Digital Future

U.S. Firms Believe in German Industry

Digital industry made in Germany. Source: DPA
Digital industry made in Germany.
  • Why it matters

    Why it matters

    Many German politicians and business leaders are concerned American Internet giants have taken too big a lead in the digital age.

  • Facts

    Facts

    • The American Chamber of Commerce in Germany asked 43 U.S. companies about their German rivals.
    • American business executives hold German industry in high regard.
    • But only a small minority consider Germany ready for the upheaval of digital manufacturing.
  • Audio

    Audio

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Can Germany’s industry remain competitive in the 21st century? That question has consumed the country’s politicians and business community for months. Many are concerned American Internet giants have taken too big a lead in the digital age.

But those fears might be partially assuaged by a new poll showing an overwhelming majority of U.S. firms operating in Germany believe the nation’s industry will be capable of defending its edge in the coming decades. In a survey conducted by the American Chamber of Commerce in Germany (AmCham), close to three-quarters of the companies think German businesses have a rosy future.

However, that positive sentiment is based more on a fundamental regard for German companies than on what has been achieved so far – only a small minority of the U.S. firms consider Germany ready for the upheaval of the digitization of manufacturing.

That alone is no cause for concern, said Cavin Pietzsch, chief marketing officer for General Electric’s energy division in Germany. “The Germans are often cautious when approaching new things, but at the same time that is a strength because they carefully set up their business model,” he said.

Many small- and mid-sized German companies have been struggling to react to new things like cloud computing or big data.

Ulrich Grillo, president of the BDI Federation of German Industries, also struck a confident note. “The United States may have the one or the other company that has taken the lead on the Internet, but Germany is strong in digital control of industrial production,” he said.

However, many small- and mid-sized German companies have been struggling to react to new things like cloud computing or big data. In a study recently published by the BDI, only about a quarter of the machinery makers questioned attested to a high degree of digital preparedness.

The German government also needs to invest in getting them up to speed, said Mr. Pietzsch. The 43 U.S. companies survey by the AmCham also said there needed to be more political support for expanding broadband Internet access and in ensuring the digital capabilities of the German workforce. In addition, they call for Europe-wide standard data protection regulations.

German Chancellor Angela Merkel’s coalition has made those issues part of its digital agenda, which calls for fast Internet availability across the country by 2018. However, whether that will happen is questionable.

Last Thursday, the coalition introduced a “pact for digital education” into the lower house of parliament, the Bundestag. It is meant to help improve the digital skills of German school children, who only have mediocre computer capabilities when compared internationally.

Overall, the U.S. companies continue to be highly satisfied with Germany as a place to do business. However, rising labor and energy costs are dampening the mood. A third of the companies expect a worsening of overall conditions, and only one in ten an improvement. Germany “needs an active industrial and business policy,” urged Bernhard Mattes, president of AmCham and Ford Germany.

 

Till Hoppe is a Handelsblatt editor focusing on foreign affairs. To contact the author: hoppe@handelsblatt.com

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