Irish companies that study Germans and their massive market can beat the locals at their own efficiency game
“We have an obsession in Ireland with sending our children to university and that has to change . . . We need to learn from Germany and start making money out of making things, not out of financial engineering
SEWING MACHINES and livestock; just half a century ago, those were Ireland’s leading exports to West Germany. Figures from 1962 show these exports were worth £6 million (€7.6 million). Today, however, Irish companies are selling high-tech products and services into the massive German market, beating the locals at their own efficiency game.
Trade has always been the backbone of our bilateral bond. That was recognised 50 years ago when Ireland’s first trade office opened its doors in Frankfurt.
Today state agencies Enterprise Ireland and Bord Bia based in Düsseldorf have helped to steer a remarkable revival in Irish exports to Germany, shrugging off the crisis to grow by 13 per cent in 2010 to more than €12 billion annually. At the heart of this revival is sheer economic necessity.
“For many companies Germany is their emerging market,” says Deirdre McPartlin, Enterprise Ireland manager for Germany. “The arrogance that had begun to creep into our behaviour during the boom years – that somehow we were doing the customer a favour in supplying them – has now been replaced by a greater understanding of the need to deliver outstanding customer service.”
Carlow-based firm Keenan, which makes advanced mixing wagons for livestock feed, has operated in Germany since 1990. Its patented mixers produce a unique feed mix optimal to cows’ digestive systems that maximises milk yield while cutting down on levels of environmentally harmful methane.
“We deliver a more efficient output from the animal, which is becoming more important as costs of production increase,” says Michael Keogh, salesman for Germany.
Selling efficiency to Germans can be more successful than snow to eskimos with the right premium product, a niche focus and top-class service.
“The farmers know we have a premium product and the service to back it up,” he says. “We repair machines quickly so cows are not left hungry.”
A new Irish arrival in Germany is technology firm Nines Engineering. It is working with the prestigious Fraunhofer Institute – the people who gave us the MP3 file – to develop a more efficient manufacturing process for more complex solar cells.
Nines has picked its moment well: its process aims to cut costs and deliver a higher-quality product just as low-cost Chinese solar panels devastate Germany’s domestic solar panel industry.
Nines is currently building its first production machine in Freiburg with European funding and expects to start pilot production later this month.
“The cell manufacturers that are going to come out on top in the future are the ones with high efficiency solar cells requiring a bit more innovation,” says Edward Duffy, the founder at Nines, who comes from Ireland’s silicon conductor manufacturing industry.
Irish companies with experience supplying to Intel and Seagate already have the necessary experience to make them credible players in Germany, he says.
This includes “smaller companies that produce high-value products for niche markets – Germany is built on family-owned companies with one billion turnover doing just that.”
Any companies considering a move into Germany should spare themselves a lot of embarrassment by reading Managing Cross-Cultural Business Relations: the Irish-German Experience.
The book, by Irish academics Gillian Martin and Mary Keating, maps out the inter-cultural minefield where even small misunderstandings can doom deals.
German managers cited in their book report on meetings with Irish companies that start late with endless small talk, no clear agenda for the meeting nor a to-do list for the next (see panel). Martin and Keating’s fascinating study shows that, in business, Irish and German companies can draw on complementary cultural skill sets.
A European comparison shows the Irish thrive on risk and uncertainty, which Germans go out of their way to avoid. On the other hand, Irish people are highly conflict-averse while Germans have no difficulty tackling problems head on.
Put these skills together and you have Irish-German business potential: happy to take risks to pursue Irish-style innovation with a Germanic determination to persist and solve problems that arise on the way to market. Irish companies operating successfully in Germany cite two major impediments to progress: language and qualifications.
“If your company is serious about making inroads and building contacts, you need to have German speakers and materials,” says Michael Keogh of Keenan, who studied German and marketing. “It can be seen as an unnecessary cost outlay, but it could be the difference between getting to a second meeting or not.”
These days Irish third-level graduates with any kind of German skills are being snapped up by Irish companies looking to sell into Germany.
For many German lecturers, the economic slump has been marked by calls from desperate managers hunting for German speakers.
The second shortage is of staff with technical skills, particularly engineers.
While just 7 per cent of Irish school-leavers go on to be engineers, the equivalent in Germany is 37 per cent. Interestingly, less than 30 per cent of German school-leavers go to university; in Ireland it’s more than half.
Irish companies operating here have called on the Government to learn from the German model, offering vocational training, with classroom learning and on-site training, as a real alternative to university.
“We have an obsession in Ireland with sending our children to university and that has to change,” said Sean O’Driscoll, chairman and chief executive of the Glen Dimplex group, which employs 1,200 people in Germany. “You don’t have to go to university to be an engineer. We in Ireland need to learn from Germany and start making money out of making things, not out of financial engineering.”
Beyond day-to-day business, O’Driscoll sees an important role for Irish companies in Germany as advocates who can explain to clients the Irish side of the euro zone debate. “Everyone has to live within their means, that is a fact. On the other hand we also have to grow our economy,” he says.
“Irish business people have to get the message across in Germany that paying back debt is a marathon, while generating growth is a sprint.”
Tomorrow: the German company that has kept the lights on in Kerry for half a century
