Thousands of German firms fear for their US business, after President Donald Trump decided to continue blocking entry for foreign workers. Will the emerging skills gap impact America's economic recovery?
Stefan Heffner's business plans for the United States have been turned upside down. The US representative of German medical equipment maker Richard Wolf moved to Chicago about a year-and-a-half ago with the ambitious goal of cracking the company's US sales record of $100 million (€85.3 million) by the end of this year.
But the global COVID-19 pandemic has thwarted this effort, with 2020 sales of the endoscopic devices Richard Wolf manufactures having plunged 60% during the current health crisis so far.
"We're not going to be able to make up for this," the 39-year-old salesman told DW.
But the spreading coronavirus hasn't been Heffner's only problem this year. The company's expansion plans are also being slowed down by US President Donald Trump, who's trying to stem a mounting tide of virus-induced unemployment in his country with curbs on labor immigration.
About half of working Americans say they or a member of their household have lost some income due to the coronavirus
As the US jobless rate threatened to spiral out of control amid the pandemic, Trump in April announced a two-month moratorium on the issuance of visas for some foreigners working in the country. In June, he extended the ban until December, saying this continued to be necessary "to protect unemployed Americans from the threat of competition for scarce jobs from new lawful permanent residents."
The legislation has even been extended to workers within several nonimmigrant visa categories, with the ban now including H-1B (skilled workers), H4 (for dependents of H-1B), H2B (for seasonal workers in the landscaping and hospitality industries), L1 (intra-company transfers), L2 (dependents of L1) and J1 for students.
The provisions barring entry for skilled workers and intra-company transfers are hitting foreign companies like Richard Wolf especially hard because many of them are hugely dependent on specialists visiting the US.
BMW's factory in Spartanburg, South Carolina, is one of the biggest investments a German company has made in the US
German companies currently employ about 770,000 Americans in more than 4,800 subsidiaries based in the US. That makes them the third-biggest foreign employer in the country. In addition, thousands of German specialists are regularly flown in to support operations there.
Companies like automakers Volkswagen and Daimler need their home-based specialists desperately, because some professions like that of a mechatronic engineer simply don't exist in the US, or workers with those skills are few and far between.
German machine builder Groninger, for example, which employs 60 people in a plant in Charlotte, North Carolina, has had to stop "more than a dozen" in-house projects due to the Trump ban.
"Many jobs are so complex that we simply can't cope without the skills of our German specialists," said Heiner Dornburg, CEO of Groninger USA, during a video conference organized by German trade and commerce officials on a visit to Washington recently.
The Crailsheim, Germany-based firm manufactures machines and complete production lines for the pharmaceutical and cosmetics industries worldwide, and says only its specialists from Germany are able to get factories up and running.
Other German companies that said they were hugely dependent on the skills of their home-based engineers are Bestar Steel Group with operations in Georgia and mechanical engineering specialist Wittenstein in Illinois.
They, and Stefan Heffner of Richard Wolf, are now cut off for months from crucial German knowhow and skill sets. Heffner says prospects for his company's business in the US have turned from bright to bleak virtually overnight, as the COVID-19 pandemic has dramatically reduced demand for the firm's endoscopes. Emergency health care measures imposed in the US health system, for example, have led to a massive drop in the number of gallstone surgeries, for which their equipment was needed, he says.
Looking ahead, he notes that the challenging business environment in the US may force Richard Wolf to halt a planned relocation of production from Germany to the US, and adds: "This is definitely going to be a difficult year."
The relocation was carefully planned as the American market for medical equipment has grown to become the world's biggest in recent years. Richard Wolf has already invested heavily in the firm's headquarters in Chicago. But Donald Trump's visa ban means the move is off for this year, says Heffner. "I just can't fly in the specialists needed to train staff and support us here."
Heffner's foiled expansion plans are the kind of stories Hilde Holland hears a lot these days. Holland has worked as a lawyer for more than 25 years and is based in New York, where she also sits on the board of the German-American Chambers of Commerce. Never before have US visa regulations been so "bad," she told DW, adding: "They're an absolute catastrophe for businesses."
Virtually all visa applications are being turned down these days, Holland says, even those based on an emergency claim. Moreover, the COVID-19 pandemic has "de facto shuttered" all German consulates in the US, meaning not even investors or people eligible under green card requirements can apply for US entry. She claims the ban imposed by Donald Trump was clearly politically motivated.
"That's purely electioneering tactics," she argued, and adds that she doubts Trump will succeed with his aim of US companies "massively hiring American workers."
Decrying the idea as a "naive fallacy," Holland expects that most of the vacancies emerging as a result will simply remain unfilled because leadership or specialist positions cannot be easily taken up by Americans. "Should the need arise, companies will simply resort to video calls to make sure managers participate."
Richard Wolf's US representative Stefan Heffner, however, doesn't have the slightest problem with hiring American workers if this would help the company's expansion plans in Chicago. "We are determined to produce here and create jobs, not only for our own sake, but also for those US companies supplying us here."
Unfortunately, he stresses, relocating production from Germany has been made impossible by the visa restrictions, and he even had to lay off some of his US staff due to slumping US revenues.
He doesn't expects the firm's business in the US to rebound until next year at the earliest. Hopes are rising, however, that Richard Wolf's products may soon play a role in the US struggle against the pandemic, he adds. Its endoscopic devices could help in the long-term treatment of the damage done to the lungs of COVID-19 patients, and, as a welcome side effect, softening the blow to the company's bottom line caused by postponed gallstone and appendix surgeries.