Despite plenty of good economic news out of Germany, there is still an underlying pessimism about the future:
Could the real German economy please step forward?
The country is the world's leading exporter, selling goods worth 733bn euro ($920bn, £500bn) a year and growing.
Profits at Germany's large companies are soaring.
Business confidence is also improving - several respected surveys suggest company bosses are getting bullish about the future. . . .
At the same time imports have begun to rise again, an indicator, experts say, that domestic demand is on the mend.
Foreign investors, especially hedge funds, are already busy snapping up Germany's undervalued companies and assets, hoping to capitalise on the country's potential for growth.
And yet, after travelling through the country - listening to people, politicians and companies, and following the media - one would assume that Germany is on the blink. . . .
Germany's biggest problem, though, may be of its own making.
"We Germans are world class whingers," says Dr Rainer Hecker, boss of Loewe, a high-end consumer electronics firm in Bavaria.
His words are echoed by many business people. If only consumers and entrepreneurs would stop moaning and buy, invest, take risks instead.
A recurring theme -- German firms have had success in improving competitiveness by bringing down labor costs:
Over the past few years radical welfare reforms have changed the country's labour market beyond recognition.
Tales of Germany's high wages and short working hours are just that - tales.
Real wages have fallen dramatically and working hours are nearly back to 40 a week - to the point where some employers say they don't see much difference between the cost of hiring a German or British worker.
Cooperative relationships between business and labor have helped this process along:
Trade unions negotiate deals with flexible hours and lower wages, tailored to the needs of companies under competitive pressure.
"I have to discuss such deals with nearly all companies in our region," says Juergen Apfel, regional organiser for the IG Metall trade union in Coburg, a depressed region in Northern Bavaria.
What inflexible labor markets?
Of course, the unions don't have much choice, given the increased bargaining power business has over them:
. . . these days German bosses have stopped playing Mr Nice Guy.
In the search for profit and faced with global competition, they are squeezing suppliers, axing jobs and shifting production to low-wage countries like never before.
This week Volkswagen announced that its German workers are just too expensive. Thousands of jobs are likely to go, Portugal may benefit. . . .
Many workers . . . face the downside of globalisation.
"During the past few years more and more firms are coming to us and warn 'production will be moved if wages don't come down'," says Michael Ebenau, a regional organiser with the IG Metall trade union in Jena. . . .
In the hope of persuading companies to stay here, the government has lowered labour costs and made it easier to hire and fire.
And workers are getting the drift.
"When people tell you "do this, your job is at stake', you'll do it. I'm happy to make sacrifices as long as I keep my job," says Silke Tischer, a union official at Corning's threatened Neustadt plant.
This shows that the current economic recovery strategy is clearly self-limiting, however. Lower labor costs may mean higher profits and greater export competitiveness for large multinational firms, but the core of the German economy - consumers and small-to-medium sized firms - are still in a funk:
Earlier this year, the number of jobless reached a post-war record of 5.2 million. Every day, says the opposition, another 1,000 jobs disappear.
Over the past five months unemployment rates have improved slightly, but in some regions - especially the East - unemployment is still well above 20%. . . .
Real wages have fallen dramatically and working hours are nearly back to 40 a week . . .
Unemployment [and falling wages are] hitting both consumers' confidence and their purchasing power.
As they tighten their belts, Germany's savings rate has reached a staggering 11%. . . .
It is a vicious circle: consumers stop spending; retailers bemoan empty shops.
In particular, weak domestic demand hurts the small and medium-sized enterprises that are the backbone of Germany's economy - its famous Mittelstand.
Many of these firms now cut jobs and invest less. With eight out of 10 employees working for Mittelstand firms, consumer confidence takes yet another plunge.
So the very labor market flexibility that is contributing to (big) business optimism is also increasing economic insecurity for workers and consumers, limiting consumption demand, and thus dulling the incentives of the Mittelstand firms to invest and create jobs. The only thing that is driving the German economy right now is export demand. Domestic consumption and investment are still weak.
If there is one long-term ray of hope, however, it probably lies in the innovative high-tech sector, where the demand for quality, skilled labor, and proximity to the customer make jobs difficult to send out of the country:
Technology-intensive firms like Dr Bergner's [a small firm in the East specialising in vacuum technology] - and thousands like hers - are actually expanding. . . .
Many customers . . .need bespoke vacuum components and come to Vacom, which expands to fill the profitable niche.
But to stay competitive, she says, "we have to invest all the time... and work as effective as possible". One example: a computerised logistics system packs 450 square metres of storage space on a 20 sq metre footprint.
On a much larger scale, Jenoptik has a similar approach. . . . the new Jenoptik specialises in laser tools, precision optics and sensor technology.
Every year the company invests up to 10% of turnover into research and development. . . .
"As a high-tech company we've got everything in place to be successful," says Alexander von Witzleben, the boss of Jenoptik. "Germany is more competitive than ever before."
"I can't and won't complain about our situation. Working hours (in Eastern Germany) are longer and wages lower than anywhere else in Western Europe," he adds.
The French multinational Saint-Gobain is expanding the town's industrial ceramics factory.
Part of the investment package was a lengthening of working hours from 38 to 40 a week. . . .
The key to Roedental's success, though, is the know-how of its workforce.
"Workers need so much experience and training to get the product right, we can't just go to China with this business," says Brigitte Wirth, who looks after Saint-Gobain Ceramics' marketing.
A few valleys away, in Kronach, consumer electronics firm Loewe tries a mixture of flexibility and innovation to stay competitive.
To sidestep the flood of cheap television sets and DVDs from Asia, the 80-year old company has long been pitching for the high-end premium market.
. . . Loewe's boss Dr Rainer Hecker and the IG Metall trade union hammered out a package of lower wages, flexible working and job cuts.
. . . Loewe's flat screens are now all the rage. . . . even though most of Loewe's electronics is designed, manufactured and assembled in high-wage Germany . . .
How does Loewe do it?
"We have to innovate all the time", says Dr Hecker, and by keeping design and manufacturing under one roof "we can implement innovations straight away", while being in Europe makes it easy to produce bespoke television sets for customers. . . .
The Czech republic may be just 45 minutes drive away, but "even if Czech workers are paid half the salary and I save 2.5% of costs, with the extra logistics and drop in quality, it's just not worth it to relocate," says Dr Hecker.
What is "the common thread of these stories"?
Standardised mass production is rarely competitive in Germany.
Customisation and cutting-edge technology are the keys to success.
Only one problem, though:
. . . it doesn't add up to a huge amount of new jobs. "Labour costs are not that much of an issue" . . . "In the end wages are just a small fraction of the equation."
