The president of the German-Portuguese Chamber of Commerce and Industry (CCILA), Markus Kemper, underlines that “German buyers highly valued the stable relationship with suppliers”. In an interview with ECO, the CEO of Filkemp, a filament manufacturer based in Sintra, recognizes that in recent years the investment was directed mainly to strength production in large companies such as Bosch, Siemens, Volkswagen, Fuso Mitsubishi or Continental, but warns that “attracting new investment from companies of the Mittelstand [German SMEs] is no less important”.
On the day the world’s largest industrial fair kicks off in Germany, where Portugal has the status of “partner country” and participates with 109 companies, 93 of which are small and medium-sized – the organisation of Hannover Messe estimates that 66% of visitors are involved in investment decisions and a third have projects estimated at €52 billion – Markus Kemper advises industrialists to “go to the right people with the right approach”. For the time being, he underlines, Portugal “has qualified personnel, especially in the area of engineering, in still reasonable quantities”.
Does the Portuguese technological and industrial ecosystem can surprise Mittelstand? What are the main arguments?
Germany is already the third export market for Portuguese products and services, with special emphasis on the areas of metalworking, moulds and, more recently, information technologies and engineering. Therefore, the Mittelstand already has knowledge and proof of the capacity of the Portuguese ecosystem. German buyers know that, besides the quality of production, Portuguese suppliers are reliable, besides [the advantage of] the geographical proximity of the market, compared to other latitudes. The Portuguese presence at Hannover Messe will allow us to showcase Portugal’s excellent production to more potential customers.
On the other hand, what aspects do Portuguese companies still need to improve in order to become more attractive to the powerful German industry?
Besides the continuous investment in the quality of their products and services, Portuguese companies should try to gain as much knowledge as possible about the competitive German market in order to address the right interlocutors and with the right approach. Within the internationalisation process, it is fundamental to access reliable information on the reality of each company’s specific market and [to have] define an adequate action plan to take the right decisions and make the most of the existing opportunities.
In which sectors does Portugal have the best conditions to enter or gain weight in the industrial value chain in Germany?
The sectors represented at Hannover Messe are, by excellence, sectors in which Portugal has a high potential: engineering solutions, automation, digital solutions and a sector that until now has been little considered, which is energy, with enormous development possibilities. Portugal as a supplier country also stands out in “niche” areas, with high specialisation, such as, for example, technical textiles or plastics.
Portuguese companies should try to gain as much knowledge as possible about the competitive German market in order to address the right interlocutors and with the right approach.
What is most valued by German investors when they think of a country like Portugal for industrial sourcing?
They consider factors such as supply security (meeting deadlines, supplies without interruptions or stoppages) and stable relations with suppliers, which is an aspect highly valued by German buyers. Nearshoring has also gained great relevance. In addition, Portugal’s geographical location represents an advantage in terms of transport time and the reduction of potential logistical problems along the route.
Talent (human resources) has been one of the axes of the country’s promotion, especially in the engineering area, but companies are increasingly complaining about the shortage of qualified personnel. Could this become a problem?
The shortage of qualified personnel is a problem common to many industrialised countries – and particularly notorious in Germany. This is one of the reasons why Portugal is on the radar of these countries because, for the time being, it has qualified personnel, especially in the area of engineering, in reasonable quantities. However, it is up to the country’s leaders to take the necessary measures to ensure that the situation is not reversed.
The organisers of Portugal’s participation in Hannover Messe say the aim is to place the country at the centre of the European reindustrialisation equation. There was a lot of talk about this subject at the beginning of the pandemic, when there were the first breaks in production chains, but in the meantime it seems to have cooled down. What is your perspective?
On the contrary, reindustrialisation has been a prominent theme both at the level of government strategy and in the activity of companies and sectorial associations. The war in Ukraine has given this issue a new dimension in all industrial sectors. From the German perspective there is a huge effort to diversify supply chains to reduce their dependence on markets such as Asia and Russia.
Another topic that was not on the agenda for this fair, but has since emerged, is the war in Ukraine. What effect can this event also have on nearshoring in Portugal, i.e. subcontracting closer together in geographical terms?
The recognition of the importance of nearshoring began during the pandemic and has now been reinforced with the war in Ukraine. For the reasons already mentioned, Portugal is definitely a country that German entrepreneurs have on their radar, both as a supplier and also for the location of their production activities. Because of its advantages compared to more distant markets, such as those in Asia, or where the risk of conflict may jeopardise their viability.
A few days ago, the President of Portugal, Marcelo Rebelo de Sousa, particularly on the subject of tourism, said that Portugal could be a “net beneficiary” of this war situation in Eastern Europe, due to its geographical distance from Ukraine. Do you believe that it could also benefit in this area from German investment in Portuguese industry?
Portuguese companies already have an image of trust with German buyers in terms of the supply of goods and services, an asset that is also relevant in attracting investment. The security issues of the supply chains raised by the war in Ukraine have led German businesspeople to look with greater mistrust to the Eastern European markets and have increased the pressure to look for other countries within Europe that can establish themselves as alternatives, both as suppliers and production sites.
Portugal as a “net beneficiary” of the war in Ukraine? German businessmen are under pressure to look for other countries within Europe that can assert themselves as alternatives [to Eastern Europe], both as suppliers and production sites.
“Portugal makes sense” is the motto for the national participation in this year’s edition of Hannover Messe. Besides the industrial capacity of its companies, what other arguments can the country present to attract foreign investors?
With this claim, Portugal positions itself as a supplier and investment destination. The Portuguese presence in Hannover highlights the main advantages that the country offers: security, diversification of supply chains and production sites, the existence of a pool of talent available and with competitive conditions (…)
We believe that Portugal has the conditions to capture new clients and new investments. [According to the fair’s organization, 66% of visitors are involved in investment decisions and one third has investment projects estimated at €52 billion]. It is in this sense that the Government, associations and companies are working and preparing the Portuguese presence.
And what push is there in the successful cases of investment in Portugal by large German companies, such as Siemens, Bosch or Volkswagen? Is it also possible to attract German SMEs that want to expand their activity or even put their industrial activity back in Europe, which is in other more distant locations?
Companies such as Siemens, Bosch or Volkswagen represent the most visible German presence in Portugal and act, in a way, as a business card. However, in Germany, the Mittelstand does not necessarily compare itself to these companies. On the contrary, it is guided by its most direct competition, other companies of the same dimension and with the same characteristics. But also at this level we have in Portugal examples of successful German investment, such as the cases of Leica or Eberspächer, which occupy a relevant place in the Portuguese economic context.
In the last few years, German investment was mainly directed towards the reinforcement of existing production in companies such as Bosch, Siemens, Volkswagen, Fuso Mitsubishi or Continental. The attraction of new investments from companies of the Mittelstand is of no less importance in this context.