Worries mount for German 'Mittelstand' as election looms

Thu Jul 4, 2013 2:23am EDT
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By Michelle Martin

BERLIN (Reuters) - Christof Rosenberg has been trying for a year to find a skilled toolmaker for the specialist pipe company he runs with his two brothers in western Germany.

Two recruits he brought in and trained failed to master the job. Now he's having to delay projects by up to six weeks and that's hurting business at Aquatherm, the 450-strong firm Rosenberg's father set up in his garage four decades ago.

"The market is completely devoid of well-qualified workers," Rosenberg told Reuters from the company's headquarters in Attendorn, an industrial town 90 kilometers east of Cologne.

Aquatherm, which makes plastic pipes for heating and air conditioning, is not alone among German "Mittelstand" companies - the small and medium-sized, often family-run, manufacturing firms that form the backbone of Europe's largest economy.

A recent study by consulting firm Ernst & Young showed three of every four German Mittelstand firms are struggling to find suitable employees due to an acute shortage of skilled labor.

And that's not the only problem worrying the sector ahead of a federal election in September in which Chancellor Angela Merkel is seen likely to win a third term, in part due to the relative strength of the German economy.

Slowing growth, rising energy prices, tightening credit conditions and a pre-election debate about tax hikes are also unnerving firms across Germany, including those that have weathered years of crisis in Europe with hardly any damage.

Reuters spoke with a dozen Mittelstand firms about their business prospects ahead of the vote. Most said they had a higher headcount now than three years ago, considered their business situation to be satisfactory and planned to invest around the same amount as last year.   Continued...

A woman paints on a vase at the KPM porcelain manufacturer in Berlin June 28, 2013. REUTERS/Thomas Peter