The US remains for many German companies the most important market outside the EU. A majority of companies are planning to invest further and expand the number of staff in the US. However, at the same time, the shortage of skilled labour often gets in the way of vigorous recruitment.
A few figures highlight the importance of the US market for German companies: German companies employ roughly 860,000 people in the US, generated over USD 530 billion in 2018 and have in the meantime invested over USD 520 billion there. The US was the most important target country for foreign direct investments in 2019 and, besides the EU, the most significant trading partner. Despite turbulent times, the US market remained extremely important to German companies also in 2020. This was revealed in our "German American Business Outlook (GABO) 2021".
Identification with the US remains for many German companies very pronounced through their US-American subsidiaries. German enterprises are showing their willingness to invest in the US by not only expanding and strengthening their existing operations, but also by setting up new representative offices, sales and service centres and production sites. 82% of the companies surveyed for the study are planning to make additional investments in the US over the next three years. These growth plans are often accompanied by heavy recruitment: 43% are seeking to expand their workforce in 2021. And 79% of those surveyed actually plan to raise their headcount by 2026, of which just under one-third (30%) want to increase staff by more than 25%.
However, besides the coronavirus crisis, the shortage of skilled labour represents one of the biggest challenges to realising growth. Practically every other German company in the US (45%) rates the search for suitable skilled employees among their top three challenges. Despite continued staff development efforts, only 14% of the companies surveyed say that they have no issues finding qualified employees for vacant positions. By contrast, 64% of German companies in the US complain that they have difficulties finding people with the right qualifications.
More than one-third of the companies surveyed (34%) stated that their US activities account for over 20% of the group's entire revenue. 15% of those surveyed stated that US activities actually contribute to more than 50% of consolidated revenue, and for 9% this figure is even higher than 50%. Thus, US business activities are extremely important for German groups, although the share of profits from US activities has decreased. 92% of the companies surveyed expect their business to grow in 2021. The somewhat subdued optimism compared to the prior year (96%) is due in this case to uncertainty as to when the end of the Covid-19 pandemic can be expected.
However, our "German American Business Outlook 2021" also shows how German companies plan to respond in the US to the challenges caused by the pandemic. In this regard, many companies view Covid-19 as a catalyst for change. Changes in the working world as well as investments in automation and digitalisation are the two main responses of German companies in the US to counter the challenges of Covid-19. These activities are paving the way for accelerated digital transformation.
You can find all of the results of the survey, which was prepared together with the German American Chamber of Commerce, here. 166 German companies in the US were surveyed for the study.