Latest news with #Mittelstand
Malay Mail
4 days ago
- Business
- Malay Mail
Niche and needed: German SMEs weather Trump tariffs with specialist tech
FRANKFURT, Aug 7 — While Germany's big companies groan under the US tariff burden, many small and midsize firms, the backbone of Europe's top economy, are confident their highly-specialised goods will just keep selling. The hope is that, in niche areas where American customers have no obvious alternatives, buyers across the Atlantic will just have to accept paying higher prices for their high-tech machines and products. 'The customer in America pays the tariff,' said Thorsten Bauer, co-head of laser maker Xiton Photonics, based in the western city of Kaiserslautern. 'We don't notice a thing.' Bauer's firm of about 20 workers is in this respect typical of the often family-owned enterprises that make up the German 'Mittelstand', Deutsche Bank executive Jan-Philipp Gillmann said. 'German Mittelstand companies are somewhat protected since they are often very specialised, sometimes the only firm that makes a particular part,' said Gillmann, Deutsche Bank's Head of Corporate Bank Europe. 'The cost of the tariff will often be borne by the consumer.' Under a framework deal agreed in late July, EU exports are set to face across-the-board US tariffs of 15 per cent from Thursday — higher than traditional duties but much lower than Trump's threatened 30 per cent. While German corporate titans such as automaker Volkswagen have grabbed headlines by taking tariff hits measured in the billions, many of the smaller firms hope to weather the headwinds. Brian Fuerderer, head and founder of Microqore Medical, a high-end surgical equipment maker with 32 employees, agreed. 'It's not possible to just copy 'Made in Germany,'' he said. 'There's not much comparable to what we in Germany do when it comes to medical technology.' He added that US tariffs would have to rise to 30 or even 40 per cent before American customers got cold feet. 'For Volkswagen, for big business, it's hard,' he said. 'But if you have a real niche, something only certain specialists can do, demand will carry on as before.' 'No legal certainty' The Mittelstand's rugged optimism defies Trump's repeated statements that foreign companies — not American importers or consumers — will pay the tariffs. That does not mean the levies — and the past months of uncertainty around them — have left the small and medium enterprises entirely unscathed. The United States is Germany's largest trading partner and Trump's on-again, off-again tariff blitz has already had an impact. 'When all the tariffs started, I made no US sales for three months,' Bauer said. 'You don't spend money if you don't know how things will look in the next six months.' He hopes the latest agreement fixing duties at 15 per cent, up from a provisional 10 per cent in the lead-up to an August 1 deadline, will at least give American companies the confidence to place orders again. But he is not entirely sure, pointing to Trump's highly changeable tariff policies. 'There's no legal certainty, basically,' Bauer said. 'I am trying to push up sales in Europe with discounts and things like that, to be less dependent on the international market.' 'Regulating ourselves to death' About a quarter of Xiton Photonic's sales are exports to the United States and it would be hard to diversify, Bauer said, since his high-tech customers are more often found in Japan, China or America than in Europe. Wider geopolitical tensions mean there is no easy answer. 'China could equally turn around tomorrow and say: 'We are not importing anything from the EU,'' said Bauer. 'In that case I'd be just another leaf blown about by the wind.' Fuerderer, whose company makes half its sales in the United States, said that relocating production there could make sense for some firms in the sector over the long term, particularly given high energy costs and burdensome bureaucracy at home. 'The US government wants companies to manufacture in the United States and they have tax breaks, grants and subsidies to make it happen,' he said. In Europe, by contrast, Fuerderer said 'we are regulating ourselves to death. People are afraid to put money on the table and try something new.' — AFP
Yahoo
16-06-2025
- Business
- Yahoo
Triton, Carlyle weigh bids for Germany's REMA Tip Top, sources say
By Emma-Victoria Farr and Andres Gonzalez FRANKFURT (Reuters) -Private equity funds, including Carlyle and Triton, are weighing bids for Germany-based industrial equipment maker REMA Tip Top, which is exploring a possible sale, three people familiar with the matter said. The family-owned maker of industrial conveyor belts is working with an adviser to explore its options, which include a sale, the sources said. The stake size on offer has not yet been decided, two of the sources said. The firm generated 1.4 billion euros of revenue in 2023, according to the company, putting its possible value north of 3 billion euros in any deal, for which formal talks could start after August, one of the sources said. The owners are considering bringing on external investors to grow the business, the person said. The sources spoke on condition of anonymity because the matter is private. Carlyle and Triton declined to comment. REMA Tip Top did not immediately return requests for comment. A sale would come amid a muted time for dealmaking after the revelation of U.S. tariffs in April put a halt on transactions. Germany's economy, heavily dependant on exporting to an increasingly volatile world, has been stagnating for years. A government borrowing splurge is in the works but it remains unclear whether that will help. The firm would be the latest family-owned company to come up for sale as a wave of business owners in Germany's so-called Mittelstand look to exit without successors. REMA was founded in 1923 by brothers Otto and Willy Gruber as part of the Stahlgruber Group, concentrating on providing basic materials and tools for industry and trade in the 1920s as a supplier in the German industrial landscape. The firm focuses on sustainable services in the field of conveyor and processing systems as well as tyre repair. Its business services are used in areas including the automotive industry, chemicals, energy, water treatment and pulp and paper. REMA Tip Top has more than 9,000 employees and 200 subsidiaries worldwide, it says on its website.
