THE NECKAR VALLEY, not far from Stuttgart, is the epitome of provincial Germany. A string of picturesque towns with quaint Swabian names—Tübingen (home to a famous university), Reutlingen, Nürtingen, Wendlingen, Metzingen—stretch along the river, separated by orchards and family farms and flanked by the hills of the Swabian Alb. But the small-town idyll is deceptive. The Neckar valley is also home to scores of Germany’s small and medium-sized companies known as the Mittelstand, a highly successful component of the global economy.
Storopack, tucked inconspicuously down a side street in Metzingen, is a world leader in protective packaging. The firm is family-owned but thoroughly global, with 52 factories in 13 countries. The first Chinese facility opened in 2000. Now there are ten.
Rösch, a third-generation family textile firm in Tübingen known for upmarket nightwear, has also become one of Europe’s biggest makers of specialist fabrics for the car industry. Its unassuming buildings, down a small road by the river, contain vast computer-aided processing and dyeing machines that produce the synthetic materials for lining car roofs.
These small-town champions, along with industrial giants such as Siemens, Bosch and BMW, help to maintain Germany’s manufacturing and export prowess. Manufacturing’s share of GDP in Germany is bigger than in other rich countries and German exports, particularly to fast-growing emerging economies, are stronger. Half of Germany’s growth over the past decade has come from exports. The external surplus, at €188 billion ($243 billion), or 7% of GDP, is the world’s biggest in absolute terms, one of the biggest relative to the size of the economy, and rising.