Press Evening of Organization of German Volksbanken
Dinklage, October 6, 2008
Ambassador William R. Timken, Jr.
Mr Lesch, members of the Consortium of Credit Unions and Community Banks, thank you very much for inviting me to address your annual meeting.
It has been my great privilege to serve as President Bush’s man-on-the-ground here in Germany for the past three years. As is normal after a presidential election, I will soon be returning to the United States - in December. For Sue and me, this opportunity to serve our country has been an enormous privilege.
Today, Germany and the United States continue to enjoy one of the largest and most important bilateral relationships in the world. It is a story that started before the American colonies gained their independence. My own family has its roots in Germany. My great grandfather immigrated to the U.S. in 1837 from Tarmstedt, here in this state. America would not be what it is today without the millions of immigrants from Europe. I am very proud of my great grandfather, a son of Lower Saxony. From an early age, he worked hard. Although he didn’t have the benefit of a college education, he did an apprenticeship in carriage building, or more broadly put, transportation, an industry that over the centuries has always been at the cusp of every phase of globalization. Later in his life, he turned that knowledge into an invention that revolutionized the automobile industry in its early phases.
I tell this story to remind us all that the American economy, like America’s immigrant society, is flexible, resilient, and strong, a system that absorbs challenges, makes corrections, and bounces back. American economic strength is characterized by its entrepreneurial system. Individuals make technological innovations which in turn highlight the need for ongoing change in business and in society. My great grandfather transformed the focus of his business from building carriages and wagons to providing the technology for the very first automobiles.
The Timken Company, like any other successful business, is marked through and through by ongoing change. At the beginning of the 1980s, the United States was emerging from a period of slow economic growth, along with high inflation and high unemployment. In 1985, in order to be more competitive both within the United States and abroad, the Timken Company invested two-thirds of the company’s net worth to build the only completely new alloy steel plant in the U.S. since World War II. It was risky, but this investment in state-of-the-art manufacturing and control processes increased productivity - and profits.
Today we are in another difficult economic period - for America and for the world. We've seen triple-digit swings in the stock market. Major financial institutions have teetered on the edge of collapse, and some have failed. As uncertainty has grown, many banks have restricted lending. Credit markets have frozen. Businesses and families have found it harder to borrow money. This situation demands difficult solutions. There will be no easy way out.
But the Administration has been working with Congress to address the troubled assets now clogging the financial system. Clearly, this will be the major issue for the next President, so President Bush and his cabinet have been in close contact with both Senators McCain and Obama regarding immediate steps to correct the problems. They continue to discuss, with Secretary Paulson and others in the administration -- as well as with the American public -- ideas for a modernized financial oversight structure that matches our modern economy, and more closely links the regulatory structure to the reasons why we regulate.
Right now, however, the focus is on restoring the fundamental strength of the U.S. financial system so it can again finance economic growth. Rest assured, the United States remains the best place in the world to invest and do business. The vital German-American economic relationship is proof positive of that.
Our partnership is the success story of modern business and of modern diplomacy. Continued success, however, will require us to look beyond the challenges of yesterday. During the Cold War, mutual security concerns held us closely together. Today, those particular concerns have faded, and their role in binding us together has been overtaken by an unprecedented level of economic integration. In the past 20 years, no two parts of the world have experienced economic integration faster and more intensely than the U.S. and EU. For that reason, the economic relationship between Germany, Europe's largest economy, and the United States continues to be among the most important in all the world. It represents the “gold standard” of a mature and deep bilateral partnership that binds countries firmly together.
Recognizing the importance of the economic relationship, Chancellor Merkel initiated the Transatlantic Economic Initiative. She and President Bush share a language of common purpose – of a strong Europe in partnership with America. That is the reality of our cooperation today. My experience during the past three years as Ambassador, however, has reinforced my appreciation of the need for government and business to work closely together to find and implement effective remedies for the problems that arise. The Transatlantic Economic Initiative is such remedy, but business and industry must fully back it for its potential to be realized.
The hard economic data consistently demonstrate that the U.S.-German relationship is deeper, more fundamental, more interconnected and more important then ever before. At the Embassy and among our five Consulates, we have been tracking some of the economic indicators that measure the levels of connectivity between our two countries through trade and investment. They are so broad and deep, and in many cases so seamless, that they often are taken for granted.
The size and growth in US - German Foreign Direct Investment is perhaps the single most significant factor leading to our more integrated economic relationship. U.S. foreign direct investment in Germany has more than tripled, while German direct investment in the U.S. is roughly seven times what it was when the Berlin Wall fell. U.S. affiliate assets in Germany now total more than $400 billion and German assets in the U.S. are even larger at over $600 billion. German investment in the U.S. today is four times that of German exports. Only the United Kingdom and Japan have greater FDI stock in the U.S.
Rapid growth is not only in FDI, but also in the acquisition of stock equities. In the first nine months of 2007 alone, U.S. investors bought more German stocks than they had over the entire past decade.
On the trade side, the U.S. exported nearly twice as much to Germany last year than it did five years ago and at the same time also imported 50 percent more. The rapidly accelerating FDI investment between the two economies significantly fuels this two-way growth.
Figures for Lower Saxony back up all these trends.
Over 150 U.S. companies are located in Lower Saxony. At the end of 2006 U.S. direct investment in Lower Saxony was € 4,548 billion. U.S. companies are now the top foreign employer in Lower Saxony with over 46,000 jobs, equalling 9% of all industrial jobs in the state. The six top U.S. investors in Lower Saxony generate annual total revenue of approximately € 6.5 billion.
The figures for German investment in the United States are just as strong.
Approximately 50 industrial enterprises from Lower Saxony have factories in the United States. At the end of 2006 Lower Saxony direct investment in the U.S. was € 7.6 billion.
Companies from Lower Saxony have created over 18,000 jobs in the American industrial sector. Most of these are in the automobile industry and are especially appreciated.
In July 2008, Volkswagen announced plans to open a new one billion USD plant in Tennessee by 2011. The move to produce in the U.S. is seen as a cornerstone of VW’s growth strategy to surpass Toyota as the world’s largest car producer. This plant is expected to produce 150,000 cars annually and employ 2,000 workers.
The common factor or lingua franca for all these direct investments is undoubtedly basic business opportunity and need. But I know from my own experience, that the managers and employees of these transatlantic businesses are also fluent in other languages, including those of collaboration, cooperation and creativity.
That was true at the Timken Company. We profited from our diverse, global workforce. It helped us blend very different ideas into the best, most innovative solutions. We became stronger because we worked together.
The more we invest in each others' economies and the more we trade, the more we create the jobs and the prosperity that benefit both of our countries. Our connectness provides us with enormous business opportunities. It has contributed much, much more than is publicly recognized to the prosperity of both of our countries and to the employment of our citizens.
That economic connectivity, however, also brings important responsibilities. Our governments, our industries and our citizens - as they grapple with this financial crisis - must take great care to preserve and revitalize the powerful economic bonds that nuture our prosperity - in the United States, in Germany, and around the world.
Thank you.
