A Dutch official tiptoes past the tulips to sell Americans on industrial ventures
Picturesque as they may be, images of windmills, tulip fields, and Dutch people shuffling about in wooden clogs are not what Adrian Roosen loves to be reminded of. As a member of the Netherlands Industrial Commission, Mr. Roosen is charged with dispelling old-fashioned or romantic notions about his native country -- especially where business is concerned.
``We don't want to waste people's time with how beautiful Holland is,'' he said at a recent seminar in the heart of Massachusetts' high-tech belt. ``This isn't so much a sales effort. What we're trying to do here is save them a ticket to Europe.''
Stereotypes, he explains, can be downright dangerous when battling dozens of European nations for millions of dollars in United States investment. And that's just what the relatively tiny Netherlands has been doing so successfully for so long as it vies with the rest of Europe for a piece of the pie.
This year, as every year, the Netherlands, along with governments from nations around the world, has come fishing for investment dollars in the United States. The Dutch target is US high-tech companies -- small and large.
The objective: to get them to set up a distribution center, build a factory, or become involved in joint ventures with Dutch companies.
The message: Launch into the European market from a Netherlands base of operations. US companies last year sold roughly $400 billion worth of goods to Europe. And with European economies reviving under the stimulus of lower oil prices, the Continent is suddenly a much more attractive place for US companies to be.
Though Britain and West Germany are attracting big pools of US capital, the Netherlands continues to receive a disproportionately large chunk of US investment relative to the size of its economy and population.
With just over 14.4 million people in Holland, the economy isn't the main attraction for US companies. But the Dutch government contends that American companies cannot afford not to use the nation's well-educated work force and strategic location as a base from which to manufacture, sell, and distribute to Europe -- and the world.
More than 1,000 US companies agreed with that argument last year, accounting for an estimated $8.5 billion in US investment in the Netherlands. When 1985 data are released, US investment is expected to have risen about $200 million from the year before, much of it capital spending on plants and other facilities, as opposed to investment in Dutch securities.
A few recent examples:
Intergraph Corporation, a leading maker of computer-aided design/computer-aided manufacturing hardware (CAD/CAM), recently announced it will build a $12 million manufacturing and distribution facility in Nijmegen.
For Intergraph, which had $403.8 million in sales last year, it is the first manufacturing plant to be built away from its Huntsville, Ala., headquarters. The move was necessary, says Robert A. Glasier, executive product marketing manager, because the company's European market is rapidly growing. Last year Europe accounted for 16.8 percent of Intergraph's sales -- or $68 million.
AT&T and Philips Telecommunications BV was formed in early 1985. A $500 million pact has AT&T and the Dutch giant Philips jointly developing, manufacturing, and marketing public telecommunications networks around the world. The joint venture recently received a contract from the Dutch government to replace the nation's phone system.
Companies such as Prime Computer, Mentor Graphics, and Wang Laboratories have announced plans to move to or expand in the Netherlands, the Dutch government reports.
The Netherlands now ranks sixth among 48 countries in a survey to assess US investment potential. Business Environmental Risk Index SA (BERI), an investment consulting firm, puts the Netherlands ahead of Britain (10th) and France (18th), but behind fourth-ranked West Germany. The survey calculates three separate factors -- political risk, operations risk, and outlookfor remittances and repatriation of capital -- and then combines them for an overall assessment.
Another way of showing the Netherlands' relative strength compared with the larger populations and economies comes from comparing US Commerce Department data of US investment abroad for the past few years. In 1984, and in previous years, the Dutch captured a much larger per capita share of US investment (see chart) than their neighbors in West Germany and France, and even edged out Britain.
US investment in the Netherlands is also significant as a percentage of gross domestic product (GDP), the European equivalent of the US gross national product measure of economic output. The Netherlands ranked second behind Britain in attracting US investment and ahead of France and Germany.
``They've had a relatively better experience with inflation, due, in part, to their offshore supplies of natural gas for expansion and energy independence,'' says Blair Nare, an analyst with Data Resources Inc. (DRI) in Lexington, Mass.
Dutch inflation remained low last year, at 3.3 percent. This year's rate should be about 2 percent, according to Mary Jo Deering, a political- and economic-risk analyst with BERI.
Nevertheless, the Netherlands has not escaped all the economic hardships and recessionary pressures that have haunted most of Europe during the past decade.
Dutch wage costs rose rapidly from 1974 through 1984, with hourly wages up an annual average of 5.5 percent during that period, says Ms. Nare. Partly because of the wage increases, a decline in productivity followed. Gauged as output per person, Dutch workers' productivity dropped an annual average of 1.5percent during the same period, according to Data Resources.
But the Dutch government says a study last October by West Germany's Dresdner Bank reflected favorably on Dutch labor costs compared with 11 European nations. The Dutch say the study puts the Netherlands in fifth place, reporting lower labor costs than the Americans, Swiss, West Germans, and Swedes.
Unemployment in the Netherlands is about 15 percent. That, perhaps more than anything else, has given a sense of urgency to efforts to attract business -- and the jobs they bring.
``The [Dutch] baby boom has hit the labor force now, and the economy is not creating enough jobs,'' says a US Commerce Department official who asked not to be named. ``Among a lot of people between 18 and 30 years of age, the prospects for getting a job aren't thatgood.''
Under pressure to create new jobs, the party holding power is under pressure and is facing a crucial test of its economic policies when elections are held on May 12. ``If the conservative political trend in Europe continues, we would expect the center-right Christian Democrat-Liberal coalition to just squeak by,'' Ms. Deering says. ``If they are returned to power, you can expect investment to continue to rise.''
On the deficit front, there remains some way to go in battling a problem the US is all too familiar with. Nare at DRI says the Netherlands' '85 general government deficit, at 7.5 percent of GDP, was higher than those in Britain (2.5 percent), France (3.3 percent), or West Germany (1.9 percent).