Germany enjoys a reputation worldwide as a valued trading partner. German products stand for reliability, quality and precision, which is why their popularity extends beyond national borders. Especially in times in which the image of the German automotive industry is damaged, however, attention shifts to the large number of German manufactories that dominate a considerable part of the German luxury market.
In Germany there are automobile and watch and jewelry manufacturers and manufacturers of high-quality fitness equipment, but also numerous fine cost producers. In recent years, the interest in manufactories and their products has increased significantly, which has also increased their importance in the competition between German manufacturers.
At the same time, however, the challenges for manufactories are also increasing. Manufactories are representatives of a special culture, but they are also companies that have to earn profits in a tough competition. The manufacturing industry is faced with the problem that as a small-series production it is exposed to the same financial burdens as large corporations, but has to make do with a much smaller budget. In addition, globalization and digitization are increasing competition.
Conceptual blur: Manufactory
Manufactories are regarded as the transition between craftsmanship/artisanship and the factory during the 18th century. Nowadays, however, they clearly distinguish themselves from these two concepts. In contrast to the craftsman’s business, series production is particularly important in manufactories. In contrast to the factory, the manufactory emphasizes manual work.
However some questions arise when it comes to defining the term Manufactory. For example, what percentage must be hand-made during production? Is the manual production of the essential components sufficient? What distinguishes crafts enterprises from manufactories? These questions alone show that it is difficult to give a legal definition to the term manufactory.
It is therefore often difficult to justify whether a particular case concerns a manufactory. A predominant share of manual work in production, a minimum size of the company (10 employees), a supra-regional customer market, belonging to the premium segment, the external perception as a manufactory, the quality of the materials used and the individual production according to the customer’s wishes are mentioned here as criteria.
Today, manufactories form the basis for luxury brands. For German brands, this luxury stands for authenticity, sustainability, innovation and understatement. On the other hand, French luxury brands are known for elegance and Italian for eccentricity.
Current challenges
Today, German luxury manufacturers are exposed to a multitude of challenges. In particular, high costs and increasing competition face a comparatively low budget and low sales volumes.
The high financial burden on manufactories includes, among other things, years of training for employees, who often need many years of practical experience after completing their training before they can master the techniques perfectly. Also, investments for the complex handicraft, as well as ever increasing internationalization and marketing costs are expensive for the manufactories.
In addition, competition for manufactories is constantly growing. This is mainly the result of the democratisation of luxury, the lowering of barriers to market entry, globalisation and rapid technological progress with the accompanying increase in the quality of industrial production. An increasing number of increasingly better copies and counterfeits are also contributing to this development.
Due to such developments, the importanceof luxury brands customers is increasing more and more. It can even be said that customers are now just as important as the product itself. As a result, manufacturers are exposed to an ever-increasing pressure to innovate in order to ensure their own attractiveness. However, as they are associated with values such as timelessness and tradition, it is very difficult for manufactories to be perceived as innovative, modern and original.
