Bad for Business

Neo-Nazi riots threaten international business in Saxony

Germany Chemnitz
Meet the onboarding committee. Sources: AP/Jens Meyer

The rise of nationalist and far-right extremists in Germany’s eastern state of Saxony and violent clashes between these groups and protesters makes it harder to convince specialized workers to move to Saxony, according to one of the region’s largest industrial employers.

On Monday evening, 20 people were injured in protests in Saxony’s third-largest city of Chemnitz that drew neo-Nazis from across the country. And it could get worse: Police in Chemnitz are bracing for more demonstrations, according to a spokeswoman for the department. They expect them to begin Saturday.

International companies are already adjusting. Global chip maker Globalfoundries Inc. has to take more time now to describe to outsiders what life in Saxony is like, according to Jens Drews, director of communications and government relations for Globalfoundries in Europe, the Middle East and Africa.

“It is not easy to explain to an engineer (they should) relocate to Saxony and bring their family,” Mr. Drews said. “We have to spend a little more time explaining that the Dresden area is safe, kids can go to school on their own and that wearing a headscarf will not ostracize you.”

Economists told Handelsblatt that the increasing aggression against migrants is bad for business and the rioting could put a dent in the economy of Chemnitz, which is home to about 3,000 companies. German companies in Saxony are concerned about potential fallout from the violence. “Political violence has a very negative impact on multinational corporate plans and activities,” said Theodore Moran, professor of international economics at Georgetown University. “At a minimum, international companies will hold off on new projects, and consider how they might reduce their exposure.”

Globalfoundries, which is owned by investors affiliated with the government of Abu Dhabi and based in Silicon Valley, employs about 3,200 workers in Dresden from approximately 50 different countries. The company says it is still finding the workers it needs and its output has not been affected so far by the crisis. Orientations for new employees at Globalfoundries in Dresden are full each month, but it is still too early to tell if employees will leave because of the political climate. Globalfoundries is monitoring these issues closely, he said.

These also aren’t new issues for Saxony. Mr. Drews said when the anti-Islam right-wing political movement Patriotic Europeans Against the Islamisation of the West, PEGIDA, began in Dresden in 2014, Globalfoundries had to start holding informal meetings on Friday afternoons for Dresden employees. They wanted to discuss their concerns about what was going on, such as what to do when encountering large crowds on the street. The meetings continued for several months.

Businesses still have many reasons to like Saxony. Rents have not risen dramatically, the schools are strong and the Technische Universität Dresden is among the top universities in Germany.

But now, when foreign executives visit the region, they want to know what the political and social future will look like.

“This is on the minds of everyone in Saxony,” Mr. Drews said. “We are constantly soul searching.”

Georgia Wells is a recipient of the Arthur F. Burns Fellowship, a German-American program for journalists, who writes for the Wall Street Journal.

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