German Business Outlook - AHK USA€¦ · Business Outlook 2017. 2 ... Midwest 33% West coast 5%...

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Presentation by Caroll H. NeubauerChairman & CEO, B. Braun Medical Inc.Chairman, GACC New York

Prepared by Roland Berger

December 5, 2016

German American Business Outlook 2017

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German American Business Outlook 2017

Introductory remarks

Immediately following the 2016 US presidential election, the German American Chambers of Commerce (GACCs – AHK USA), the Representative of German Industry & Trade (RGIT), and Roland Berger Strategy Consultants, for the seventh time, conducted a survey of German subsidiaries in the U.S.: the German American Business Outlook

1,900 headquarters of German subsidiaries in the U.S. were approached, senior management from various industries responded, mainly from the traditional German Mittelstand (88%)

The purpose of the survey was to gauge respondents' opinions on the current business conditions and future outlook in light of the newly elected administration

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Structure of results presentation

1 Survey respondent analysis

2 U.S. election and German business in the U.S.

3 State of business

4 Future expectations

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Respondents represented a comprehensive spectrum of regions and industries, primarily SMEs in Automotive and Manufacturing

1) Based on employee count; 2) Respondents can be present in more than one industry – results normalized to 100%

By region [%] By company size1) [%] By industry2) [%]

South 49%

Midwest 33%

West coast 5%

Northeast 12% 1-10 23%

>1000 9%

501-1000 2%

151-500 12%

51-150 26%

11-50 27%

6%Professional Services

11%

Industrial Manufacturing 21%

Automotive 24%

9%Other (please specify)

Consumer Goods and Retail

3%

Chemicals, Pharma, and Healthcare

Financial Services 4%

Transportation and Logistics

6%

Construction and Infrastructure

9%

Energy and Natural Resources

7%

Study participant breakdown

1 Survey respondent analysis

Source: German American Business Outlook

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As with most elections, opinion is split on the impact of recent presidential election in the US

1) Only includes responses submitted after election day; 2) Numbers may not sum to 100% due to rounding

"Do you expect that the newly elected U.S. Administration’s economic policies will benefit your U.S. business?"1)



Overall [%] By industry2) [%]

Negativeimpact

Noimpact

Positiveimpact

30%28%

42%

50%

47%

46%

32%

29%

24%

22%

20%

15%

37%

43%

41%

43%

43%

45%

40%

38%

32%

29%

35%

35%

43%

43%13%

14%

33%

Financial Services

Professional Services

10%

Automotive

Energy and Natural Resources

Chemicals, Pharma, and Healthcare

Industrial Manufacturing

Consumer Goods and Retail

Construction and Infrastructure

Transportation and Logistics

Positive impact Negative impactNo impact

100%

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Opinion is also split regarding preferred priorities for the new Administration

Free trade agreements

Ease of visa process & immigration reform

Investment in physical infrastructure

52%

58%

52%

45%

Investment in apprenticeship & training

Incentives for investment

55%

60%Comprehensive tax reform

1) Share of overall votes (multiple responses allowed)

"Which of the following should be prioritized by the new U.S. Congress / Administration?"1)


Example "Other" responses…

Reduce regulation and bureaucracy

Comprehensive lobbying & campaign

finance reform

Ports

Health care reform


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Most companies are more optimistic about their own business growth outlook than about the U.S. economy as a whole

1) Flat is defined as +0-1%, moderate is defined as +1-3%, while strong is defined as +>3%; Numbers may not sum to 100% due to rounding

U.S. growth outlook1) [%]

Own business growth outlook1) [%]

65

90

11

80

9 8

88

4 12

88

0 5

94

1 14

86

1

Strong growthFlat to

moderate growth

Contraction

> Companies have positive outlook for the U.S. economy

> 14% of companies, the largest share in five years, expect strong growth of the U.S. economy in 2017

Insights

20162013 2015201420122011

27

63

9

4651

4

5940

1

4553

2

5344

2

4355

2

Contraction Flat to

moderate growth

Strong growth

∑ 2016: 98%



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Driven by customer demand, the U.S. remains a key strategic focus for many German companies

1) Multiple responses allowed

Strategic focus on U.S. since last year [%]

Top reasons for future investment in the U.S.1) [%]

Increased strategic focus

46%63%

Decreased strategic focus

1%5%

No change

53%32%

> Only 1% of companies are decreasing their focus on the U.S.

> Investment in the U.S. is driven by strong demand for products (87%) and the opportunity to be closer to customers (55%)

∑ 2016: 99%

Favorable

energy costs

5%

Exchange rate

conditions

8%

Relative

market stability

25%

Proximity to

customer base

55%

Customer demand for

your goods/services

87%

15%

70%57%

10%

47%

20162015

20162015


Insights

3 State of business

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Sales volume continues to grow for majority of respondents –Sixth consecutive year of strong growth

Change in sales volumes [%]

72

1214

2

65

1617

1

69

20

9

2

68

22

10

0

72

1513

0

70

1512

2

Worse No change Better/much betterMuch worse

∑ 2016: 85% > 85% of companies report same or better/much better sales volumes, continuing the economic recovery of past years

> The share of companies with negative impact on sales volumes has slightly increased, 2% of companies reported much worse sales decrease

20122011 2014 20152013 2016


Insights

3 State of business

10

Regardless of size, 85% of companies plan to increase their workforce in 2017

0-50 51-500 501+ Insights

> Large companies hired more than expected in 2016, as German American companies capitalize on the strong US economy

> Small companies are the most optimistic ever when it comes to 2017 hiring plans

2%

71%

2017

2%

96%

2%

2016

27%

No change IncreaseReduction

1) Based on employee count

Headcount change by company size [%] 1)

3 State of business


Planned

10%

2017

8%

82%

2016

Actual

2016

2%12%

86%

2017

0%20%

80%

Planned

3%

2017

18%

78%

2016

Actual

59%80%

29%

13%12%

2016 2017

7%

Planned

13%

2017

13%

2016

73%

Actual

? ? ?

