American Firms Flock to Europe ...
BRUSSELS — A Chrysler Grand Cherokee Jeep rumbles down a boulevard in Brussels. With a beefy, 237-horsepower engine, the Jeep is geared for any terrain.
And it has helped carry Chrysler back to Europe.
Two decades ago, Chrysler fled the Continent. But last year it opened a sparkling new European headquarters here in Brussels and now sells 100,000 Jeeps, minivans, and passenger cars yearly in Europe. And the company is gearing up for 20 percent annual growth.
Europe, despite slow growth and high unemployment, is simply too big to be ignored. The combined economies of European Union (EU) countries are worth some $7 trillion. And after years of productivity gains at home, American companies have invaded this rich market with new products, technologies, and management techniques.
"Our vans and Jeeps offer a driving experience unlike anything the Europeans have on the road," boasts Tim Adams, president of Chrysler Europe.
"If companies from the United States stay true to their American roots," he says, "they have a lot of potential in Europe."
Billions of dollars ride on such boasts. US investment in Europe doubled since 1992, to $150 billion. Last year alone, the amount swelled almost 20 percent.
Just last week, Merrill Lynch struck one of the biggest deals: a $5.3 billion buyout of Mercury Asset Management in London.
"The EU represents the largest trading partner with the US," says William Setton Brown of the American Chamber of Commerce. "Europe offers a huge infrastructure base, an understandable culture, and the world's single largest market."
Also, privatization and deregulation are opening up long-closed sectors to investment - such as telecommunications and energy.
"In comparison to the constant tensions over the Pacific, the relationship across the Atlantic is remarkably balanced," says John Russell, an American Chamber of Commerce economist. "That keeps everything on an even keel."
The US strategy in Europe is changing. American companies no longer feel bound by traditional European rules, which limited price competition and imposed layers of social protection.
Today, US investment takes aim at the EU's single market, launched five years ago.
"Historically we had a separate organization in each country" says Jon Chait, managing director of Manpower International. Now "marketing, data processing all have been centralized."
Americans also find their operations growing faster here than in America. Manpower logs annual growth of 25 percent for its European temporary-work business, versus 15 percent in the US.
"I think the whole idea of a service economy has come of age in America," Mr. Chait says. "That gives us, American multinationals, an advantage of coming to Europe with sophisticated distribution."
But big problems remain, such as high labor costs and distaste for reduced, American-style benefits and changes in job routines. And many US companies find the single market isn't as single as hoped.
UPS, for example, has invested almost $2 billion here to build one of the Continent's largest package-delivery networks.
But the company still faces what it calls unfair competition from entrenched European postal monopolies, delivering more than $500 million in losses for the past three years.
"Since the advent of the single market, customs have gotten better," says Erik Merkel Sobotta, a UPS executive. "But its still not as simple to ship a package from Stockholm to Madrid as it is from Los Angeles to New York.
Nonetheless, UPS says customers want one-stop global shopping, and the company has redoubled its investment, with new airplanes, express-mail shops, and a new computer-tracking system.
"It takes time to conquer a complex, fragmented market," Mr. Merkel Sobotta says.