Economic Lessons In Hessen

My recent jaunt through central Germany featured high-profile interviews with economic ministers, financial experts, and corporate executives…and some local apfelwein.

Late last year as the global economic meltdown dominated international media, I found myself on a business trip to Germany, Europe’s leading—and the world’s third largest—economy. With pre-scheduled meetings with political leaders, economic development officials, and CEOs of major corporations, I suddenly needed to reexamine my approach to conducting interviews. Questions about local economic conditions, corporate expansions and financial stability can be tricky to ask even in prosperous times; these queries become much more precarious amidst the rapid development of a worldwide recession. Even harder than asking tough questions would be obtaining definitive answers; the uncertainty of the corporate universe turned solid facts and figures into “guesstimates” and strong opinions into hesitant observations. But as I traveled through the German State of Hessen, I was relieved by the upbeat businesspeople and optimistic policymakers that I met.

Bordered by six other German states, Hessen is anchored at the country’s core. The modern skyscrapers of the financial hotbed, Frankfurt; the narrow, winding alleys of the quaint state capital, Wiesbaden; and the lush, world-class vineyards of the Rheingau are a microcosm of Hessen’s kaleidoscopic landscape. These locales are about an hour’s drive of each other; travel into the state’s northern stretches and you’ll find more juxtaposition of pastoral serenity and industrial might.

During my time in Hessen’s political epicenter, Wiesbaden, I conducted an interview with Volker Hoff, the (now former) State Minister for Federal and European Affairs, and Bernd Kistner, Head of Foreign Trade for Hessen’s Ministry of Economics, Transport, Urban and Regional Development. When asked to name Hessen’s greatest asset, Hoff’s response was witty, yet telling: “We’re surrounded by Germans.” This reference to the state’s central location within the country is a legitimate economic selling point. The vast pool of available workers, across a variety of industries, enables Hessen to create and fill jobs with local talent. Rather than outsourcing employment to non-natives, Hessen has the capacity to keep its salaries within national borders.

As a counterbalance to speaking of Hessen’s strengths, I inquired about the biggest challenge facing the state. Hoff sidestepped a generic, perhaps expected, response about the current financial gloom and, instead, said, “Education. Over the next 20 years, we need to find the money to enhance our academic staff.” This was not an admission that Hessians are uneducated, but rather a desire to improve a pillar of infrastructure. “The best resource we have,” Hoff continued, “is the brains of our kids. We need to start better academic development at the kindergarten level to stay competitive.” It couldn’t have been better scripted that, while revealing a key to Hessen’s future, the Minister highlighted a German word—kindergarten—that English speakers value as one of their own.

Hessen recently has been energized by the addition of Dieter Posch, State Minister of Economics, Transport, Urban and Regional Development. Austrian-born Posch’s integration into Hessen’s political cabinet in February 2009 has invigorated the Ministry with fresh visions, yet his face is not a foreign one; Posch spent several years in Hessen’s State Parliament in the 1990s. “I am optimistic that Hessen will leave the economic crisis behind much faster than other states,” says Posch. He says that 209 new infrastructure projects will be implemented in 2009, totaling 94 million euros. “Entrepreneurs in Hessen are optimistic,” he says. “Thus, I am too. It could be that we have an improved situation by year’s end.”

A short train journey east from Wiesbaden is the financial colossus, Frankfurt, home to Germany’s top stock exchange, the most bank headquarters on the continent, and nearly 700,000 inhabitants within city limits, of which 72,000 work in financial services. Here, I met with Markus Theobald, Director and Head of Relationship Management for International Public Finance at Helaba, one of Germany’s leading regional banks. We met in Main Tower, an instantly recognizable feature of Frankfurt’s skyline that offers 360-degree panoramic views of the city. Theobald explained how Helaba’s owning structure (85% local savings banks, 10% State of Hessen, and 5% State of Thuringia) had helped Helaba dodge the banking collapses that had destabilized other financial institutions around the world. “We may be a role model for the economic crisis,” Theobald suggested, “as our vertical integration between owners and Helaba will continue to be efficient.”

Further stressing Frankfurt’s status as a global banking metropolis, Theobald asserted that Frankfurt has 10 to 15 years of positive relations with Russia, and that the majority of Korean companies use the city as its European hub. With a total business volume of 214.4 billion euros as of June 2008, Helaba seems poised to remain a robust powerhouse in the realm of international finance.

U.S. businesses, too, have found Hessen to be a desirable location. “The Hessen brand provides U.S. corporations with a highly competitive international business location that offers a quality infrastructure and direct access to Europe’s rapidly growing markets,” says Kristina García, managing director for Hessen’s U.S. Office of Economic Development. “Hessen’s decision to establish a U.S. representative office in New York in 2007 is a clear indication that the state welcomes and values U.S. investors.”
Connecticut’s Hartford Financial Group established a new office in Frankfurt in 2008. Suzanne Zeller, managing director of human resources for The Hartford, described the Regus Business Center Trianon in downtown Frankfurt as the perfect location for her company. The prime space was renovated easily to suit The Hartford’s expanding needs, and it began selling variable annuities in the first quarter of 2009.

I also interviewed Illinois-based global logistics firm SEKO Synergy’s Christian Marz, managing director, and Kass Ayadi, marketing manager, at Frankfurt International Airport’s Cargo City. SEKO launched German operations in June 2008 after a speedy selection process of only several weeks, which Marz described as “quite simple.” He pointed to Frankfurt’s success as Europe’s largest freight airport as the main factor in his decision. Marz’s choice supports García’s claim that, “Most U.S. executives recognize the Frankfurt/RheinMain Area as an international finance center, a leader in global logistics and, with the expanding Frankfurt International Airport, Germany’s largest transportation hub.”

As the world continues to stare in the face of economic hardship, Hessen remains buoyant. Outside its boardrooms, the state’s culture and quality of life help retain employees. Idyllic Eberbach Monastery in the Rheingau produces some of Germany’s best wines, and a glass of apfelwein, Hessen’s famous apple wine, can help anyone recline and unwind after a long workday.