German manufacturing culture does many things very well, but a few things particularly stand out. One of these items pertains to the concept of verbund manufacturing. Verbund simply means “integrated” or “linked”. Verbund manufacturing sites are clusters of manufacturing units that take advantage of proximity. Clustering can offer certain logistic and energy advantages if done intelligently.

A cluster of manufacturing sites can operate and share a co-generation plant for the distribution of steam, waste heat, and electricity. Large capital items like steam plants can be shared so funds can be plowed into larger scale for better economy. Rail operations and other transportation resources can be shared as well. Clustering also provides for the possibility of vertically integrated manufacturing on site and a reduction in transportation costs.

Clustered manufacturing may also have the effect of concentrating the supply of skilled workers for the labor pool. A manufacturing nexus can attract community colleges and other vocational opportunities for the next generation of employees.

The USA has many manufacturing sites where similar industries congregate. Look at the Gulf coast with all of the refinery locations. But the extent to which there are synergistic interactions between companies is unclear.

In the US, corporations tend to behave as the Republic of Exxon or the Republic of the Union Pacific. This kind of a fragmented confederation of corporate states is becoming obsolete as we go up against nationalized business entities that control key resources and trade. The key to future vitality is greater efficiency with resources. Synergistic cooperation is one model that is available. But to do this requires trust and the desire to cooperate for mutual benefit. Competition begets gamesmanship and posturing which works against the verbund model for US businesses.

US corporations have much to learn from this business model.