Reuters
16-06-2025
- Business
- Reuters
Triton, Carlyle weigh bids for Germany's REMA Tip Top, sources say
FRANKFURT, June 16 (Reuters) - Private equity funds, including Carlyle (CG.O), opens new tab and Triton, are weighing bids for Germany-based industrial equipment maker REMA Tip Top, which is exploring a possible sale, three people familiar with the matter said. The family-owned maker of industrial conveyor belts is working with an adviser to explore its options, which include a sale, the sources said. The stake size on offer has not yet been decided, two of the sources said. The firm generated 1.4 billion euros of revenue in 2023, according to the company, putting its possible value north of 3 billion euros in any deal, for which formal talks could start after August, one of the sources said. The owners are considering bringing on external investors to grow the business, the person said. The sources spoke on condition of anonymity because the matter is private. Carlyle and Triton declined to comment. REMA Tip Top did not immediately return requests for comment. A sale would come amid a muted time for dealmaking after the revelation of U.S. tariffs in April put a halt on transactions. Germany's economy, heavily dependant on exporting to an increasingly volatile world, has been stagnating for years. A government borrowing splurge is in the works but it remains unclear whether that will help. The firm would be the latest family-owned company to come up for sale as a wave of business owners in Germany's so-called Mittelstand look to exit without successors. REMA was founded in 1923 by brothers Otto and Willy Gruber as part of the Stahlgruber Group, concentrating on providing basic materials and tools for industry and trade in the 1920s as a supplier in the German industrial landscape. The firm focuses on sustainable services in the field of conveyor and processing systems as well as tyre repair. Its business services are used in areas including the automotive industry, chemicals, energy, water treatment and pulp and paper. REMA Tip Top has more than 9,000 employees and 200 subsidiaries worldwide, it says on its website.
South China Morning Post
13-06-2025
- Automotive
- South China Morning Post
Cheerleaders to critics: German machinery makers call for EU action on China
Now, as exports dwindle and facing 'increasingly strong [Chinese] competitors' beefed up by 'unfair state subsidies', the industry is demanding that Brussels put in place trade barriers to protect it. A new position paper published on Thursday by the Mechanical Engineering Industry Association (VDMA), representing medium-sized manufacturers that help constitute Germany's famed Mittelstand group of businesses, marks a dramatic reversal for an industry that until recently lauded the Sino-German economic miracle. 'The EU should impose countervailing duties on imports from third countries if they violate EU anti-dumping or anti-subsidy rules. China is a particular focus here with its aggressive export policy,' read the VDMA's paper. The industry group – whose 3,600 members make everything from power transmission systems and machine tools to semiconductor machines and precision tools – made clear that it was ready to compete with Chinese rivals on a level playing field. However, it was also unequivocal that it feels those conditions do not exist and that it wants governments to intervene. 12:53 'Overtaking on a bend': how China's EV industry charged ahead to dominate the global market 'Overtaking on a bend': how China's EV industry charged ahead to dominate the global market 'Chinese companies are heavily subsidised by the government. And they supply products to Europe that sometimes disregard our technical regulations. China is not playing fair, and politicians must respond to this,' said Bertram Kawlath, VDMA's president.
