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BusinessWeek: January 10, 2000 |
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Books
This Show of Muscle Isn't So Scary
The New German Juggernaut and Its Challenge to World Business By Werner Meyer-Larsen Wiley 244pp $27.50 It's no secret that German companies are expanding abroad. But what, exactly, are they up to? Is this another grab at world domination--as the British tabloids would have it--or a matter of survival against global rivals? The question is timely. Deals such as DaimlerChrysler, Deutsche Bank-Bankers Trust, and Bertelsmann-Random House are early examples of the transatlantic alliances that will shape global business in coming decades. Germany is set to play a key role in the new capitalist order. Germany, Inc. is a worthy attempt to explain what's driving German corporations and their leaders. Author Werner Meyer-Larsen's choice of title is a bit ironic, though. The phrase "Germany Inc." is usually used to refer to the cozy alliance of business, government, and labor that has ruled the German economy since the end of World War II. In fact, that alliance is disbanding, rendered obsolete in a world where borders are losing their economic relevance. Germany Inc.'s members won't disappear, though. On the contrary, most of the companies profiled by Meyer-Larsen are already more than a century old. They've shown remarkable staying power in the face of huge setbacks. The great service of this book is its insight into where these companies came from and what accounts for their strength. Take Deutsche Bank, the institution that best typifies Germany Inc. It turns out that the bank's current thrust into investment banking is more a return to its roots at the end of the 1800s, when it provided the venture capital to build German industry and make the newly united nation a world power. Back then, the bank took huge risks, including financing railroads in faraway places such as Anatolia and even the U.S. But the spirit of adventure and innovation was crushed by the world wars. Devastated spiritually and physically, many of Germany's big companies became defensive and risk-averse. In postwar Germany, they created webs of cross-holdings and reciprocal board memberships. The incestuous system functioned well during the cold war. But it couldn't cope with the global competition that accelerated after the 1989 fall of the Berlin Wall and, more recently, the introduction of the euro. Stifled by taxes, high wages, and rigid work rules in their home country, German companies responded by pushing abroad. Meyer-Larsen, a former U.S. correspondent for the news magazine Der Spiegel, excels when profiling Germany's corporate leaders. His descriptions will surprise even those who think they know corporate Germany pretty well. A veteran of Der Spiegel, a sort of thinking man's tabloid, Meyer-Larsen sizes up these men with a critical eye and sarcastic wit. For example, he characterizes Bertelsmann CEO Thomas Middelhoff as a "Mr. Spock," who, besotted by logic and technology, is morphing the former publisher of religious books into an Internet company. Moreover, the author punctures some myths about DaimlerChrysler's Jurgen E. Schrempp, the closest thing Germany has to a business hero. As Meyer-Larsen tells it, Schrempp only reluctantly gave up a luxurious life, working on assignment for Daimler-Benz in South Africa. Posted to the U.S. in 1982, his job was to turn around Euclid Inc., a maker of heavy commercial vehicles recently purchased by Daimler-Benz. Schrempp's solution was simply to sell the company. Back in Germany, Schrempp presided over massive losses at Daimler's aerospace business and was responsible for the disastrous acquisition of Dutch plane maker Fokker in 1992. In 1995, Fokker was the chief cause of Daimler's $3 billion loss for the year. Meyer-Larsen gives credit for Daimler's survival mostly to car chief Helmut Werner, who was forced out by Schrempp. For those worried about a rebirth of German aggression, a closer look at its business leaders is reassuring. Despite the "juggernaut" promised by the subtitle, Germany's business elites come across more like a bunch of American wannabes, showing off their English, being envious of the unfettered capitalism enjoyed by U.S. companies, and embracing U.S. business articles of faith such as shareholder value. Middelhoff even calls himself an "American who by sheer coincidence has a German passport." He spends half his time in New York. Seen in that light, Germany's push abroad seems more an attempt to embrace America than conquer it. Its companies often eschew their German-ness and install foreign managers. Big companies such as Industrial giant Thyssen-Krupp are shedding traditional businesses such as steel and instead building up such U.S. operations as auto parts maker Budd Co. It's probably only a matter of time before a blue-chip company such as DaimlerChrysler relocates its executive offices to the U.S. Germany Inc. is giving way to World Inc. But how will a reoriented corporate Germany look in the years ahead? Meyer-Larsen's main weakness is that he never makes any firm predictions. And, in the mode of Der Spiegel, at times the evidence for his characterizations is a bit thin. The book's nine-page final chapter does an inadequate job of summing up almost 200 pages of company and CEO profiles. Readers must draw their own conclusions. Read as history, though, the book is an informed and entertaining portrait of the institutions and people who run the world's third-largest economy. Return to top | |
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