Nexia Ebner Stolz

"America First" – Does it still make sense to invest in the United States?

Numerous midsize companies from Germany are currently doing business in the United States or are planning to set up shop there. But many are skeptical about the current political trends in the "Land of Opportunity." Should they be?

In the autumn of last year the Ger­man Mit­tel­stand still see­med quite calm about future busi­ness rela­ti­ons with the Uni­ted Sta­tes. In the meantime, busi­ness owners can see the situa­tion more cle­arly - and US Pre­si­dent Donald Trump is advo­ca­ting his "Ame­rica First" stra­tegy of eco­no­mic pro­tec­tio­nism, as his recently pre­sen­ted tax plan shows. But not­hing with the cur­rent US govern­ment is set in stone. And the ini­tially harsh tone has become inc­rea­sin­gly mild, as the sub­se­qu­ent modi­fi­ca­ti­ons of the tax plan show.

America First – Does it still make sense to invest in the United States?© Thinkstock

But what practi­cal con­se­qu­en­ces will this have for Ger­man Mit­tel­stand com­pa­nies that already have a sub­si­diary, a branch office or a rep­re­sen­ta­tive office in the Uni­ted Sta­tes or plan to make this kind of invest­ment? Can a Ger­man Mit­tel­stand com­pany live with these ups and downs?

"Ame­rica First" as a dri­ver of invest­ments

The fact is: Apart from the daily Twit­ter mes­sa­ges from the White House a strong will to inc­rease coope­ra­tion is cle­arly noti­ceable on both sides of the Atlantic. Com­pa­nies, asso­cia­ti­ons and orga­niza­ti­ons are stan­ding toge­ther in these politi­cally chal­len­ging times. It is true that we can no lon­ger take for gran­ted the things that were a given in the past few deca­des, such as free trade and free access to resour­ces, capi­tal and labor. But still: right now might actually be a gol­den age for Ger­man Mit­tel­stand com­pa­nies to invest or expand their acti­vi­ties in the Uni­ted Sta­tes. Because when you look at it the other way around, "Ame­rica First" means that invest­ments in the US are more wel­come than ever before. The bound­less wil­ling­ness to coope­rate and inc­rease fri­endly rela­ti­ons bet­ween Ger­many and the Uni­ted Sta­tes is an impres­sion that ran like a thread through the count­less dis­cus­si­ons held by Hen­ning Gün­t­her Wind LL.M., a tax advi­sor, finance gra­duate and part­ner at Ebner Stolz, during his visits to the Uni­ted Sta­tes, inclu­ding at a high-cali­ber "100 Days of Trump" event in New York with mid-sized com­pa­nies and rep­re­sen­ta­ti­ves of asso­cia­ti­ons, cham­bers and busi­ness pro­mo­tion offices.

Ger­man Mit­tel­stand in the Uni­ted Sta­tes – Char­lotte, NC

On the ground in the Uni­ted Sta­tes, the Trump Admi­ni­s­t­ra­tion has not cau­sed Ger­man Mit­tel­stand com­pa­nies to lose their con­fi­dence. This was con­fir­med by the impres­si­ons gathe­red in the Char­lotte, North Caro­lina region, where more than 300 Mit­tel­stand com­pa­nies from the Ger­man-spea­king coun­tries have set up shop. But now it is time for the lit­mus test: Can inter­nal pro­ce­du­res at com­pa­nies be adap­ted to local requi­re­ments so that they ope­rate seam­lessly on both sides of the Atlantic? Is it pos­si­ble to recruit or train a qua­li­fied work­force? The admi­ni­s­t­ra­tive capa­ci­ties at sub­si­dia­ries in the Uni­ted Sta­tes, parti­cu­larly at Mit­tel­stand com­pa­nies are much smal­ler than at the Ger­man head­quar­ters. Syn­er­gies often get "lost in trans­la­tion"—and that can get in the way of growth. It is criti­cal to bring in local exper­tise so that all resour­ces can work towards a com­mon goal. From the con­sul­ting stand­po­int, our part­nership with col­lea­gues in the Nexia net­work has pro­ven inva­luable; spe­ci­fi­cally in Char­lotte we have part­ne­red with Clif­ton­Lar­so­nAl­len (CLA).

"Enginee­red in Ger­many" but "Made in USA"

While Ger­man custo­mers pre­fer goods that are "Made in Ger­many" with practi­cally end­less pos­si­bi­li­ties for custo­miza­tion, what Ame­ri­can CEOs want is to be able to purchase right away—with imme­diate deli­very. They are wil­ling to put up with fewer fea­tu­res or a lower deg­ree of custo­miza­tion of the orde­red goods. What is deci­sive for them is the ser­vice asso­cia­ted with the purchase. This means that a com­p­le­tely dif­fe­rent infra­struc­ture is requi­red in the Uni­ted Sta­tes (logistics, ware­house and a highly res­pon­sive ser­vice depart­ment) than is custo­mary in Ger­many. "Enginee­red in Ger­many" is popu­lar in the Uni­ted Sta­tes, but it still has to be "Made in the USA." There is no way of get­ting around it: Ger­man Mit­tel­stand com­pa­nies must adapt to local customs with local emp­loyees.

And this is where the crux of the mat­ter for an invest­ment lies: even if the invest­ment cli­mate is down­right fri­endly, many Mit­tel­stand com­pa­nies in the US report that it is very dif­fi­cult to find a qua­li­fied work­force there. And it is dif­fi­cult to close this gap in an age of res­tric­tive visas and work per­mits in the Uni­ted Sta­tes by brin­ging in more qua­li­fied expat wor­kers, i.e., from the Ger­man parent com­pany. Accor­din­gly the issue of edu­ca­tion and trai­ning was one of the top items on the agenda during Angela Mer­kel's last trip to the Uni­ted Sta­tes. Eve­r­y­t­hing curr­ently indi­ca­tes that the Ger­man trai­ning sys­tem is to be rol­led out across the board in the Uni­ted Sta­tes in order to pro­duce the work­force that is so urgently nee­ded.

On-Site Sup­port for US Invest­ments

Overall the bot­tom line is clear: the Uni­ted Sta­tes is open for busi­ness. The Ger­man-Ame­ri­can Com­munity is more than wil­ling to assist new­co­mers and com­pa­nies that want to expand their busi­ness there, will wel­come them with open arms and are happy to share their own expe­ri­en­ces with them. Even and espe­cially in times of "Ame­rica First" there are excel­lent oppor­tuni­ties to invest in the US or expand ope­ra­ti­ons there.

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