STUTTGART, Germany — There's a reason German automotive suppliers set up sales and engineering facilities in the Detroit area — and it isn't the weather or low, non-union wages.
Stuttgart-based companies such as Robert Bosch GmbH, Mahle Group, Behr GmbH & Co. KG and others locate near Detroit because they have to: That's where the customers are — and the engineering talent.
The Stuttgart Region Economic Development Corp. (SREDC) is using this same rationale in reverse to lure North American suppliers to southwest Germany, one of the country's key automotive centers.
It isn't offering big financial incentives or low-cost labor. Quite the contrary, Germany's manufacturing and labor costs are among the highest in the world.
But Stuttgart offers a region filled with some of the world's best-known auto makers and suppliers. DaimlerChrysler AG's headquarters, with its giant 3-pointed star, dominates the landscape, but many other major companies are based here as well, including Porsche AG, Bosch, Mahle, Behr, Durr AG, Getrag GmbH & Cie KG, J. Eberspacher GmbH & Co. KG and Schefenacker AG.
Other companies have major facilities here, from International Business Machines Corp. to Valeo SA and Filterwerk Mann+Hummel GmbH.
Arndt Siepmann, SREDC's North American representative, acknowledges the region isn't right for those looking for low-cost manufacturing. Instead, he stresses the region's high-level research and engineering work in fuel-cell development, mechatronics, telematics/mobile computing and virtual-engineering software.
To make Stuttgart more attractive, the region is promoting these research areas with so-called Centers of Excellence, which are non-profit organizations built around a specific business activity. Each group consists of members from business and academia interested in promoting innovation.
The region has more than 280 local companies, 16 non-governmental organizations and 43 universities and research facilities. SREDC says some of the competence centers already are showing results.
Fuel-cell producer Ballard Power Systems Corp., Crystop Display GmbH (an electronic control systems manufacturer) and a third partner in the region reportedly are in the initial stages of developing a fuel cell for mobile homes.
German machine tool maker Schuler AG and Antriebssysteme Faurndau GmbH, worked together in the mechatronics competence center to develop the world's fastest roll feed for high-speed presses.
And a supplier used environmental simulation processes developed with the aid of the textiles competence center to optimize fiber materials and coating procedures for convertible roofs. As a result, a better convertible top soon will be in production.
Last year the Michigan Economic Development Corp. officially partnered with SREDC to focus on alternative energy education projects. SREDC President Walter Rogg sees Michigan and Stuttgart as economically comparable.
“Through this cooperation, both partners expect to be able to strengthen their overall market positions and to improve the time to market required for new developments using fuel-cell technology,” Rogg says. “We anticipate our universities and research institutions will cooperate in the future in the education of skilled employees.”
Whether these competence centers will be enough to make U.S.-based suppliers as common in Stuttgart as German suppliers are in Detroit remains to be seen. But some observers say it's nice to see economic development packages that aren't based on cheap labor and massive taxpayer-funded financial incentives.