Merkel warns of "difficult" 2013 for Germany and the EU

German Chancellor Angela Merkel warns of "difficult" 2013 for Germany and eurozone.

In the UK we are facing up to a make or break year as anti-EU party UKIP is doing well at the polls. Will we end up as part of a second tier Europe?

Click here to read the article: http://www.france24.com/en/node/5380790

Germany Business News

Here is a summary of the main business headlines from Germany:

ALLIANZ FINED $12.3 MILLION IN CORRUPTION FEES

US securities regulators charged German insurer Allianz SE on Monday with bribing Indonesian government officials, and fined the company $12.3 million for violating overseas corruption laws

POLICE GAIN POWER TO CLOSE MOBILE PHONE NETWORKS

The German state of Saxony-Anhalt said on Tuesday that it had re-drafted a law in order to let police shut down mobile phone networks in times of imminent danger without court approval. Critics voiced have concern about misuse.

BUNDESBANK WARN GERMAN ECONOMY GOING TO SHRINK

The German economy, Europe's biggest, is set to contract "noticeably" in the fourth quarter of this year and will probably tread water early next year, the Bundesbank forecast on Monday

GOVERNMENT ADVISORS CLAIM GERMANY ARE MISSING TARGETS

The four specialists supervising Germany's planned transition to renewable energy have said the government will fail to meet crucial targets for energy efficiency if the pace of improvements is not accelerated.

Source:

http://www.thelocal.de/

Walmart's failure in Germany... was it cultural?

Tesco have recently announced they are going to leave the American food and grocery market to the Americans, after selling Fresh and Easy. Tesco have been taking flak for this, but they are not alone in terms of cutting their losses.

Sam Walton founded Walmart in 1962. The rapid growth of the small Arkansas store eventually reached every state in the USA and indeed has travelled across borders. The Walmart principles of keeping costs and prices cheap to entice customers has seen them become the world’s largest retailer. However not every country and culture has greeted Walmart with open arms. The example of their glorious failure in Germany is one to think about.

Walmart bought Wertkauf in 1997 and Interspar in 1998, existing German grocers. They didn’t do exactly badly. Sales of $2 billion kept an 11,000 strong staff going in 85 stores. Remarkably, their market share was only around 1.1%! Less than a decade later, Walmart’s Teutonic adventure was over, as in 2006 they sold the entire German Walmart operation to rivals Metro.

Many reasons have been put forward as to why Walmart failed.

The main reasons do seem to be cultural.

German staff are more reserved than Americans and certainly more unionised. Stories of German employees hiding in toilets to avoid the embarrassing team practices seem to be true. A team chant or song that was often used early in the mornings was also axed as staff just didn’t get it.

Customers in Germany had also become used to self-service checkouts, without need of staff help. This again was alien to Walmart. The employment of the extra staff Walmart like to use to create their atmosphere and in store culture resulted in Walmart’s labour costs sitting around the average for the industry.

In addition, the ‘Walmart welcome’ – smiling employees or ‘greeters’ as customers enter the stores had to be stopped, as the Germans – often an unfounded focus of fun for British comedians for claiming the Germans lack a sense of humour, in particular the men interpreted this as a form of flirting!

The unions did not approve of many of Walmart’s dealings with employees and their overall industrial relations. Even when they moved their HQ lock, stock and barrel they expected the staff to move with them. To their surprise, the majority of employees (including many executives) preferred to quit rather than up sticks. This seems alien to American ideals and indeed again something becoming more prevalent in the UK.

Walmart’s pricing tactics came under fire from regulators also. Walmart were accused of destroyer pricing – setting prices artificially low to destroy competitors – in order to put small local grocers out of business. Walmart were ordered to raise prices. Ironically, Walmart, who so often aim for the low cost, value market, had nowhere to go as Germany has strong discount stores such as Aldi and Lidl.

The tagline of “Everyday low prices” simply didn’t ring true in Germany.

German legislation also stood in the way of standard Walmart practices. Walmart often open 24 hour stores… 7 days a week. Germany has restrictive shopping practices which denied Walmart this often used advantage.

Even the locations of the stores they inherited from Wertkauf and Interspar were in rather less family friendly areas, which put off many target customers. The Interspar stores were generally viewed to be run down and also in need of a total refit. It took Walmart a considerable amount of time to upgrade these stores, and by then the writing was already on the wall.

Also Walmart’s practice of parachuting in American executives to lead the transition did not go down well either. Germans preferred German managers with local market knowledge.

So it seems that the generic ideals of globalisation may not work in every culture, without significant adaptation. Is Walmart’s ‘Rural America’ model inflexible enough not to grow and adapt to different peoples?

Perhaps Tesco have learned from their rivals and cut their losses as they focus on a culture and market with greater long term potential profits and a culture that perhaps is more suited for a very British type of supermarket: India.

