If you read publications such as the Weekly Standard or the National Review, you would get the impression that "Old Europe" is an enconomic backwater which lacks the dynamism of the US. Germany, in particular, is singled out as "the sick man of Europe" – an nation doomed to decline due to over-regulation and intransigent trade unions. So why are US firms flocking to Germany? Why is Germany the number one European target of the dreaded private equity firms such as Blackstone Group and Texas Pacific (aka "Locusts" – Heuschrecken)? The Boston Consulting Group and the American Chamber of Commerce surveyed major US corporations and discovered renewed enthusiasm for Germany as place to invest and expand. The results of the survey were released yesterday:
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).
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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 “Seventy-two percent were able to increase their revenues in 2006.”
Germany’s skilled and highly educated workforce was cited as an important factor in American investment:
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.”
On the negative side, German employees are often seen as risk-adverse. This tends to inhibit innovation, and is maybe one consideration in the dearth of high-tech start-ups in Germany:
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 , interdisciplinary thinking , and willingness to assume responsibility are in high demand, but these are characteristics that from the U.Sperspective are not among German strengths. With regard to willingness to take risks, for instance, German managers garner only “satisfactory” ratings.
