EU and businesses CMU-Presentation – Hans-Andreas Fein & Associates, Stuttgart/Germany – Page 1...

CMU-Presentation – Hans-Andreas Fein & Associates, Stuttgart/Germany – www.andyfeinmarketing.com Page 1

EU and businesses

Presentation for the Central Michigan University

on February 8, 2006 in Mt. Pleasant/MI

Hans-Andreas Fein & AssociatesBusiness Consultants - Stuttgart/Germany

Doing Business in the European Union


EU and businesses

Market research and competitive analyses

Corporate strategies and strategic planning

Key account and product marketing plans

Market entry, sales/distribution concepts

Search for business/alliance partners

Re-organization and personnel searches

Scout Service for the German/EU market

Hans-Andreas Fein & AssociatesBusiness Consultants Stuttgart/Germany

Marketing Strategies for

Automotive, Factory Equipment, Facility Automation

Founded in 1989

[email protected] andyfeinmarketing.comPhone: 011-49-711-6159073 Fax: 011-49-711-6159176


EU and businesses

Hans-Andreas Fein & AssociatesBusiness Consultants Stuttgart/Germany

Some of Our Customers, e.g.

BEHR, Millennium, Donnelly, Hermann Winker

ABB, Linde, Schindler, ThyssenKrupp Ind.Serv

Shape, GHSP, Cascade Engineering, JSJ

Balluff, Festo, Lenze, Traub, Hoffmann

HMS, Granco Clark, Grand Transformers

Werkö-Milacron, American Saw/Lenox,

and many others

[email protected] www.andyfeinmarketing.comPhone: 011-49-711-6159073 Fax: 011-49-711-6159176


EU and businesses

Global Column in the MiBiz


EU and businesses

Agenda – Doing Business in the European Union

• Europe, EU Countries, and Euroland

• Political Issues around the EU

• Business Issues around the EU

• Major Technical Trends

• The Daily Challenges for Businesses

• The Cost Trap and the Way out

• Cultural Differences Doing Business in Europe

• Benefit of Doing Business in Europe


EU and businesses







• Major Differences Doing Business in Europe

• Benefit of Doing Business in Europe



EU and businesses

Europe as “Patchwork” of Nations

Spain

Portugal

France

UnitedKingdom

Ireland

Italy

Greece

GermanyBelgium

Netherlands

Sweden

Finland

Poland

Austria

Czech Rep.

Slovakia

Hungary

Cyprus

Denmark

Romania

Bulgaria

Luxembourg

Lithuania

Lativa

Estonia

Turkey

Ukraine

Belorus

Russia

Switzerland


EU and businesses

NAFTA EU

NAFTA and EU

3 countries

420 mil people

14,000 bil US$ GNP

25 countries

456 mil people

12,000 bil US$ GNP


EU and businesses

Smaller Distances and Heavy Traffic Problems

London

Madrid

Paris

WarschauBerlin

Stockholm

Vienna

Rom

Frankfurt

Brussels

AmsterdamNew York Dallas

Frankfurt Rom Frankfurt Rom

Boston San Diego

Oslo Madrid

Oslo


EU and businesses

The 15 EU Members before Enlargement in 2004

Spain

Portugal

France

UnitedKingdom

Ireland

Italy

Greece

GermanyBelgium

Netherlands

Sweden

Finland

Poland

Austria

Czech Rep.

Slovakia

Hungary

Cyprus

Denmark

Romania

Bulgaria

Luxembourg

Lithuania

Lativa

Estonia

Turkey

Switzerland

Slovenia


EU and businesses

The 25 EU Member Countries in 2005

London

Madrid

Paris

WarsawBerlin

Stockholm

Vienna

Rom

Frankfurt

Brussels

Amsterdam

Switzerland


EU and businesses

The Member Countries and Candidates in 2005

London

Madrid

Paris

WarschauBerlin

Stockholm

Vienna

Rom

Frankfurt

Brussels

Amsterdam

Switzerland

Candidates

Romania

Bulgaria

Ukraine

Turkey

Croatia


EU and businesses

Spain

Portugal

France

UnitedKingdom

Ireland

Italy

Greece

GermanyBelgium

Netherlands

Sweden

Finland

Poland

AustriaSwitzerland

Czech Rep.

