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Germany's mighty Mittelstand

From Juliet Mann, CNN
May 24, 2012 -- Updated 1642 GMT (0042 HKT)
  • The Mittelstand is the German name for the country's 3.5 million small and medium sized businesses
  • These often family owned companies currently make up around 60% of the German workforce
  • Most Mittelstand companies tend to produce niche products for the manufacturing and engineering markets

(CNN) -- As the eurozone's financial crisis drags past its second year, Germany's powerhouse economy has kept the bloc from sinking into a double dip recession.

A quiet force behind this growth are the country's 3.5 million small and medium sized businesses, collectively known as Mittelstand.

Mittelstand companies can be found behind hard to imitate niche products for the manufacturing and engineering markets. They have played a vital role in the country's export driven economy for over a century.

Read more: Juliet Mann's blog on the Mittlestand

While latest economic data suggests even Germany is being weighed down by the crisis, that could be offset by the Mittelstand's philosophy of longevity, innovation and investment in their workforce.

Such an outlook has helped to foster community loyalty, which has kept the Mittelstand steady through economic fluctuations.

The Mittelstand often have longstanding apprentice schemes, and German universities work closely with researchers at local firms to ensure products are always improved.

Pencil maker Faber Castell is one such company. They do not chase quick profits or high risk investments, and invest in their people.

"Partially it is simply being far-sighted and smart," said Count Anton Wolfgang von Faber Castell, chairman and chief executive of the company which bears his name.

Faber Castell has been making pencils on the outskirts of Nuremberg since 1761 and today they produce one sixth of the entire world's pencils.

"We have a product which causes a yawn, pencils. But we have to stick to it and we have to try within this framework to improve, to constantly optimize the product. If you have the curiosity, you have the right people, you will always find things to improve," he said.

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