May 24th, 2012
10:59 AM GMT
London (CNN) – Are European Union governments missing a trick by taking small and medium-sized firms for granted?
In Germany, such businesses - the Mittelstand - have been nurtured, and in return significantly boosted the country's economy.
As our regular viewers will know, over the last few months Marketplace Europe’s travels have taken us inside small and medium-sized companies around the region.
We’ve talked about the way they run their businesses, the bigger macro environment and prospects for Europe and the single currency.
The common theme of each conversation is concern that well-intentioned incoming governments - from France, Greece and the Netherlands - will tax smaller firms out of business rather than offering incentives and protection to keep growing in such challenging economic times.
From kitchen firms and plastics mouldings firms in Alsace (both sides of the French/German border), to pencil makers in Bavaria, Germany: Small and medium businesses are core to the German way of doing business.
Firmly rooted in their local regions, Mittelstand companies tend to be solid and dependable local employers, fostering a community loyalty which serves them well in both prosperous and difficult times. Dismissed as boring in the past, these companies are having the last laugh, helping keep Germany's economy afloat as Europe drags itself through the crisis.
Take Faber Castell, which has been making pencils on the outskirts of Nuremberg since 1761. The factory sits alongside the castle where eight generations of the Faber Castell family have sketched out plans for the brand to go global.
Today they have 15 manufacturing plants around the world, producing a 6th of the entire world's pencils.
When I met Count Anton Wolfgang von Faber Castell, chairman and chief executive of the company, he told me: “If I look back 30 years, Mittelstand, family companies were not so much in fashion. People would say 'oh, he is the son of the Count von Faber Castell, he has no clue about business.'
"[But] the big advantage we have as Mittelstand is that we are not a public company. As soon as you list you need to adhere to rules - among others, quarterly earnings results. With this short-term view over your head - I don't say as a threat, but as a challenge - there is not so much time to think for the far future.”
True to Mittelstand form, they do not chase quick profits or high risk investments. They invest in their people - another Mittelstand trademark and something Faber Castell pioneered. It was one of the first firms to offer staff benefits like health cover, back in the nineteenth century.
“Partially it is being far sighted and smart. My great grandfather was an outstanding entrepreneur who educated the workers and built them homes to make them better workers. And if you have better workers that automatically makes you more competitive,” the Count told me.
Mittelstand thinking is entrenched in the German way of running a company. To them, it's common business sense. And as the rest of Europe looks on with interest, Faber Castell could be just the place to find what they need to start taking notes.
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