https://x.com/patrickc/status/1751292301811630171
[I think Germany is underrated for its expertise in precision engineering and the market tends to reward "move fast and break things" more, but in light of challenges we may face with "safety/alignment" in the future, this makes precision engineering more important]
Geht man zur Laborautomatisierung oder zu vielen Konferenzen, bei denen es um das Thema „Alles messen“ geht, sind deutsche Unternehmen oft überrepräsentiert. Denken Sie als Beispiel an BrainProducts GMBH.
Why doesn't German expertise in precision engineering translate to more German companies being in the "top 50/100"?
byu/inquilinekea ingermany
Von inquilinekea
8 Kommentare
Well the know-how and the stock market capitalisation are a completely different topic. For example Tesla has an extremely inflated market capitalisation compared to other car manufacturers, especially when you look at their market shares and their financial results.
Why would companies that specialize in high precision engineering or measuring specific things be among the top 50 or 100 largest companies? How could something that specific compare to a company like Amazon that does many different things
Precision engineering isn’t used by everyone.
European firms in general are slightly hampered by us all speaking different languages so scaling to different markets is harder.
When they do scale there is normally a large US firm ready to snap them up (Nokia by Microsoft being an obvious example, ARM by Nvidia being another)
The way I experienced it is that precision isn’t that unique anymore and many countries caught up with Germany by either providing the same qualities at similar prices or good enough quality for way smaller prices or instant replacement if something isn’t working.
At the same time Germany has been resting on its high horse of engineering supremacy that it lost any sort of strategy on how to deal with competition or drive innovation.
The giant companies are either tech companies or generalists, making many different products. Tech companies become big because they can literally serve 7 billion people without too many issues, and generalist companies grow by buying existing easy-to-manage companies.
Precision engineering usually serves niche markets, which means that they cannot grow big on their own product and they are hard to manage, since the management needs to understand the production process in detail to understand the pros and cons of the choices they make. For this type of manufacturing having 1000 medium size companies is just more efficient than one company owning them all.
If you go down the rabbit hole you end up at German companies quite often.
Like the fact that 8 of the top 10 companies depend on something that comes from a German company to make their entire technology possible:
Currently the highest end micro chips are made on ASML machines that need Zeiss optical parts to allow for the insane precision needed.
Also the stock market capitalization does not directly reflect the actual business size. Volkswagen is probably selling five times more cars than Tesla, however Tesla is in the top10 while VW is not.
ive worked for some american and german companies and i tell you americans take much more risk and go for ‘aggressive market acquisition’ like a motherfucker. germans do not do that…
On top of what everyone said, two things:
1) US stocks benefited immensely for the past decade of zero interest rates. Anyone, anywhere around the world with a somewhat high net value could get a zero interest USD denominated loan via one of the large financial institutions to buy US stocks. The resulting rush catapulted the tech giants into becoming those tech giants.
You could literally build all the FAANG for less than half of what the market cap of any of them. Tesla’s, as others have pointed, market cap more than all the other major US and European automakers combined. Does anybody, in their right mind, think Tesla is worth more than GM, Ford, Stellantis, BMW, Mercedes, VW, Peugeot, and Renault combined???
2) As someone in tech myself, the industry has a lot more tolerance for imprecision or errors than any of the European heavy industries. Outages are a common occurrence across the industry. So are releases of broken or buggy software. Precision industries are characterized by the lack of errors, or very tight tolerances at the very least, in any and all products shipped to customers. That’s the definition of precision. Imagine if the brakes in your car stopped working at random intervals every few months. VW went to hell and still hasn’t come back for doing the same kind of thing every big corporation in the tech industry has been doing for the past 3 decades or more.