US&FCS Stuttgart: U.S. exporters' passport to Baden-Wuerttemberg, a valued customer of American products and technology - Foreign Commercial Service

Business America, July 26, 1993 by Camille E. Sailer

Stuttgart is in the western German state of Baden-Wuerttemberg, the heart of one of the most important commercial areas in Europe. Baden-Wuerttemberg's economy, alone, is larger than its country neighbors, Switzerland and Austria, and last year, local companies imported more than $4 billion of American products, more than the amount U.S. manufacturers sell in 45 individual countries. In terms of direct investment, the United States and Baden-Wuerttemberg are each other's best investment partners.

The state is famous not only for its beautiful Schwabian country scenery and noted tourist attractions such as the Black Forest and the spa resort of Baden-Baden. More importantly, Baden-Wuerttemberg's official emphasis and corresponding financial support for its "Mittelstand" (small- and medium-sized companies), its research and development facilities, and its "dual-system" vocational institutions for apprenticeship/education, have made it one of Germany's richest states in just a few decades.

For the most part, the "Mittelstand" companies of Baden-Wuerttemberg engage in high-precision industries and fine hand and crafts work. These companies form the bedrock of Baden-Wuerttemberg's, and some would say Germany's, economy. Over 50 percent of all Baden-Wuerttemberg enterprises employ less than 50 people, and 95 percent employ less than 500, but they account for 50 percent of the state's gross domestic product. These smaller companies, suppliers to their more well-known business brethren such as ABB, Hewlett-Packard, IBM, John Deere, and Daimler-Benz, all also headquartered in the state, are good past and future customers of U.S. products, technology, and services.

Unlike the regions around Munich and Frankfurt with their almost 70 percent employment related to the service sector, Baden-Wuerttemberg has maintained a 50/50 balance between manufacturing and the service industry (although one job in five in the state is related to the auto industry). To reduce this dependence, the state contributes heavily to Baden-Wuerttemberg's apprenticeship and research and development tradition, making it a European leader in both these areas.

Baden-Wuerttemberg's "dual-system" vocational academies have developed into an attractive alternative to university study. Increasingly, they are the target of foreign study tours, especially from the United States, which want to document and perhaps duplicate the success of these academies in their home countries. Baden-Wuerttemberg's state government created this new type of educational institution in close cooperation with local industry. The key advantage to the program is that the students are paid employees of companies during their studies and thus combine theory and practice at the same time.

Baden-Wuerttemberg also has become a leader in research and development, with over 90 scientists for every 10,000 inhabitants in the state, and with 3.6 percent of its total gross national product spent for research and development--ratios higher than in any other European location. The Max Planck Institute, the Fraunhofer Society, and the Steinbeis Foundation are some of the more than 150 scientific institutes engaged in active research, much of which is conducted to serve practical applications. To turn products of scientific research even more quickly to practical use, Baden-Wuerttemberg has established a "Science City" in Ulm, birthplace of Albert Einstein.

The U.S. and Foreign Commercial Service in Stuttgart has Germany-wide business counseling and market research responsibilities for, among others, the machine tool, environmental control, automotive, and food processing industries. Sub-sector industries within these categories may offer export potential for U.S. companies, especially as German firms actively seek ways to reduce their costs--without sacrificing quality--by shifting purchasing away from uncompetitively priced German products. US&FCS Stuttgart also conducts tailored seminars and other programs geared to bringing together U.S. exporters and qualified German buyers in areas of best export possibility.