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Global Carolina Profile: Doing Business in Southwest Germany

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Stuttgart, Germany – the capital of the State of Baden-Württemberg – is a global center of the automotive industry, being home to two giants of the luxury car market, Daimler and Porsche. BMW, another German automotive giant, has its headquarters in the Bavarian capital of Munich and, since 1993, its main North American manufacturing facility in South Carolina. Parallels between the Carolinas and the south of Germany – two formerly agricultural regions that have successfully transformed themselves into centers of international business – began being drawn almost immediately following BMW’s announcement to locate its facility in the Upstate. However, a much longer tradition of cooperation between German-speaking countries and the Carolinas predates BMW’s announcement by almost 30 years.

That tradition of trans-Atlantic cooperation and commerce has created worlds of opportunity – and not only for global giants such as BMW but also for small and midsize enterprises (SMEs) looking to do business in either of these “southern states.” Numerous opportunities exist in industries including, but not limited to, healthcare, telecommunications, IT, mobility, renewable energy, environmental technology, and aerospace and aeronautics.

A Bit of History: From Hoechst to Here
“The business relationship between South Carolina and German-speaking countries like Germany, Switzerland, and Austria really started with the chemical companies, such as Hoechst, in 1966,” explained Global Consulting and Affiliates CEO Russ Froneberger at a recent meeting of the Midlands International Trade Association (MITA) in Columbia, SC. “Then came the Swiss and German companies in textile machinery; and then in the 1990s there were headquarters of companies locating here, such as Michelin and, of course, BMW,” Froneberger continued.

The MITA event, titled “Doing Business in Southwest Germany” and sponsored by Global Consulting and Affiliates, featured guest speaker James M. Goss, North America representative for Baden-Württemberg International (BW-I). BW-I is the leading economic development organization in southwest Germany, and its shareholders comprise local government agencies, state-owned banks, and associated chambers of commerce and industry. The central message of Goss’s presentation was that BW-I is constantly on the lookout for new, pioneering companies seeking to expand their reach to Europe. And they are looking right here in the Carolinas.

“One thing that I hear over and over again from government and business leaders in Baden-Württemberg is that they are looking for innovative companies to set up there to do business. Innovation is a key driver of our activities at BW-I.” And innovation is in no short demand in the Carolinas. With the close cooperation that is taking place between universities and technical colleges, businesses, and economic development agencies, major opportunities exist for local companies to do business in Baden-Württemberg. Moreover, many of the growth industries in southwest Germany are the same as those in the Carolinas.

Worlds of Opportunity . . . Across the Atlantic
While the south of Germany and the upstate of South Carolina are known throughout the world as hubs of the automotive industry, there is much more to the story than just automobiles. In the broader mobility sector, Clemson University’s International Center for Automotive Research (CU-ICAR) is at the forefront of innovation, featuring the nation’s only doctoral program in automotive engineering. CU-ICAR’s activities have had a ripple effect, recently helping to bring electronic vehicle (EV) companies such as Proterra and Korea-based CT&T to the region. Similar activities are taking place in Baden-Württemberg. At the Cooperative State University in the city of Mannheim, engineering students recently partnered with global players such as BASF, Continental, and ABB to develop an EV that was ultimately presented at the Geneva Motor Show. And with its recent “BWe mobil” study, which was completed by the renowned Fraunhofer Institute, the State of Baden Württemberg plans to invest some €15 million in EV project-related activities in the next two years.

In addition to being a world leader in the automotive industry, southern Germany has long been a leader in renewable energy technology. Baden-Württemberg recently kicked off its “State Initiative on Environmental Technology and Resource Efficiency” in an effort to expand the region’s leadership position. Stuttgart’s Centre for Applied Research at Universities of Applied Sciences is a network for the research of the energy consumption of buildings and the efficiencies market. Founded in 2002, it is one of three centers of excellence in the region of Baden-Württemberg and allows local universities of applied science to pool their expertise in the area of R & D. Similarly, the renewable energy sector in the Carolinas is thriving through initiatives such as the Clemson University Restoration Institute’s wind turbine testing facility in North Charleston – which helped put South Carolina on the wind-energy world map almost overnight. And with companies such as GE Energy in Greenville, SC, which produces 50 percent of the world’s gas turbines, as well as Charlotte, NC-based Siemens Energy and its work in the wind turbine industry, the potential is there for cooperation between the Carolinas and southwestern Germany on many different levels. 
In the aerospace and aeronautics sectors, the recent announcement that global giant Boeing would be building its 787 Dreamliners in the Charleston area was clearly the biggest economic success story for South Carolina since BMW. Again, however, the tradition is much longer, with the aeronautics and aerospace sectors having been well-represented here for years – from Lockheed Martin to GE Aviation to global aerospace giant Goodrich. Aeronautics and aerospace technology in Baden-Württemberg has a similarly long tradition, with both the first Zeppelin and the first aircraft to be made out of fiber-reinforced materials having been made there. Baden-Württemberg remains an international center for R & D, as well as being an important location for suppliers in this high-tech sector. Over 60 aerospace companies operate in Baden-Württemberg, taking advantage of cooperation with local research institutes and universities.

Cross-Cultural Challenges, Cross-Border Solutions
While innovation and innovative companies remain highly-prized, without proper funding, many of these companies cannot get off the ground, much less thrive. It is certainly no secret that both the United States and Europe are facing difficult economic conditions. As a result, U.S. venture capital firms who have traditionally funded innovative startup companies are now primarily looking to invest in established businesses that have more tried-and-tested, market-ready technology. In addition to the obvious economic problems, further challenges exist across all industries to making sure that good, innovative products find their way not only into the local but, in the current global economy, the international marketplace. Despite these challenges, BW-I is still on the hunt for innovative technologies wherever it might find them – at established companies as well as at recent startups.

Through working hand in hand with firms such as Global Consulting and Affiliates, BW-I can help companies address and understand many of the global challenges around funding, compliance, and taxation. “BW-I gives end-to-end investor support to companies interested in locating in the region, as well as expert advice on market information, strategy, and development,” explains Goss. “We can also identify local potential investors, multipliers, and partners – just to name a few of our services.” Meanwhile, here at home in the Carolinas, through initiatives by SCRA in South Carolina and NC IDEA in North Carolina, innovative companies have access to everything from solid sources of startup capital to R & D facilities that can help them get started toward getting their products into the global marketplace. And in many ways southwestern Germany is the perfect place to start. The region’s strategic geographic position affords more benefits to those who do business there. “Baden-Württemberg serves as a central gateway to Europe,” Goss explained.

Strengthening US-EU Ties – A Bridge to the Future
It is widely believed that if the United States and the EU countries are to retain their leadership roles in the face of emerging economies such as China, India, and Brazil, closer cooperation will be necessary. And that cooperation, according to Goss and Froneberger, is best conducted not at the national, but more importantly, at the regional level. “I have made over 100 trips to Europe,” Froneberger stated, “and in that time I have seen that the best approach to ensuring mutual economic development is the region-to-region one. So I think we need to find the progressive states on both sides of the Atlantic and get them to work together.”
With the long history of international business between the south of Germany and the Carolinas, as well as with current common interests and local and regional initiatives, the future of cooperation between our two regions seems very bright indeed. “Hundreds of years of cooperation and trade between the United States and Europe have benefitted both areas greatly,” Goss concluded. “And increased cooperation among German and U.S. businesses, specifically on a regional level between southwest Germany and the Carolinas, can bring more such benefits for both the short and the long term. It is truly a win-win situation.”

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