helped some of its struggling retailers stay afloat by extending their payment terms, Chief Executive Bertram Kandziora told Reuters.

The gambit paid off.

After a tough couple of months, demand soared for Stihl’s tools as people stuck in lockdowns spruced up their gardens. Since May, Stihl has enjoyed double-digit sales growth and is working on Sundays to fill its orders.

To be sure, the landscaping industry has been a sweet spot during the crisis but Stihl’s ability to navigate the lean lockdown months reflects a particular advantage of Mittelstand firms – they are typically family owned, with long-term horizons and strong balance sheets to see them through rough patches. Read More

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s