The German pay for factory workers isn't so great, by the way. Income structure is more flat in Scandinavia, for instance; compared to Sweden and Finland, Germany has cheap factory labor cost.
However, the main problem with British industries and collapse of some of them in 1970's was unionisation and political fighting. This included even outright sabotage, and of course abysmal build quality. My uncle had a Morris Marina, my father a Sunbeam Avenger. Never again a British car. British workers are OK as long as their overlords are Japanese or German.
This is a valid point but at the same time - can every country make a lot of money selling extremely high end luxury goods? It seems to me (but I'm very open to information that would change this view) that Germany occupies a rather special position that doesn't scale out world-wide.
> can every country make a lot of money selling extremely high end luxury goods?
It seems to be working well for Apple...
In any case, the biggest car company in Germany is VW, and I wouldn't consider them a "luxury" car manufacturer. And most of the Mittelstand in Germany are companies that are not household names, but are very successful in their particular industrial niches.
Is there such a thing as a "position" that scales out world-wide?
Just as every individual is unique in its skills, experience, available resources and ___location, so is each country. Surely China's cheap workforce cannot be replicated in Europe or the U.S. and China's biggest problem will be their own middle-class which gets richer, so you can clearly see that a cheap workforce is not sustainable in a growing economy.
Can the world replicate Silicon Valley or Hollywood? Maybe, maybe not, but surely a lot of effort is required and there are also cultural issues that makes this hard. Failure is accepted as a sign of progress in Silicon Valley, but in Japan it's unacceptable.
The way to grow is to rely on your core strengths and make your weaknesses obsolete. So for example if companies move to China for cheap labor, then pay engineers to build better robots, a strategy which in the long run can yield better and more efficient factories.
I personally don't associated Germany with luxury goods (not in the same way as Italy or Switzerland) but I do associated it with very high quality engineering.
Someone needs to explain this to the Germans then.