Business News - Focus on Germany

US AIRLINES STRUGGLE IN WAKE OF SANDY

US Airways said late Monday in a filing that Sandy reduced fourth quarter earnings by $35 million, including $15 million in October and $20 million in November. The carrier said bookings fell 13% in the days leading up to and following Hurricane Sandy, from October 24 through November 3. Close-in bookings, made zero to 13 days prior to departure, which generally involve higher ticket prices, fell by 21%. November passenger revenue per available seat mile fell by 2% and, as a result, will be flat compared with a year earlier, US Airways said.

BOLTON FIRM BOUGHT OUT BY GERMANS

Edbro, a Bolton business which develops hydraulic cylinders and systems for commercial vehicles, has been acquired by a German firm.

JOST has bought Edbro for an undisclosed sum from French business Caravelle.

David Nesbitt, managing director of Edbro, which was founded in 1916 and employs 200 staff, said the business would benefit by becoming part of a global company.

“We will be able to grow our sales faster and access new markets through JOST's global sales and distribution network,” he said.

JOST supplies a range of components for vehicles and has sales and production facilities in 18 countries.

SIEMENS TRAINS LATE AGAIN

German industrial conglomerate Siemens AG (SI) said Wednesday it is unable to deliver on time an order of high-speed trains to Germany's train operator Deutsche Bahn in early December.

Originally, the 16 intercity-express trains (ICE), which have already been paid for, should have been delivered at the end of 2011, but due to technical problems Siemens couldn't keep the delivery date.

The most recent delay is due to problems with the train control systems that have occurred during testing in the last weeks, the company said.

The delays have already had a financial impact on Siemens, which booked nearly 70 million euros ($89.8 million) in charges in the first quarter of the 2011/2012 financial year due to delays caused by a slow supplier.

VOLKSWAGEN TARGET CHINA IN ORDER TO BECOME WORLD’S No. 1

As Volkswagen AG plots a course toward its goal of becoming the world’s biggest automaker by 2018, it’s increasingly clear that the path to global dominance runs through places like Lanzhou, in western China.

The capital of landlocked Gansu province, which borders the Gobi Desert, is home to a total of 11 dealerships for VW and its sister brands, Audi and Skoda. With a population of 3.6 million, and GDP per capita of about $4,100, Lanzhou is the type of smaller city away from China’s prosperous east coast that VW is targeting in its next phase of expansion.

“Volkswagen’s early entry into China meant that our outlets focused on bigger, developed cities,” said Soh Weiming, the carmaker’s China Executive Vice President. “Now, we have to expand beyond them.”

Less-developed Chinese cities are VW’s “bread and butter,” Soh said in an interview at the Guangzhou Autoshow on Nov. 21.

Sources: Fox Business News, Forbes, BusinessWeek

Global Car Production Threatened by a break in the Supply Chain

When a fire in the small town of Marl in the west of Germany closed down an obscure chemical plant on 31 March, it barely made headlines.

Two people died and that was a personal tragedy for their families and friends, but the shock waves did not resonate far beyond.

Except, it turns out, to the other side of the Atlantic - in Detroit, Michigan.

So tight is the global car industry's supply chain that one break in a small link threatens the lot.

About three weeks after the fire, executives from the world's biggest auto-makers and their suppliers have met with furrowed brows to take stock of the implications of the fire.

And they are serious.

It turns out that the braking and the fuel systems of cars depend on a resin called PA-12.

And PA-12 is made out of an inelegantly named chemical: cyclododecatriene, or CDT.
Evonik Industries' plant in Germany was responsible for a good chunk of the world's supply - one estimate put it between a quarter and a half.


From BBC Business News. Read the article in full here: http://www.bbc.co.uk/news/business-17769466

International Business News: Germany

GERMAN INDUSTRY BIGGEST POLLUTER IN THE EU

German industry causes more environmental and health damage than any other country in the European Union, amounting to billions of euros each year, according to a new EU report.

The study by the European Environment Agency (EEA) released Thursday ranked Germany ahead of other serious polluters like Britain, France or any eastern European countries.

But if the polluters were ranked based on economy size, eastern countries such as Bulgaria and Romania would be on top, according to the environmental watchdog.

The agency, which used 2009 numbers in factors including CO2 emissions, said that pollution from facilities like steelworks and power plants caused between €102 billion and €169 billion in health and environmental costs across the European Union.

AIR BERLIN NEEDING INVESTORS

Air Berlin Chief Hartmut Mehdorn has already held talks with Etihad Airways, based in the United Arab Emirates, and Chinese holding company HNA, the main shareholder of Hong Kong Airlines, the Sueddeutsche Zeitung daily said.

One option is the "selling of a large amount of Air Berlin shares," the daily said, without citing its sources.

