Like hundreds of government-funded vocational schools in Germany, Berufskolleg Wittengenstin (BKW) should intrigue anyone frustrated by turnover and skills gaps. Sitting in her neat, quiet office, vice principal Claudia Sauer explains the much-admired apprenticeship system that pumps talent into the Mittelstand and other German employers, keeping youth unemployment at a relatively low 7.9 percent. Like the Mittelstand itself, it is a system designed to deliver a quality, customized product. 

Roughly two-thirds of BKW’s 700 students arrive bearing contracts from local employers willing to train them. These students, ages 16 and up, spend two days a week at BKW learning traditional academic subjects and the theory underlying their chosen fields. For three days, they work at their companies, gaining both basic proficiency and familiarity with their employers' machinery and processes.

"The apprentices bring their experiences from these companies back into the lessons, and the teachers and other students learn from that,” says Sauer. "When we see a problem with a student we call the company, and if they see a problem they call us."

The final exam includes an oral presentation in which each student must explain how his or her employer develops products and goes to market, as well as the processes used in one department. After graduation, the majority of students receive offers for permanent positions. Some go on to universities for advanced training; but many then return to the companies where they apprenticed.

Employers also get to offload some employee development. Companies can send full-time workers back to school for four years of free, advanced training two nights a week. That includes six months during which employees work on projects for their employers, bringing to bear not only their own thinking but also that of their fellow students and teachers.

BKW is located in Bad Bereleburg, a town of 20,000 people perched on the flank of a low mountain range. The Mittelstand companies here include BSW, which makes products from recycled rubber. The company has 26 apprentices who earn roughly $1,200 a month. Managing Director Ulf Poppel shows me his projected demand for apprentices through 2020. It includes an annual infusion of four industrial clerks and three machinery and plant technicians, among other positions.

"They do learn things specific to the company, but a lot of it is not," says Poppel. "If you educate an electrician he can work here or a hundred kilometers from here. We try to employ 80 percent of them at least." Poppel estimates average employee tenure at BSW is 15 to 20 years. Other Mittelstand companies keep people even longer.

"Germany is always criticized for having too few college graduates in percentage terms,” says Mittelstand expert Hermann Simon. "I think the number elsewhere may be too high. You need a substantial percentage of the population to be people who can really make things."