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Companies continue to face difficulty attracting skilled labor –Engineering and manufacturing most difficult

1 2 3

Difficult Easy

Engineering

Manufacturing

Sales

IT

"Do you experience difficulty in attracting skilled labor?"

2016

69% Yes

3 State of business


+10%

2011

59% Yes

"Please rate the ease of finding qualified workers in the following fields:"

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Manufacturing expansion continues to be strong, IT & Big Data investment planned by many companies for 2017

Strategic initiatives

Investment in IT & Big Data

35% of companies plan to invest in IT & big data in 2017 – A sign that SMEs understand the importance of big data

35%Planned in 2017

Investment in manufacturing was the strongest initiative in 2016 and expected to continue in 2017

Expansion of manu-facturing capabilities28%

Planned in 2017

Expansion through M&A

M&A activity is planned to increase from 2016; 50% more companies than in 2016 are planning on M&A in 2017

17%Planned in 2017



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Companies expect a positive impact if tariffs are reduced between the U.S. and EU, while Brexit is unlikely to impact investment

U.S. and EU trade relations Brexit impact

U.S. legal risks

Negative impact

No impact

Positive impact

2016

2%

27%

70%

Reduce hiring & investment

No impact

Expand hiring & investment

2016

2%

37%

61%

"What impact would reducing tariffs and harmonizing standards between the U.S. and EU have on your U.S. business?"

"If positive, how would this impact your employment and investment plans in the U.S.?"

Negative impact on US investment

No impact on US investment

Positive impact on US investment

2016

8%

87%

5%

No concern for future investment

Low concern for future investment

Strong concern for future investment

2016

32%

55%

12%



If positive impact

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German American companies continue to grow in a more uncertain business environment

Summary

State of business Sales volume has continued to grow for the majority of companies. Regardless of size, most companies plan to increase their workforce in 2017. Companies continue to face difficulty attracting skilled labor – Engineering and manufacturing most difficult.

U.S. election and German business in the U.S.

As with most elections, opinion is split on the impact of recent presidential election in the U.S. – yet only 1% of companies are decreasing their strategic focus on the U.S. From the new administration, companies expect tax reform, free trade, investment in apprenticeships and infrastructure to support further investment.

Future expectations

Manufacturing expansion continues to be strong, IT & Big Data investment planned by many companies for 2017. Most companies are more optimistic about their own business growth outlook than about the U.S. economy as a whole. Driven by customer demand, the U.S. remains a key strategic focus for many German companies.

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With their 3 main offices in Atlanta, Chicago, and New York and branch offices in Detroit,

Houston, New York, Philadelphia and San Francisco, the GACCs (AHK USA) have

approximately 2,500 member s from all industries. The GACCs offer a broad spectrum of

activities and services for the German-American business community. Fostering bilateral

trade and investment, and the provision of consulting services are among the key tasks.

The GACCs, coordinated and supported by the German Association of Chambers of

Industry and Commerce (DIHK), are an integral part of the network of German Chambers

of Commerce Abroad with 130 offices in 90 countries around the globe.

The Representative of German Industry and Trade (RGIT) is the liaison office of the

Federation of German Industries (BDI) and the Association of German Chambers of

Industry and Commerce (DIHK) in Washington. RGIT represents the interests of the

German business community vis-à-vis Congress, the US administration and the

international organizations based in Washington, D.C. We report regularly on

economically significant developments as well as legislative activities in the US and

provide our partners in the United States with information on German business.

Founded in 1967, Roland Berger is one of the world's leading strategy consultancies.

With 50 offices in 36 countries, the company has 2,400 employees contributing to its

successful operations in all major international markets. The strategy consultancy is an

independent partnership exclusively owned by about 220 Partners.

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German American Chamber of Commerce, Inc. – AHK USA-New York

James Freeman

75 Broad Street, 21st Floor, New York, NY 10004

T +1 (212) 956-1770 | F +1(212) 074-8867

[email protected] I www.gaccny.com

German American Chamber of Commerce of the Midwest, Inc. – AHK USA-Chicago

Franziska Weyer

321 N Clark Street, Suite 1425, Chicago, IL 60654

T +1 (312) 494-2169 | F +1 (312) 644-0738

[email protected] I www.gaccmidwest.org

German American Chamber of Commerce of the Southern United States, Inc. – AHK USA-Atlanta

Stefanie Jehlitschka

1170 Howell Mill Rd, Suite 300 Atlanta, GA 30318

T +1 (404) 586-6803 | F +1 (404) 586-6820

[email protected] I www.gaccsouth.com

Representative of German Industry + Trade

Daniel Andrich

1130 Connecticut Ave, NW, Suite 1200, Washington, DC 20036

T +1 (202) 659-6831 | F (202) 659-4779

[email protected] | www.rgit-usa.com

Roland Berger Strategy Consultants LLC

Marc Winterhoff, Partner

37000 Woodward Avenue, Suite 200, Bloomfield Hills, MI 48304

T +1 (248) 729-5000 | F +1 (248) 649-1794

[email protected] | www.rolandberger.com

mailto:[email protected]

http://www.gaccny.com/








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German Business Outlook - AHK USA€¦ · Business Outlook 2017. 2 ... Midwest 33% West coast 5%...

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