Oliver Jörk , Saxony Economic Development Corporation
Release Date: 2010-01-06
Before we start talking about Saxony, I would like to invite you to provide a background of what had you done before and how you ended up here at Saxony Economic Development Corporation representing your region.I worked for many years for Germany’s International Chamber of Commerce Network. These chambers are the business link between Germany and the countries in which they are based; the network is part of the German economic promotion system. Such chambers often work alongside the GTAI for example, as well as the representatives for the promotion of the individual states. So this job is like working on the other side, for another element of the same system, and we of course work closely with the chambers abroad. I was attracted to the idea of coming back to Germany because it is one thing to be located in an array of destinations worldwide and another to be in the centre of where it’s all happening and to be responsible for promotion strategies, helping to decide which are to be the important countries and markets for Saxony.
Why did you choose Saxony in particular? Were you brought up here?
No, I’m actually from Berlin, but it is not really important where you are from in this job.
When you arrived here what were your first impressions of Saxony? What surprised you about the region and what really drives the economy here?
It was surprising to see how Saxony is concentrating the economic power of the five former East German states. I had been living abroad for the past 16 years, so had been away from much of the reunification period. So I imagined the five states to have been similar to one another economically-speaking, but I realised that Saxony has 40% of the industrial power of the five states. This is quite evident when you come to Saxony; it is quite impressive.
What has been the secret to the success of Saxony over the past 20 years or so when the same opportunities were available to other states; what was different about Saxony?
It’s above all for two reasons. It is firstly thanks to a very good promotion policy, but it also has a lot to do with traditions, historic evolution, development, because the clusters we see today are built upon those which have been strong in Saxony for decades. It’s not very easy to build a cluster out of nothing; it is much easier to develop a cluster in a more or less intelligent way if there is already a basis present. Over the past 20 years, Saxony has therefore effectively developed these clusters upon existing success stories in the industries. For example there has been a machinery industry cluster in Chemnitz since the nineteenth century and an automotive cluster nearby since Audi was founded 100 years ago. Another sector, mircoelectronics, was very strong here in GDR times, with the largest IT company Robotron having 60,000 employees. Such companies had problems not with a gap in technology but a gap in efficiency. They had some of the world leading patents in microelectronics, but they weren’t able to produce them in an economic way. However, since we had the specialists here, with the new economic and political system that came with reunification it was possible to build up the microelectronics cluster that Saxony is known for today.
Over the coming years both automotive and machinery will begin to represent fewer jobs than the environmental technology sector for example. Saxony moved early on towards a focus on solar energy; why did you chose solar in particular? Are there other areas of renewable energy that will play a role in Saxony’s economic development?
Technology-wise the solar industry is similar to microelectronics, particularly since both involve the raw material silicon, so it was relatively easy to integrate focuses on the solar industry into the existing cluster. When we decided on which clusters to promote though our economic policies, alongside automotive of course, we realised that it is increasingly difficult to separate technologies from one another, since many were multipurpose and thus overlapped various industries. Saxony is very strong in the machinery sector which is the basis of many other sectors; this has aided the rapid development of the PV industry, because we can offer not only manufacturers of solar panels for example but also many of the producers of the machinery for the industry.
Due to our strong positioning in the automotive industry of course clean vehicle development will also play a key role. There is still a lot of R&D to be done before electric cars are readily available on the market. One of our key areas of R&D in Saxony is therefore in developing the capacity of the batteries. Although I believe hybrid models can only be transitory solutions since it is not very efficient to have two systems in one car. Another very important issue for automotive R&D concerns materials, we are carrying out many studies into how we can make cars less heavy and more efficient in terms of consumption.
Another sector which we focus on is environmental solutions for the mining sector, since we have a long history in this region in this area. Due to strict German environmental laws we have been forced over the past 20 years to learn how to manage and solve these problems. As we have been developing these solutions for a long time now, today this is an important export sector, since many other countries are dealing with the same problem. As far as other renewable energies are concerned, we are also strong in bioenergy solutions and localised energy and heating solutions.
One of the advantages of being a part of east Germany is that over the recent decades you have received a lot of financial support for the economic development of the region, not only from the German State, but also from the European Union; how will you cope in the future when that support does not exist anymore, are you ready to stand on your own two feet?
It is interesting actually that when we speak to investors looking to come here, the financial support the state receives is rarely the most important factor in their minds. There are many more important criteria such as the technological know-how of the specialised workforce, the proximity to R&D facilities, or the fact that the wages are not yet as high as in West Germany. The Eastern German states act as the bridge between Western Europe and Eastern Europe. In Eastern Europe there is the cheap labour but there is no comparable R&D infrastructure, whereas in Western Europe it is just the contrary; we are somewhere in the middle. We have very good R&D infrastructure, which distinguishes us from Eastern Europe, but we are not nearly as expensive in terms of labour costs as Western Europe. This is a very attractive niche for investors. So you are right that over time the promotion money will become less and less and from 2013 onwards if nothing changes policy-wise then that criterion will be lost, but Saxony certainly has many other attractive attributes to promote itself with.
When was the last time you travelled to China on business?
It was two months ago, accompanying the Gewandhausorchester, the world-famous orchestra from Leipzig. We try to combine cultural attractions of the regions with out promotional interests so that we get culturally interested target groups; this is an effective way of promoting what is going on here in the business sector at the same time as showing what the region has to offer culturally. On another recent trip I was promoting Germany and its machinery sector with GTAI.
How are you working to put Saxony on the map for potential Chinese investors who are unfamiliar with the region? What examples do you use to illustrate what Saxony is all about?
