German companies eye brisk US business | Business| Economy and finance news from a German perspective | DW | 11.12.2012
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German companies eye brisk US business

US President Obama lauded German investments during a visit to Daimler subsidiary Detroit Diesel. And German firms are full of praise for the US as a business location, with its advantages of cheap energy.

While the sovereign debt crisis keeps raging in Europe, the United States remains an attractive investment location for German companies. According to a recent survey conducted by the German American Chamber of Commerce, they believe in bigger revenues throughout next year - despite the protracted fiscal cliff talks. And two-thirds of all German firms active on the US market are planning to create new jobs.

Broken English a global language

Optimism prevails in midtown Manhattan, where some 100 German-American relaxed entrepreneurs have come together for a meeting in the building of the Bloomberg news channel.

The German CEO of the US agricultural machinery firm AGCO, Martin Richenhagen, asked Linda Mayer, US head of the glassmaker Schott, what it feels like to work for a German firm as an American. "You mean, apart from the language?," Mayer quipped.

Richenhagen replied with a twinkle in his eyes, "Well, all of those present here speak the real global language - broken English!"

Far away from crisis-stricken Europe, some two-thirds of German companies with subsidiaries in the US have been able to boost sales this year when compared with 2011 revenue. And more than 90 percent of 230 respondents of a survey are even more optimistic for 2013.

Kostal Nordamerica President Walter Maisel said that "a global comparison sees us well positioned for the challenges ahead." Although he thinks infrastructure in the US is sometimes problematic, he is to point out the country's energy boom. "In 20 years from now, the US will be self-sufficient on the energy front," he said. Maisel maintains that "the US is an excellent location."

Comeback of US auto industry

The German family enterprise Kostal is based in Michigan and produces electronic components, mainly for the US automotive industry. The latter marked a comeback in 2012, which saw many German suppliers capitalize on that development. This was the case for Tognum America, a producer of diesel engines, as well as drive and energy systems.

But there's a drop of bitterness from German small and medium-sized enterprises. Skilled workers for complex production processes are hard to come by in the US, where vocational schools and apprenticeships are not integrated into the public education system.

US Company Marlin Steel in Baltimore Photo: Verena Klein

Low energy prices in the US provide a market edge for investors

Jörg Klisch, vice president of Tognum USA, said he sees "companies and regional authorities trying to train high school graduates in programs constituting a college alternative." He thinks that's far too late, and that such activities should start during lower education years.

Invited to the White House

Many German firms active in the US have established training programs of their own to address the lack of skilled workers. In doing so, Tognum even caught the attention of US President Barack Obama.

"We look for suitable employees among 11th-graders," Klisch explains. "That seemed so intriguing for the White House that we were invited to elaborate on the scheme."

The young people who get supported by Tognum end up having not just a high school degree, but also solid skills as industrial mechanics enabling them to start working for the Germans right away.

Kostal's Walter Maisel remarked that US engineers with PhDs are very good, often better than German professors.

Closer cooperation

Despite all optimism, German companies in the US have grown wary of the fiscal cliff debate in Washington. If Democrats and Republicans do not eventually strike a deal, painful spending cuts and tax hikes are likely to be enacted.

Thomas Zielke, a lobbyist for German entrepreneurs in the US, says more cooperation among the parties would bring the country forward. "It would be helpful if President Obama could bring about closer cooperation in his second term," Zielke remarked.

Expanding in the US

German firms in the US employ some 570,000 people. Engineering giant Siemens has a workforce of 60,000 in the US alone - more than Microsoft. And two-thirds of the German firms in question are planning to hire more people in 2013.

"We prefer to invest more in local production and resources than in bringing over technology from Germany," said Schott's Linda Mayer. She added that the German businesspeople in the US are banking on a booming auto industry, cheap energy and the recovery of the US real estate market.

"I want to make sure that we're fully prepared for that."

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