BERLIN, March 28 /PRNewswire/ -- U.S. companies are increasingly
confident about their business prospects in Germany, according to the
fourth annual AmCham Business Barometer, a survey conducted by the American
Chamber of Commerce in Germany and The Boston Consulting Group (BCG).
Of the 86 companies surveyed, 57 percent intend to increase their
investments in Germany, and 40 percent plan to create new jobs, the study
found. And 80 percent expect continued sales growth this year, despite
increases in the value-added tax.
The survey, which was supplemented by in-depth interviews with senior
executives, elicited responses from almost 80 percent of Germany's 50
largest U.S. companies in terms of revenue. Those companies that responded
represent total annual revenues of 130 billion euros and 266,000 jobs in
More than half the respondents (53 percent) said that Germany has made
further gains in attractiveness as a business center since last year.
Respondents ranked Germany as their first choice in Europe for locating
administrative centers (up from second choice last year) and as their top
choice for "centers of competence" for marketing, sales, and business
development (the same as last year).
"Germany has continuously gained in attractiveness for U.S. companies
over the last several years," says Fred B. Irwin, president of the American
Chamber of Commerce in Germany (AmCham Germany). "Seventy-two percent were
able to increase their revenues in 2006."
Almost half the U.S. companies hired in 2006
With 130 billion euros in investments, Germany is a favored location
for U.S. businesses in Europe. From 2005 to 2006, the share of U.S.
companies increasing their investments in Germany rose from 32 percent to
56 percent. This year's AmCham Business Barometer indicates that this trend
will continue, albeit at a slower pace.
The number of direct jobs -- currently more than 800,000 -- at U.S.
companies in Germany is also expected to rise. Last year saw the first
indication of a positive impact on the job market from increased revenues.
At the beginning of 2006, only 31 percent of companies anticipated hiring
new employees, but by the end of the year, considerably more -- 45 percent
-- had actually created new jobs.
Hiring targets for 2007 look even better. Far more U.S. companies plan
to hire (40 percent) than dismiss (24 percent) employees this year.
"We have achieved an emotional turnaround. Growth and growing
confidence in Germany are proving to be mutually invigorating," says Martin
Koehler, a BCG senior vice president based in Munich.
Production relocation is slowing, and some jobs are returning
One reason for the expected job growth is a slowdown in certain types
of outsourcing and offshoring. Eastern Europe is still by far the most
attractive investment location for U.S. companies. However, there is a
slowdown in outsourcing and offshoring production. In 2006, 24 percent of
U.S. companies in Germany planned to reduce their production capacity,
whereas only 16 percent anticipate doing so in 2007. Every fifth U.S.
company hopes to expand production capacity. "We have even seen the first
cases of complex production and administrative activities returning to
Germany," says Koehler.
With regard to less complex processes and R&D, Germany still finds
itself in ferocious international competition. "U.S. companies see German
labor laws as a problem child," stresses Irwin of AmCham Germany. "Nearly
one in three wants to see a more flexible labor market in order to be able
to respond to short-term demand peaks." At the same time, however, lowering
personnel costs in Germany is considered urgent by only 27 percent of U.S.
companies, a smaller share than last year.
"German engineers are the best in the world"
Highly skilled employees are Germany's greatest strength, the companies
indicated. Without exception, respondents gave German education and
subsequent on-the-job training high to very high marks -- especially for
the country's engineers. "German engineers are the best in the world and
are therefore in the highest demand," says Koehler. "But when it comes to
putting a business plan behind their good ideas, German graduates lack
real-life experience and business know-how."
Germany's good education system can contribute only so much to
competitiveness in the globalized economy. Otmar Debald, vice president of
AmCham Germany, says, "In high-tech manufacturing, Germany is still the
leading production location thanks to its excellent skilled-worker
training. But when production processes and technologies become simpler,
the main thing that counts is cost. Wage costs are lower in Eastern Europe,
and costs of small electronic parts are lower in China."
U.S. companies seek readiness to take risks
U.S. companies not only consider labor costs in their decision making,
but they also factor in such so-called soft skills as dedication,
initiative, teamwork, and willingness to assume responsibility. In the
survey, respondents gave their German employees only middling marks on
these qualitative skills, which they say are more important than the
"typical German" virtues of reliability and exactitude.
At the management level, willingness to take risks (73 percent),
interdisciplinary thinking (59 percent), and willingness to assume
responsibility (41 percent) are in high demand, but these are
characteristics that from the U.S. perspective are not among German
strengths. With regard to willingness to take risks, for instance, German
managers garner only "satisfactory" ratings.
The AmCham Business Barometer documents the satisfaction of U.S.
companies located in Germany. For the fourth year, U.S. companies were
faxed a survey soliciting their views of Germany as a business location
relative to the rest of Europe. Of 180 companies, 86, or nearly 50 percent,
responded. This year, the topical focus was human resources. Conducted for
the first time in 2003, the study reveals early trends and produces
AmCham Germany is the largest bilateral business association in Europe.
The companies organized under its auspices represent about 130 billion
euros in investments and 800,000 direct jobs. The Chamber sees itself as a
bridge to investors in the United States. Its activities focus on the
promotion of German-American business relations and Germany as a business
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SOURCE The Boston Consulting Group