By Suzanne Sprague
EUROPE – Suzanne Sprague, KERA 90.1 Reporter: If you drive north on Central Expressway, you'll pass through the towering shadows of what European investment has brought to North Texas. Telecommunications giants Nortel and Alcatel are just two of the more than 40 European firms ensconced here.
Joe Lake, Director of International Affairs, City of Dallas: You cannot beat the location for attracting foreign investors.
Sprague: Joe Lake is the Director of International Affairs for the City of Dallas.
Lake: When you are in Dallas, you can be in any place in North America, within the North American free trade area, NAFTA, in four hours or less. You can't beat that.
Sprague: But drive north on the Tollway and you'll pass by one of the region's biggest players in the European marketplace: Plano-based Electronic Data Systems.
Steve Leonard, President, EDS's E.solutions: Europe is the second largest marketplace in the world for EDS, and we're driving substantial growth there.
Sprague: Even double-digit growth, according to Steve Leonard, president of EDS's E.solutions line of business in Europe.
Leonard: Europe is still on an expansion curve, whereas some of the North American markets are on a slowing curve. So for us, there's a lot of opportunity to diversity the portfolio in terms of growing our business in areas where other companies are choosing to invest.
Sprague: It's fair to say Leonard is bullish on Europe's future. This year, EDS spent more than half a billion dollars to acquire the German software firm Systematics, expanding its 30,000-member European workforce by another 3,000 people. Even though EDS is based in the States, Leonard says the company shouldn't operate the same way in foreign countries. So, it rarely sends Americans to work in Europe, even when they feel confident they can blend easily with the local culture. Steve Denson is an adjunct professor at SMU's Cox School of Business.
Steve Denson, Adjunct Professor, Southern Methodist University's Cox School of Business: There are times when we think, "Oh, because my grandfather was from France or my grandmother was from Italy, I know how things are done, so I am the best representative." But what you realize is that you know France 1940 or you know Italy 1950. And just like our country, everything's evolved, gotten faster.
[Ambient sound of man playing according on a German street.]
Sprague: In Germany, which by most accounts fuels the economic engine of the European continent, a new fast pace is balanced with long-standing ways of doing business. Labor unions are strong, and decision making is more decentralized than in the U.S.
Juergen Dunsch, Business Editor, Frankfurter Allgemeine Zeitung: I suspect there is still the American belief that you have the right CEO and you have an efficient American top manager here and things will develop and things will run smoothly; and I think that is the biggest mistake Americans can make in this country.
Sprague: Jurgen Dunsch is the business editor with the Frankfurter Allgemeine Zeitung, a kind of German Wall Street Journal. For decades, he has watched U.S. firms take over German companies and "Americanize" them with language and management style. But he says that trend began to change with the DaimlerChrysler merger in 1998 that led to the sacking of the American management team.
Dunsch: And I think this is really justified to say, DaimlerChrysler is a German company or a European company but with a very, very important American arm. And I think this is the art of management these days, that you must blend two cultures and still have two separate cultures at different places of work, in different departments.
Sprague: Eastern European countries, however, seem less concerned about these cultural differences. They're far more eager for foreign investment to support their emerging democracies. Routinely, groups from Eastern Europe tour the United States in search of American dollars. Csaba Kilian was part of a Hungarian delegation that came to Dallas two months ago.
Csaba Kilian, Investment Director, The Hungarian Investment and Trade Development Agency: We picked the Dallas area because we think this region is developing very fast and [there are] more and more high-tech related companies investing and growing very quickly in Dallas. And we hope that they are interested in the international, the European market.
Sprague: American firms, such as General Motors, General Electric and Coca-Cola, have poured more than $7 billion into Hungary since communism collapsed in 1989. But in Slovakia, that money has flowed less freely. Until recently, the government was more isolationist and authoritarian toward foreign investment.
[Ambient sound of street construction in Bratislava.]
Sprague: But construction projects throughout the Slovak capital of Bratislava point toward a new optimism. The government cut corporate taxes and set aside $10 million to build new industrial parks. So last year, foreign companies invested $2 billion here, more money than in the last six years combined. Stefan Burda is with Slovakia's Ministry of Economy.
Stefan Burda, Slovakian Ministry of Economy: We highly appreciate the inflow of American capital, and American capital creates good competitive environment with the European one and has a good impact on the economy: growth. I want also to stress that our economy is very open. I want also to stress that foreign investors, we offer the same conditions as for the domestic ones.
Sprague: American firms operating in Eastern Europe are often greeted with looser business regulations than they'd find in the United States, as well as extensive tax holidays and government subsidies. And, these countries don't have to abide by European Union regulations because they're not yet member states. But some observers believe their governments are selling their countries' futures away to the lowest bidder at the expense of workers and the environment.
Richard Filchauck, Environmental Activist and Project Manager with the Regional Environmental Center for Central and Eastern Europe in Bratislava: There is more and more investment creating more and more environmental impact. It doesn't matter if you are very environmentally friendly - there is still some impact that is happening.
Sprague: Richard Filchauck is a project manager with the Regional Environmental Center for Central and Eastern Europe in Bratislava. He says foreign firms have been successful in exploiting loopholes in Slovak laws to avoid the environmental responsibilities domestic manufacturers have. But he acknowledges it's hard to choose between protecting the environment and cutting Slovakia's double-digit inflation.
Filchauk: This interest for the environment is decreasing because people mostly are still thinking about economic profit; and they think as soon as we reach some point in economic development, then we can start to think about environmental impacts.
Sprague: It's the same scenario with workers. At manufacturing plants, they don't have the strong labor unions that EU nations do; and they make, on average, less than $500 per month. Almost one in five people here is unemployed.
Denson: You have to have employment before you can debate the quality of it.
Sprague: Again, SMU''s Steve Denson.
Denson: So now, and probably for the next 20 years, you're going to see government efforts in the evolving countries of Europe [placing] an emphasis on lessening or keeping weak the unionization process in those countries.
Sprague: Most observers also believe you're going to see more American investment here, even though U.S. firms have been cautious in the past. The question remains how that investment will affect the local culture, and what responsibilities foreign firms will feel to their new European neighbors. For KERA 90.1, I'm Suzanne Sprague.* * * * *
Suzanne Sprague's reporting has been made possible in part by the German Marshall Fund of the United States. * * * * *
Photo: American-based business advertise in a Frankfurt train station/by Deborah Yasinow