NEWSLETTER

May 2008

German American Chamber of Commerce, Inc.

The New Global Strategy

Natural hedging seems to be the key as more and more German companies feel pain of a strong euro

For German companies like BMW the euro's strength can spell trouble. Since most of its production is in Europe and much of its revenue is in dollars, BMW bears a large currency-risk burden and tries to balance that burden. "BMW is crafting its own solution," said Mathias Schmidt, a company spokesman. Part of the solution lies in South Carolina where BMW has made cars for the American market since 1994. BMW will spend $750 million to expand this production facility as part of a global strategy known as natural hedging that aims to ensure that costs and revenue are denominated in the same currency, in this case dollars.

Natural Hedging seems to be the key for many German firms of late. For the first time since 2003, manufacturers want to expand their plants abroad, according to a recent survey by the Association of German Chambers of Commerce and Industry (DIHK). By opening a production facility in the U.S. market they can match their expected sales revenue to their cost structure. The highest increase can be seen in North America: In 2006, only every tenth German company, that invested in North America, said costs were the major reason for investments. This figure rose significantly in 2007 when nearly every fourth company claimed to take advantage of the weak dollar by opening new or expanding existing facilities, stated the DIHK.

The latest results of the DIHK report go hand in hand with a survey conducted by the German American Chambers of Commerce in February 2008. Despite facing a slowdown due to the currency crisis, 19% of the participating German subsidiaries in the U.S. said they would invest more into local facilities.
 

>>> Sources: International Herald Tribune, DIHK Report "Investitionen im Ausland", GAT Magazine
>>> Read the GACCNY's related statement in the German newspaper Rheinischer Merkur

+++++ Company to bring North American HQ to Indiana +++++ Selzer plans Alabama factory for $22 million +++++ Germany falls behind U.S. as biggest market for wind generators +++++ Carl Zeiss SMT opens new North American headquarter +++++ Germany's BaFin to work with U.S. on bond insurers +++++ $10 million in tax-free loans to German company +++++ Cephalon gets European OK to sell pain drug +++++ Siemens Energy won two big U.S. orders +++++ German supplier opens tech center in Auburn Hills +++++ 150 years of winemaking history returns to the U.S. +++++ European airlines profit from weak dollar +++++ Bayer USA Foundation awards $135,000 grant +++++ Siemens completes acquisition of Morgan Construction +++++

>>> Read more news in the Ticker Archive

The use of Emotional Intelligence skills in the simple act of communication in a multinational corporation is essential. Not to generalize too much, but Germans are very direct and explicit in their communication at the workplace. Americans on the other hand are generally less direct and more emotional, while trying to be collegiate. These differences can pose a few challenges in a multicultural environment. A skill that plays a big factor here is the use of emotional intelligence, which can make communication much more effective and can lead to a better office environment and even company performance. That way, emotional intelligence can be the basis for sound leadership.

>>> Read the full article on page 20 in the May issue of the German American Trade magazine.

The response exceeded all expectations: 71 of the 117 German Schools abroad took part in the contest “Pupils Building Worldwide Bridges” organized by the Association of German Chambers of Commerce and Industry (DIHK). Among the participants were the German Schools in Portland, Boston, Silicon Valley, and Washington D.C. They were supposed to come up with innovative school projects which would establish ties to the host country and would promote the German language and culture. Now the most difficult part remains for DIHK's committee: By the end of June it has to decide on the best of the best. The top three schools will share a prize of 80,000 Euro. 

At the GACC NY's 4th German American Renewable Energy Conference Biomass: Power, Heat and Fuels 10 companies will have the opportunity to give a short power point presentation about their product and future potential to the entire conference audience. Additionally, the presenting companies can set-up their own conference networking booth. The conference will host decision-makers, executives, researchers and government officials who are leaders in the biomass and bioenergy field. The overall aim of the event will be to initiate a transatlantic dialogue on current issues, and to promote business relations in the biomass field. The conference program will consist of a selection of presentations by German executives and researchers as well as company presentations.

The conference will be held on June 24 in Syracuse, NY. It is organized by the GACC NY, sponsored by the German Federal Ministry of Economics and Technology and supported by the German Energy Agency. Currently the GACC NY is coordinating the event program. If you are interested in one of the 10 open presentation spots, please send your proposal to renewable energies specialist Sebastian Göres, Manager Consulting Services at the GACC NY. Also contact him when seeking further information about the conference and registration.

The Technical University Berlin will offer a two-year Masters degree in Global Production Engineering for Solar Technology (GPE Solar) beginning in October 2008. The course will equip engineers with a comprehensive qualification in solar-thermal and photovoltaic technologies. This Masters, produced as a collaborative project by the Technical University and Renewables Academy AG, will include not only cover engineering and production-specific material but also training in non-technical fields such as management, finance, marketing, business development and inter-cultural communication. For further information contact Oliver Zink at info(at)gpe.tu-berlin.de.

Within the German American Partnership Program of the Goethe-Institute New York and the Standing Conference of the Ministers of Education and Cultural Affairs in Germany, 16 students from Bremen had the opportunity to participate in an exchange program with the Brighton High School in Rochester, NY. The program lasted two weeks and ended with a trip to New York City where the German students also visited the GACCNY. There, BIG Bremen, which represents business and economic development for Bremen, sponsored pizza, soft drinks and snacks while René van den Hoevel, U.S. Representative of BIG Bremen, explained the setup of German Chambers abroad as well as his work for the Federal state of Bremen.

If a seismograph were installed in Leipzig, it would probably swing to its limits for four days non-stop in from August 21-24. This is when the GC-Games Convention shakes the foundations of the Leipziger Messe exhibition halls. Spread over four halls, the industry shows the public the games and products it now offers or is planning to bring onto the market soon after, and usually does so with enormous presentational effort, big shows, loads of celebrities and all sorts of gimmicks to entertain its visitors. For further information about the GC-Games Convention please contact Martin Kaiser, the U.S. representative of Leipzig Trade Shows at the GACC NY.

Editor & Advertising Coordinator Nicola Michels
Tel.: 212.956-1770 • Fax: 212.974-8867 • nmichels@gaccny.com

German American Chamber of Commerce. Inc. • Telephone: 212.974-8830 • www.gaccny.com

The German American Chamber of Commerce New York (GACCNY) gives no warranty nor accepts responsibility for the accuracy or the completeness to the information contained in this newsletter. The GACCNY cannot and does not make any representations or warranties with respect to any information, product or service available through any third party site. EIN: 13-1893850

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