October 2002 - Nr. 10
German Companies Optimistic About Business Prospects
in U.S.
TWIG - One year after terrorist attacks shook the world, including the world of finance, German companies that do business in the U.S. are surprisingly optimistic about the business outlook there, according to a recent article in the Handelsblatt business daily. A recent survey of 150 executives of leading German companies in the U.S. showed that four of five managers expect the U.S. economy to recover in the coming year. The majority of survey respondents said they expect their sales to increase 5% and their profits to climb 3% in 2003.
Only one in four said they believed the terrorist attacks have strongly affected the U.S. economy. Forty-nine percent see business as having been only moderately touched. Werner Walbröl, president of the German American Chamber of Commerce (GACC) in New York, which commissioned the management consultancy Droege to conduct the survey, says, "More than 90% of German branches have undertaken cost-cutting measures and have put investment plans on hold. But in contrast to many U.S. companies, the fundamental business structures of [German branches] remain intact." German companies in the U.S. are therefore excellently prepared for the coming upturn, he thinks. German companies in the U.S. have done well despite the stagnant economy, not only in the pharmaceutical and automotive sectors, where they are traditionally among the strongest, but also in the chemicals, medical technology and steel sectors.
Still, current slow economic growth in the U.S. hasn’t left German subsidiaries unaffected. Some 60% have trimmed their budgets and adapted their investment volumes to lower demand. Yet more than 90% of them are urging their parent companies, back at headquarters in Germany, to "invest now in the U.S." Three of four German subsidiaries want to remain on their expansion courses and take advantage of the present favorable market situation by making acquisitions. In the wake of the stock market collapse, many U.S. companies are seen as undervalued and therefore attractive take-over candidates. More than 40% of German subsidiaries in the U.S. have devoted more resources to marketing efforts to combat the economic lull. Some three in four companies say all of the above measures have yielded desired results.
