U.S. Companies in Germany: Optimistic Outlook

For American companies, Germany remains the most attractive business location in Europe. The majority (59 percent) of U.S. companies in Germany responding to a recent study expect the economic effects of the crisis to be mitigated within the next twelve months, according to the joint survey conducted by The Boston Consulting Group( BCG) and the American Chamber of Commerce in Germany (AmCham).

The survey was conducted at the beginning of 2010 among 102 US companies with a total of approximately €  150 billion in revenue and more than 350,000 direct  jobs in Germany. “Besides the high process and product quality, US companies value the high quality of employees in Germany,” said Christian Veith, Head of BCG Germany. “During the
crisis, the German domestic consumption, which is less vulnerable than other international counterparts, also had a positive effect on the propensity to invest.”

Fred B. Irwin, President of AmChamGermany, added: “Our survey shows that US companies plan a long-term commitment in Germany. At the same time, however, they are demanding active industry and location policy.”

For the coming year, the respondents to the survey predict that the development  of domestic consumption and economic development in emerging markets and the BRIC countries will be positive. They expect revenues, employment and investments to pickup again in 2010.

BCG and AmCham see the overall positive rating of Germany as a business location also reflected in the assessment of the effectsofthe crisis relative to other European countries. The majority of respondents (56 percent) estimated the negative impact of the crisis in Germany as less severe than in the rest of Europe. Nevertheless, the survey also shows how significantly the crisis affected US companies in Germany: 44 percent said that their revenues were strongly or drastically impacted  — three times as many companies as last year. 42 percent of the surveyed companies reduced headcount in 2009 (2008: 27 percent).

After M&A transactions were largely deferred in theprevious year (13 percent of respondents agreed), approximately one-fifth of the surveyed US companies are currently planning strategic acquisitions.

Although the surveyed US investors show long-term loyalty to Germany as a business location, there are areas with a clear need for improvement, according to the survey.

In particular, their expectations regarding the deregulation of the labor market in Germany have not yet been fulfilled, said 79 percent of the responding companies.