Resurrecting the German miracle [German manufacturing industry]

The German manufacturing model that has been held up as a shining example of an industrial economy has been showing cracks recently. Like most of Western Europe, Germany is struggling to maintain a vibrant manufacturing sector. Now facing the added threats of two new, low-cost manufacturing giants in China and India, its shortcomings - a tendency to over-engineer and high labour costs - are coming home to roost. This paper discusses the problems the country is facing along with the possible solution to these problems, which is lowering cost and increasing innovation.