Air Berlin's founder, Joachim Hunold, had always ruled out the option of seeking foreign investors but new boss Mehdorn appears to be pursuing a different strategy.

Company shares were down 2.64 percent at €2.58 in early trading in Frankfurt on the news.

The airline, which relies heavily on transporting German tourists, ran into heavy turbulence in 2008 after years of soaring growth and expansion.

The firm has suffered more than its competitors from external factors, such as the political turmoil in North Africa since the beginning of the year.

It has also been hit hard by rising fuel costs, the introduction of an aviation tax in Germany and uncertainties over the economy.

TOYOTA AND BMW IN 'GREEN' DEAL TALKS

Japanese car giant Toyota is in talks with BMW over a green alliance. Under the deal, the German automaker would provide diesel engines for Toyota vehicles, while Toyota would share its hybrid technology. It would mark Toyota's second green-technology tie-up with a major foreign automaker, following its agreement in August to develop hybrid-vehicle systems with Ford of the United States.

A Toyota spokesman said the report was based on "speculation" and refused to comment further.

Under the proposed arrangement, BMW would provide diesel engines for Toyota's passenger vehicles, most likely medium-sized cars of around 2,000cc to be sold in Europe, Nikkei said.

BMW, which inked a deal with France's PSA Peugeot Citroen Group in late 2010 to jointly develop hybrid systems for subcompacts, would be able to expand its lineup, the daily said.

Toyota has struggled to use its hybrids to expand its market share in Europe in a region where roughly 60 percent of passenger cars are powered by diesel engines, the daily said. Demand for diesel vehicles is forecast to grow since such engines are seen as an effective way to cut carbon dioxide emissions, and technological advances in the field are essential as emission regulations become tougher.

With the strong yen hurting the price competitiveness of its hybrids, Toyota was aiming to improve the marketability of its diesel vehicles by procuring engines from BMW, the daily added.

BERLIN BRANDENBURG AIRPORT NEARING COMPLETION

The new Berlin airport, Brandenburg, is expected to start operations in a little more than six months, has entered a key test phase and authorities are determined to figure out problems ahead of the June 3, 2012 opening. It will replace Schoenfeld and Tegel creating one of the largest airports in the world.

One thing is sure, said Manfred Körtgen, the head of Willy Brandt Airport said. The date will not be rolled back, Der Tagesspiegel newspaper reported on Saturday.

Körtgen said the airport is undergoing a massive series of tests and checks to make sure it can handle the traffic, luggage and passengers on the first day.

Located in a southeast corner of Berlin, the airport is currently the largest construction site in eastern Germany and has 5,500 workers hammering and digging away to get it ready. Practice run throughs will take place on Tuesdays and Thursday, Körtgen said.

Beginning in February, thousands of volunteers will play the role of passengers and help airport officials figure out what works and doesn’t.

The new airport has come under extensive criticism – and been the subject of many protests – by neighbours fearing noise and pollution problems.

The airport has a capacity of 27 million passengers per year and officials are expecting 23.5 million already in its first year.

In the News...

SLOW PAY RISES FOR UK

Private sector pay at UK listed companies has risen at the slowest rate on record, a survey suggests.

Earnings rose at an annualised rate of just 0.5% in the three months to February, according to the Vocalink FTSE 350 index.

The rate is well below consumer prices index (CPI) inflation, which is currently running at 4%.
Manufacturing employees were hardest hit, seeing a sudden 0.6% shrinkage in pay packets during the period

UK MANUFACTURING ON THE UP

UK manufacturing in January grew at its fastest annual pace in more than 16 years, official figures have shown.

Manufacturing output was up 6.8% on January last year, the Office for National Statistics (ONS) said, its strongest pace since October 1994.

Month-on-month, output increased by 1% as firms recovered from a weather-related drop of 0.1% in December. The figures suggest the economy is rebounding from the 0.6% contraction seen in the last quarter.

GERMANY BETTER THAN ENGLISH SPEAKERS?

Is Germany better at teaching university courses in English than universities in English-speaking countries?

Germany has been named as the most supportive country for overseas students, in an international league table.

Among the attractions for international students is the increasing availability in Germany of courses taught entirely in English, so much so that students can complete degrees without ever having to speak German.

In the international zones of these classes, students from Germany, the United States and China participate in seminars conducted by German professors speaking in English.

Source: BBC Business News

Libya's Oil

With Libya descending into civil war oil prices look set to rise again. Who knows how long it will be before the crisis is resolved peacefully. Perhaps Colonel Gaddaffi will leave of his own accord?

The above image displays the countries receiving oil from Libya. It will be interesting to see if Italy and Germany's economies are hit harder than the rest due to the fact they rely so much on Libyan oil.

Italy may be the next European nation to go into financial meltdown in the same way Iceland, Greece and Ireland have.