Slovakia

Hungary

Cyprus

Denmark

Romania

Bulgaria

Luxembourg

Lithuania

Lativa

Estonia

Turkey

UROLAND UROLAND


EU and businesses

History of the European Union (1)

• 1945 End of World War II

• 1951 Treaty for the Union for Steel and Coal (Montan-Union)

• 1957 Treaties of Rome - Foundation of the European Economic Community (EEC) and the European Nuclear Community (Euratom)6 countries: France, Belgium, Italy, Germany, Luxembourg, The Netherlands

• 1974 EEC-Extention to 10 countries (UK, DN, IRL (plus Greece in 1981)

• 1991 Maastricht-Treaty – to form the European Union (EU), including a common currency, joint economic policy coordination of foreign policy and defense

• 1993 Beginning of the European common internal market(“Free trade / free transportation of people, goods, capital”)

• 1999 Treaty of Amsterdam is in act, reorganizing competencies within the EU

• 2002 Euro as new currency. EU-summit approves 10 new countries in 2004

• 2003 Treaty of Nizza re-defines the decision process within the EU (majority rules)

• 2004 Major EU extension from 16 to 25 member countries (mainly)

• 2005 EU Constitution Treaty – failes in France and in The NetherlandsTurkey and Croatia get candidate status to start negotiations in fall 2005


EU and businesses







• Major Differences doing Business in Europe

• Benefit of doing business in Europe



EU and businesses

Hot Topics within the EU – Political Level

• „3 % limit“– deficit spending limited to 3 % of GNP max !

• Candidate status for Turkey, negotiations from fall 2007 on

• Cutting subsidies for agriculture, more spending on R & D

• 80 % of all legislature initiatives now coming from EU in Brussels

• EU-directive for the common market for services (“low wage jobbers” from Eastern Europe)

• “Subsidarity” – regional competence versus centralism

• Anti-trust law and state subsidies control

• Public sector must do EU-tenders for major contracts

• Standards, standards, standards …………..


EU and businesses











EU and businesses

Major Issues for Businesses in Europe

• Standards, standards, standards – EU Directives

• Deregulation of telecom, energy, postal, railway etc.

• Production moves to Eastern low wage locations

• Strong competition by China imports (and from India)

• IAS-Accounting standards / Group balance sheets

• Basel II – New rating standards by the banks

• Shareholders versus stakeholders debate


EU and businesses

Impact of EU Standards and Directives

Automotive

• EU-directive for emission reduction (EURONORM 4 (2005) and 5 (2010) for SO²,NO²,NOx, diesel particle filters, lead, etc).

• EU-directive for scrap cars (end-of-life directive)

• RoHS: EU (VDA) standard for hexavalent chromium free coatings etc.

• EU-directive for pedestrian / passenger safety (NCAP)

Equipment

• EU-directive for machines, EMC / low voltage directive (CE mark)

• EU-directive for electronic scrap

Others

• Logistics: road toll for trucks, Euro-pallets, Euro-trays, Euro-containers

• New directives/regulations for utilities, poste, lawyers, pharmacies etc.


EU and businesses

Eastern Europe as Low Cost Location

Spain

Portugal

France

UnitedKingdom

Ireland

Italy

Greece

GermanyBelgium

Netherlands

Sweden

Finland

Poland

Austria

Czech Rep.

Slovakia

Hungary

Cyprus

Denmark

Romania

Bulgaria

Luxembourg

Lithuania

Lativa

Estonia

Turkey

Slovenia

Switzerland

Ukraine

Belorus


EU and businesses

Eastern Europe as Low Cost Location

Spain

Portugal

France

UnitedKingdom

Ireland

Italy

Greece

GermanyBelgium

Netherlands

Sweden

Finland

Poland

Austria

Czech Rep.

Slovakia

Hungary

Cyprus

Denmark

Romania

Bulgaria

Luxembourg

Lithuania

Lativa

Estonia

Turkey

Slovenia

Switzerland

Ukraine

Belorus


EU and businesses

OPEL Gliwice Plant/Poland

Models produced: Astra, Astra II ("Classic")

Production 2003: 76,700 cars

Capacity load: 73,05 % **

Employees: 1,600

Wage: 700 Euro*

Workhours/Week: 40 hours*

Vacancies: 26 days*

* Sample calculation ** Status end of 2003


EU and businesses











EU and businesses

Technical Trends

Reduced fuel consumption (“3-Liter-Auto”)

Trend towards diesel (from 38% to 50%)

Emission control/reduction (eco tax/EURONORM)

Pedestrian safety, passenger safety (NCAP)

RoHS / Hexavalent chromium free coating (VDA)

Alternative energy / energy savings / ”passive house”

Bio disposable hydraulic oil, coolants

Recycling (“all PP”, all steel, Green Dot, electronic scrap)

More and more electronics (“mechatronic”)

38% diesel


EU and businesses

Technical / Commercial Trends

Cost reduction, continuos improvement (KVP)

Tier-system/vendor consolidation

Modules and system integration

Shifting engineering to suppliers

Resident engineering and “supplier parks”

Volume split into multiple engine options

Trend to sub-compact and mini

R&D Expensesof the OEsin Germany

10-20% from externalengineering firms

(in the 90ies)


EU and businesses











EU and businesses

The Daily Challenges for Businesses

• Standards, standards, standards – EU Directives

• 35 hours week / paid vacation (high productivity)

• High labor costs, in particular social security costs

• Corporate taxes, in particular for private companies

• High lease for office space and private housing

• High gasoline prices/airfares ( oil prices and eco-tax )

• Relatively high fees for power, gas, sewage, postage

• Traffic problems, in particular on the German roads

• Costs for security (for IT and for buildings)


EU and businesses

What is it? Cognac? No, gasoline!