When we promote Saxony in China we of course begin by promoting Germany. The USP that we give Saxony comes down to a few factors. As I said there are the advantages of combining the best aspects of Eastern and Western Europe; we also have good universities, R&D facilities and infrastructure which are fundamental to all sectors, state of the art telecommunication networks, intercity water supplies and highways which are considerably better than most of Germany since they have all been developed so recently. The fact that we have lower wages in Saxony – although this can’t last forever and it has negative aspects in terms of consumption – has also certainly helped us to attract companies who would not have the option of going to cheaper countries since they need the advanced technology that we offer here.
Figures from specialised consulting firms such as Mandarin Strategy Management Consulting who work on foreign investment projects from China into Germany illustrate that a lot will happen in terms of investment from China in the coming months; in what areas do you think that you can successfully attract this investment? What sort of companies would you like to invest here?
We would like to attract companies from solar, green transportation, bioenergy, microelectronic and life sciences; since these sectors all show excellent growth forecasts, as well as all being sectors in which Saxony has an internationally competitive offer.
We have experienced a very interesting phenomenon in this region: an increasing number of highly educated people from other parts of the world are coming to Saxony. This has happened in particular in the IT and microelectronics sectors and with the research institutes which are all now very international. In fact, the Max Planck Institute of Molecular Cell Biology and Genetics (MPI-CBG) in Dresden was ranked by the US magazine The Scientist as worldwide “no. 1 place to work for postdocs” outside of the United States, in February 2009.. However due to the number of excellent engineers we produce here, they are also one of our greatest exports. In Saxony around 25% of all students who leave university each year are natural scientists, a much higher figure than the 14% national average, so many go to work either abroad, or in other states across Germany where they need engineers but don’t have them.
Is that your ultimate challenge, to provide enough jobs here to match that excess of engineers compared to the rest of Germany?
Of course, it would be nice to be able to take advantage of this aspect. Looking at the degree that East German states are industrialised in comparison to West German states, it is clear that we still need a lot of growth, which is precisely why we do still need more promotion subsidies than West–German states and why we do not yet have enough industry to give all our engineers work. However this is something we are working on!
Considering the fact that 2010 will be a very important year, as the global economy starts to recover, investment starts coming back, where do you see most of your financing coming from over the coming years? I can imagine you are looking towards emerging markets, not only China, perhaps also Russia, India, Brazil, what are you priorities?
Here in the Saxony Economic Development Corporation we concern ourselves both with investment promotion and with export promotion under the same roof, which many other German states deal with through separate entities.
So you are more like Germany Trade and Invest?
Yes, but regarding chronology, they followed our model.
Considering the export promotion first, we are most active in the emerging markets such as China, Russia, India, not only because this is where the economic growth is, but also because they have need for precisely what we have to offer: they are looking to modernise their production lines and we have the machinery for that. So we provide them with the machines and then end up buying their products! Meanwhile as far as attracting investment to Saxony is concerned, we have been most successful in the industrialised OECD countries, particularly the US and Switzerland. Of course, clearly there are very attractive investors in countries like China, but since Saxony has a limited public budget and budget policy is austere we have to find intelligent solutions for how to go to new markets to find these investors. We all know doing business in China is very different from doing business in the US. So it will be our focus now for the next year to see how we can get into contact with the investors of countries which we have not explored so much in the past.
Another way to gain greater global awareness would be for Saxony to come up with some amazing new innovations which are successful around the world; what would you like to see coming from Saxony in the future which you can take advantage of?
It would be nice to transform the world with something from Saxony! Our niche is providing the machinery for successful competitive production; this is clear from looking at where we export the machines to, who are the buyers, which kind of products they produce and how our machines help them to be competitive in the world. These emerging markets have such big rates of growth not only because of their domestic markets but because they are becoming some of the largest exporters in the world. So it may not sound very revolutionary, but I think Saxony’s industries play a very important role which end-consumers don’t really see since we make industrial products not end consumer products.
So you offer the “Made in Germany” technology machinery solutions which provide the foundation for the economies in other countries in the same way as happens here…
Of course luckily “Made in Saxony” is “Made in Germany” which is a very good mark of quality for our products. Companies from emerging markets who want to enter the European market know they will be able to sell their products better if they have the “Made in Germany” label. When they come to Germany, practically-speaking they will realise they can find what they need in Saxony.
So if you want to have a cost-competitive “Made in Germany” solution, then you come to Saxony.
Yes.
What is the final message that you want to get across to the Chinese political leadership and business community.
Companies who come to Saxony will see that it is a very dynamic state; it has had very high growth rates over many of the last few years comparative to the German avarage as well as some of the highest rates of patenting in the country. We have many Fraunhofer Institutes here in Saxony – in fact Dresden is the capital of Fraunhofer Institutes in that way! We are very strong in the sectors I mentioned, very focused on our R&D and have a lot to offer companies working within these industries.
As a last question, what is the next thing that you are doing here in Saxony that other investment agencies will copy from you?
I would like emphasise that we cannot be internationally competitive in terms of price, but we pride ourselves in the fact that we can be that step ahead of others in terms of innovation. It is fundamental for us to manage the innovation, to see how we can coordinate the R&D process better with the industry, shortening the times between gaining research results and creating marketable products. In Saxony we strive to be increasingly interdisciplinary, bringing multipurpose technologies across the whole range of industries. Nowadays, speed is key above all else: for it is one thing to invent new technologies but it’s of no use whatsoever if you don’t get there before others!
| Company: | Saxony Economic Development Corporation |
| Position: | Managing Director |
| Country: | Germany |