Reuters
10-06-2025
- Business
- Reuters
In Germany, retiring company owners struggle to find successors
BERLIN, June 10 (Reuters) - Rudolf Kiessling would like to retire after years spent building his heating, ventilation, and air conditioning business. But he faces a challenge common to many German company bosses: finding someone to take over. The 62-year-old is among thousands of owners of small and medium-sized enterprises (SMEs) - some 99% of German firms, known collectively as the Mittelstand - who may have to wind up their businesses if they cannot find a successor. The issue is a growing risk to Europe's largest economy, already suffering its longest downturn since World War Two. "I have no one. I have a son, but he can't do it because he has done something completely different professionally," Kiessling told Reuters. "Some employees may have interest, but they are a bit afraid of the responsibility." A survey by state-run development bank KfW showed around 231,000 SME owners planning to close their companies by the end of this year - 67,500 more than a year ago. Age is a major factor: demographic data show more than half of Mittelstand owners are over 55 years old, up from 20% 10 years ago. And they are ageing faster than the population as a whole - 39% of them are 60 or older, compared with 30% of Germans overall. "Never since we began to monitor business successions have so many small and medium-sized enterprises considered giving up their operations," said KfW's Mittelstand expert Michael Schwartz. SMEs account for more than half of Germany's economic output and almost 60% of jobs, and are an engine of private investment. The succession problem "not only threatens jobs but also weakens Germany's economic position overall," Marc S. Tenbieg, head of the DMB Mittelstand association, told Reuters. Although the new government wants to boost investment with an infrastructure fund, corporate tax cuts and advantageous depreciation options, businesses may be reluctant to commit without clarity about their future leadership. Carsten Brzeski, global head of macro at ING, cited studies showing under-investment of 400 to 600 million euros ($457-686 million) in Germany over the last decade. "Investments are held back as business owners cannot find adequate succession planning," Brzeski said. Before February's election, the Commission for Business Succession of another Mittelstand association, BVMW, made recommendations to address the problem, including tax incentives for business transfers and ways to improve financing conditions. "The new government plans very little on this issue according to the coalition agreement, where the term 'business succession' does not appear at all," said Benno Packi, chairman of the commission. A economy ministry spokesperson said the government has been supporting business successions with numerous measures, such as a free website to match owners with potential buyers, and loan offers with reduced interest rates. A smaller pool of internal candidates can make it hard to find talent, especially if larger companies offer more competitive packages, said Oliver Stettes, head of labour economics at the IW economic institute. Germany already has an acute shortage of skilled workers. But the succession squeeze also has an impact on bigger firms, nearly all of which have small companies as suppliers that would be hard to replace. Candidate scarcity can make what is often an emotional transition more challenging, said Holger Wassermann, an expert in company successions. "Psychology makes up at least two-thirds of the considerations in Mittelstand business sales," Wassermann said. "For many entrepreneurs, their company feels like a body part - selling it can feel like losing an arm." The average age of those handing over increased to 63 years from 61.5 years last year, while the age of those taking charge was static at 38 years, according to a Successions Monitor in which Wassermann participates. Marcel Krieb is an outlier. At just 25, he became managing director of pretium associates, a financial consultancy for SMEs established in 2003, after working on a project with its founder. "He asked me at the right time if I could somehow succeed him in his company," Krieb told Reuters. "Many young people prefer the security of a steady paycheck and predictable future, rather than the uncertainty that comes with being self-employed." Many Mittelstand companies are family-owned but nowadays fewer sons and daughters are prepared to take over. A survey by the Ifo Institute found 42% do not have a family member lined up to succeed. Jacob von der Decken was 30 and his father 68 when Jacob took over the family's agricultural business in northern Germany last year, having discussed it periodically since he was 14. "It's a lot of responsibility going on your shoulders," said von der Decken, who studied agricultural economics and had been working on renewable energy projects at a fintech company. "In agriculture, your family lends you the farm for one generation, and then you pass it on to the next generation. You have like 30 years of bringing it forward and making sure that it also lasts the next decades." While his father's generation prioritised efficiency, he is focusing on diversification and leveraging AI for data collection through a startup, Tunen Agronomy. Private equity takeovers, often mooted as a solution, are really only an option for larger Mittelstand firms, said Michael Wolff, an M&A expert at investment bank Stifel who specializes in transactions for companies valued at 100-500 million euros. "For the craftsman with 10 people or 20 workers ... So far there hasn't been a solution that systematically helps these people," Wolff said. And the Mittelstand's problems ripple widely. "With each small piece that breaks away, the foundation of the German economy becomes a bit more fragile," said pretium's Krieb. ($1 = 0.8877 euros)