Birthday Card in Germany Today


EU and businesses

Traffic is a Major Obstacle


EU and businesses

Trucks all Over


EU and businesses











EU and businesses

Globalization Strategyfrom Viewpoint of a European Manufacturer

build sales subsidiariesin the key markets

grow R & D centerand build start up factory

follow key customersto US or China

shift less complexmanufacturing toEastern Europe


EU and businesses

“Extended Workbenches” in the East

Spain

France

UnitedKingdom

Italy

Germany

Poland

Czech Rep.Slovakia

Hungary

Cyprus

Romania

Bulgaria

Lithuania

Lativa

Estonia

Turkey

Ukraine

Belorus

Russia

China


EU and businesses

Sales Structure of Medium Size Companies („Mittelständler“)

Domestic45 mil. €

U.S.12 mil. €

typical sales structure100 mil. € sales

West Europe28 mil. €

AsiaE. Europe

RoW

growth!45 mil. €

growth?

growth?


EU and businesses

The Concept / Basic Business Model

• HQ is coordinator and becomes IT/engineering center

• Focus on know how and start up factory

• Contract development with universities/institutes

• New manufacturing locations in East Europe

• Outsourcing of non-core processes (logistics etc.)

• Streamlining and standardizing processes globally

• New sales & service subsidiaries in the major markets

• Key account and target industry management


EU and businesses

Employment Relationships in Germany

Fulltime employmentFull labor contract according to metal industry frame contract or free negotiation- 35 to 40 hours week (just metal industry frame contract)- 30 days paid vacation (just metal industry frame contract )- two extra bonuses payments for vacation in June and for Christmas end of November metal industry, frame contract))- 20% social security tax paid by the employer (on top) and 20% social insurance paid by employee (upfront deduction)

Part time labor contracts- According to an industry frame contract or free negotiation- weekly working hours negotiable (typically 20 hrs., 25 hrs., 30 hrs.)- vacation and extra payments corresponding to working hours

Mini-jobs up to 400 € per month- mostly no restriction on the weekly working hours- social security tax paid by the employer (on top)

Contract labor/free-lance work - with restrictions according to the newly revised free-lance act

Personnel leasing - for all kinds of skilled and unskilled workers/employees


EU and businesses











EU and businesses

Business in the EU and in Michigan- What is Different ? (1)

• 20+ languages and high “export” rates

• Excellent railway, subway, street car system (ÖNV)

• Shorter distances but heavy traffic (traffic jams)

• High gas prices (60 € for a tank filling)

• In Germany: no speed limit on the Autobahns

• “Fixed structure” of civil law

• Extensive labor law

• Privacy of personal datas (Data Protection Acts!)

• Different approach of anti-discrimination (age is an issue for recruiting )

• Act against Unfair Competition

• Payment by remittance (bank transfer)

• Soccer Champions League and Formular 1 is “in”


EU and businesses

Soccer World Championship in Germany 2006


EU and businesses

Formular 1 is „in“


EU and businesses

Business in the EU and in Michigan – What is Different ? (2)

• Hierarchy and status symbols (in corporations)

• Voice mail not so widely used (secretaries)

• Line and project organization

• Slow response (no thank you notes)

• Slow decision process

• More decentral decision owner in corporations

• Protocol and rules, more formal dress code

• Long meetings, endless discussions

• Understatement (business owners don’t disclose profit)

• Still more technology / product driven

• Metric, Meter, Kilogramm, Celsius, km/h etc.


EU and businesses

“Juergen, I don’t want to know how the clockworks, I just asked what time it is!”


EU and businesses











EU and businesses

The Benefit of Doing Business in Europe

• Benefit from buying power of 450 million people

• All types of industries and technologies established

• Best platform to access to Eastern Europe / Russia

• Compete/cooperate with tech drivers in many industries

• Get know how on environmental / energy saving tech’s

• Use your management skills (speed/flexibility/Internet)

• Exchange business practices, processes and expertise

• Get friends in the world of globalization on your side


EU and businesses

A powerful locomotive . . . . . . with a slow and deliberate start.

Once moving and committed to a course, . . .

. . . it gathers speed,

. . . and a strength that cannot easily be stopped.

What Can You ExpectWorking with European Partners ?


EU and businesses

Presentation for the Central Michigan University

on February 8, 2006 in Mt. Pleasant/MI

Hans-Andreas Fein & AssociatesBusiness Consultants - Stuttgart/Germany

Doing Business in the European Union

Thank You for Your Attention !

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EU and businesses CMU-Presentation – Hans-Andreas Fein & Associates, Stuttgart/Germany – Page 1...

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