Nearly 70 percent of German subsidiaries in the U.S. expect to create new jobs in 2011, according to an annual survey by the German Chambers of Commerce in the U.S.
If sentiments expressed in the German Business Outlook 2010 prove true, German hiring would add an important ingredient to economic recovery in the Southeast, a region with high jobless rates and a growing contingent of German companies.
In Georgia alone, 309 German affiliates employ 23,507 workers in 577 facilities, 162 of which are factories, according to the Georgia Department of Economic Development. Even a modest increase in their hiring could put a dent in the 9.9 percent unemployment rate. At the start of the recession two years ago, the state’s jobless rate was 4.6 percent.
For Rödl & Partner, a Nuremberg, Germany-based accounting firm that provides services for nearly 650 German subsidiaries through six offices in the U.S., the Nov. 30 survey validated its impressions of current trends.
“That really reaffirms our own experiences with our client base just seeing how well they’re doing,” said S.A. de Kock, managing partner of the firm’s Atlanta office, which employs about 85 people.
Many German companies in the U.S. are making parts for automotive or other manufacturing industries or supplying factory machinery or components. The export-oriented German economy is “firing on all cylinders” globally. Even as German companies make inroads in Asia and the Middle East, their interest in the U.S. hasn’t waned, Mr. de Kock said.
“Our impression is both in visiting with the parent companies and observing the local subsidiaries is that they are extraordinarily healthy in terms of their backlog at the moment and that the only concern that they have is material supply,” he said.
Fifty-four percent of firms surveyed believe that difficulty accessing raw materials globally will negatively affect their operations in the U.S. in 2011. That issue replaced currency fluctuation as the top concern among companies. Though more than 73 percent said in 2009 that they’d see negative effects due to currency, only a third of respondents said their fears were realized this year.
Global commodity prices fell during the recession, but German companies are worried that as the economy picks up steam, a surge in demand for raw materials – especially in China and other fast-growing Asian markets – will put upward pressure on prices, said Florian Stamm, a partner in the international practice at Atlanta law firm Smith, Gambrell & Russell LLP.
In addition to expanding existing factories, Mr. Stamm predicts that German firms will invest more in the U.S. in 2011. They are attracted to the Southeast for its non-unionized workforce and strong logistics infrastructure, he said.
“We’re seeing that we have a very full pipeline,” particularly in the automotive, renewable energy and chemical industries, he said, adding that Smith Gambrell is working on eight different German projects that will create at least 200 jobs each.
According to the survey, which had 1,900 respondents, German businesses had invested $218 billion in the U.S. through 2009. They employ 188,000 manufacturing workers and sustain more than 650,000 U.S. jobs.