German firms before the referendum

It’s a no-brainer. June 23rd will not only be an important date for British, but also for German firms. Over the years, these firms have invested billions of pounds in the UK and employ around 500.000 staff at their sites and plants. There are strong ties between Germany and the UK in machinery and plant construction, in the automotive sector and in the financial and insurance industry. German companies are among the biggest foreign investors in the UK, with 2.500 subsidiaries as stated by German Industry UK, a private organisation of around 100 chief executives of companies in Britain with a German majority shareholding.

According to the consulting firm h&z, the UK is the third-most important trading partner for German exports. With regard to imports, the country ranks sixth. Despite this, only 20 percent of German firms have already done their Brexit-planning, a recent survey by h&z found. About a fourth of all German companies will be affected by a potential vote for leave, the estimate goes.

A vote for Brexit will not remain without consequences. Earlier this year, a survey of 700 businesses by the Bertelsmann Foundation found that 29 percent of British and German companies, almost one in three, said they would either reduce capacities in the UK or relocate altogether in the event of a Brexit. Since then, many have declined to speak about their contingency planning in greater detail. This is understandable, given that their strategic decisions in the case of a Brexit will depend a lot on whether and what kind of agreement will exist be between the UK and the EU.

So what now, now that the referendum is only 20 days away? What should German firms in the UK be doing? Many of them, as I learned on Tuesday at the Annual Dinner of the British-German Association (BGA) in the House of Commons, are planning final rounds of meetings and talks with their employees before the vote on the 23rd of June.

One of the first firms to reach out to its staff in the UK was the car manufacturer BMW. At the beginning of March, the management sent out a letter to the employees of Rolls-Royce Motor Cars and Mini here in the UK, warning about the potential impact of a Brexit for the business in the UK. The firm’s “employment base could (…) be affected”, Rolls-Royce Motorcars chief executive Torsten Muller-Otvos wrote. Trade tariffs would drive up costs and prices.

Widely reported at the time, the letter also caused some bitter criticism. This was an act of interference, some media outlets concluded. It seems that because of this incident, other German firms that operate in the UK have been more cautious recently. They have held, for example, as the heads of Bayer and BASF told me, a wide range of events and so called town hall meetings where the whole firm gathers and debates. These internal get-togethers appear to be the format of choice when talking Brexit.

“Yes, we need to speak out”, Bayer-CEO Alexander Moscho told me after the Annual Dinner in the House of Commons. “But we don’t want to be seen as interfering.” Instead of trying to win his 1.000 staff members over, Moscho seems keen to provide enough information for everybody to make up their minds. He now plans a social media campaign, maybe a YouTube video, for the remainder of the campaign. “I hope we will find the means for a balanced discussion”, Moscho said.

BASF, another German chemicals company that operates in the UK, has followed the same route. AS UK/Ireland-CEO Richard J. Carter explained to me on Tuesday, the company has conducted a so-called roadshow with 25 events across all of its ten manufacturing sites in the UK, trying to reach as many of their 1.300 employees as possible. About one third of the workforce took part, Carter said. “We are hoping for the multiplier effect”, he explained. For BASF, it’s more about informing people than about trying to influece them. “We said clearly that we are not talking about reductions at this stage”, CEO Carter pointed out.

Bosch too has been reaching out to its staff. “If we get high turn-out, the danger is that among blue-collar voters, many might be led by emotions”, said Carl Arntzen, Managing Director at Bosch Thermotechnology Ltd. He has spoken to all his 600 blue-collar workers on the shop floor. “Immigration is the topic that comes up first”, Arntzen found.

For all these German firms in the UK, it is now important to keep the momentum going. Twenty days is a long time for a decision that is – according to the most recent polls – so close. “We need to repeat and repeat our message”, said Caroline Fairbairn, the Director General of the Confederation of British Industry (CBI) on Tuesday. “Many of our members think they have already done enough. That is not the case.” I guess she is right. “Say it again, say it agan and say it again. In simple language, talk to employees. Now is the time”, Fairbairn stated.

This might actually tip the balance: After friends and family, employers are the next most important source of information for people, she said.

 

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