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A tractor drives past a solar panel in Germany. JOHN MacDOUGALL/AFP/Getty Images) (JOHN MACDOUGALL/AFP/Getty Images)
A tractor drives past a solar panel in Germany. JOHN MacDOUGALL/AFP/Getty Images) (JOHN MACDOUGALL/AFP/Getty Images)

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Canadian firm makes hay while the sun shines - in Germany Add to ...

Arise Technologies Corp. launched in 1996 with the goal of creating Canada's leading solar energy company.

Over the next decade, the Waterloo, Ont.-based company went public on the Toronto stock exchange and secured about $40-million in funding.

But while it had raised some money and had a great deal of ambition, it lacked the means to turn its idea into reality - it had no factory location in mind, much less enough financing to build one.

That all changed in May, 2006, when a German agency made Ian MacLellan, the founder and chief technology officer of Arise, an offer he couldn't refuse: It would help finance and build the company's first solar factory. For Arise, it meant a fortune in savings. For the Germany Trade & Invest group, it meant adding a new player to its rapidly expanding alternative energy industry - Europe's largest.

A mere 19 months after the offer, a factory in Bischofswerda, a picturesque town in eastern Germany near Dresden, was churning out photovoltaic cells, which convert a free source of energy - sunlight - into electricity. "We couldn't have done this project this fast anywhere else," he say, referring to the generous incentives available to foreign investors.

Since then, the factory, with 150 employees, has added a second production line. A third is coming this year as demand for PV equipment rises at triple-digit rates as alternative energy subsidies roll in and PV costs fall. "Germany has a real commitment to manufacturing quality," Mr. MacLellan, 54, says. "It made real sense to expand here."

Mr. MacLellan is in awe of German industrial efficiency. Indeed, Arise has tapped into a country that is flourishing.

The jobless rate in Europe's largest economy is the lowest since reunification in 1991, with unemployment falling for 24 months in a row. Business confidence remains near record highs thanks to strong exports.

It's a stark contrast to economic woes rippling through the south. Both the German government and the International Monetary Fund recently boosted their forecast for economic growth this year. The country is the world's second-largest exporter and one of the most productive places on the planet.

Some of the reasons for the country's health may be transitory - a weak euro, for one, has helped make Made-in-Germany goods much more competitive when sold abroad.

But plenty of evidence suggests Germany's manufacturing strength has legs. That success makes it a worthy case study for Canada. For one, its army of small and mid-sized companies - known as the Mittelstand - think globally, an approach Canadian firms have not yet embraced. Apprenticeships are widespread, to ensure young people get top-notch, on-the-ground training. Perhaps most importantly, Germans are not ones to rest on their laurels.

In the ultimate symbol of Germany's global prowess, industrial efficiency itself is becoming a key export.


Several factors explain the country's strength. Germany has diversified its customer base well beyond the United States. China became the country's largest non-European customer at the end of last year, a shift that brings huge benefits for the likes of Bayerische Motoren Werke AG (BMW), Siemens and BASF SE.

As well, the country happens to be producing precisely what the world - and emerging markets in particular - are hungry for. It's not just autos and industrial machinery (though cars are a big part of the story). The country's factories are churning out luxury goods, consumer products, nanotechnology, biotechnology and clean tech.

"German companies are producing high-technology goods and its cars, chemicals and capital goods are exactly the goods that are in demand in China and other emerging markets," said Andreas Rees, chief German economist at UniCredit Bank AG in Frankfurt.

Challenges persist. The euro is on its way back up, a shift that is sure to pressure German and other European manufacturers. Chinese demand could wane, and competition from higher-quality Chinese manufacturers is growing. Demand from southern Europe is shaky. And, like its neighbours, Germany is also facing an aging population and needs to attract immigrants to fill gaps in the labour force.

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