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A German flag flies next to an American one on the hood of a new automobile.
Image: imago/Seeliger

Pity about that policy

Sabine Kinkartz / cd
March 19, 2014

The American Chamber of Commerce in Germany regularly asks US executives their view of Germany. They give the country top marks in almost everything: the big exception is Germany's energy policy.


Coca-Cola, Hewlett-Packard, Philip Morris, McDonald's - the list of US companies engaged in Germany is long. Forty-four of the most actively-traded ones, which together employ 177,000 Germans and do 92 billion euros ($128 billion) of business, were consulted this spring by the American Chamber of Commerce in Germany. Their opinions couldn't be more positive.

US companies are looking at the current year in Germany with great confidence, says Bernhard Mattes, the president of AmCham Germany. Nearly 80 percent of the companies expect a jump in revenues. The number of Germans they employ is also expected to increase. And particularly pleasing is those companies' readiness to invest in Germany, with every second top executive expecting an increase in investments in 2014.

"The positive expectations of US investors are an indication that the entire German economy is continuing on its way upward," Mattes told DW.

Bad grades for German industrial policy

Prospects appear bright and stable - at least for the foreseeable future. Roughly 60 percent of the executives see their activities more or less growing over the next three to four years and intend to further expand operations. The American companies especially appreciate the quality of employees in Germany, the supply networks, research and development, and the infrastructure and potential of Germany as a consumer market.

Angela Merkel sits at the wheel of a concept car.
Mattes, who head's Ford's German operations, shows Chancellor Merkel the Evos concept carImage: picture-alliance/dpa

But they were less upbeat about the costs associated with investment and financing, labor costs and economic and industrial policy. Here, a third of the respondents graded Germany poorly.

That's a warning signal, Mattes says, that Germany cannot become more expensive: "And for that reason, all parties - the politicians who set the framework, but also the companies - should not rest on their laurels."

As good as things are going, the American executives saw a need for reform.

"[Germany] has to proceed with its industrial policy orientation," Mattes said. "It has led to a stable foundation, but the innovative sectors must be driven further forward."

Expensive electricity

The worst location-related issue was, by a significant margin, the cost of energy. Germany's energy policy was viewed negatively by 71 percent of respondents. Investors were not only concerned that current costs might continue to rise, says Ralf Brinkmann, who heads the Dow chemical company's German operations and is AmCham Germany's vice-president, but they also want a reliable framework in which they can work.

"The planning uncertainties and the dramatic increases in the cost of energy are, in the eyes of the American industrial investors who pay a third for gas and half for electricity elsewhere, by no means a positive point," he told DW.

In Germany, it's about reforming the German Renewable Energy Act (EEG) and the European subsidy rules attached to it. "It has to be a question of making the EEG affordable, and to not just keep increasing the number people paying into the EEG." Higher costs, Brinkmann says, could significantly reduce the attractiveness of Germany.

Supplanted by Asia?

Germanystill stands out among its European partners. Twenty-nine percent of investors consider Germany the most attractive location, followed by Great Britain at 17 percent and Poland at 12. Other regions, however, are more promising. Seventy-six percent of respondents believe Asia will be the world's most important industrial site ten years from now; just seven percent said the same for Europe.

US investors flock to Germany

That's why it's so important, says AmCham president Mattes, to move forward with the transatlantic free trade agreement between the US and Europe (TTIP). More than two-thirds of the executives in the survey are of the opinion that it would add significant momentum to growth.

"The transatlantic market is, and remains, the largest in the world, and Europe needs this additional growth potential urgently for its recovery," Mattes says. "If the two largest economic zones in the world agree to a comprehensive partnership, we can set global benchmarks and pave the way for international standards."

Eight of ten managers interviewed are confident the TTIP will be signed. That said, Mattes says future negotiations must take top priority. At the same time, however, those negotiations must become more transparent and objective, he says - and the public needs to be informed. Only when there's consensus in society can the free trade agreement be a success.

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