Q What are your priorities in facilitating Frankfurt’s economic development and growth?
In the long term, my priority is to secure economic diversity by developing the business-orientated infrastructure, like the airport, fair and university. The main points of interest are the financial services, biotechnology, information and telecommunications industries. And we are supporting the development of the Frankfurt University.
In the short term, it is important to improve municipal services, especially for companies (ie, cutting red tape). Also important is attracting new business to Frankfurt within the framework of a regional marketing approach. The fact that some of the 2006 soccer world championship games will be played here will be a great advantage to Frankfurt’s image.
Q What role has FDI played historically in Frankfurt’s development?
A FDI has played an important role, not only in the past decade but also for the years after World War II. Looking at the international character of Frankfurt’s economy, most of the FDI in the State of Hesse was and is concentrated in the Frankfurt area. Because of the ongoing globalisation and internationalisation of business, FDI will continue to play an important role.
Q How would you describe the city government’s strategy for attracting FDI?
A Considering the large number of foreign companies from all over the world here, providing good municipal services for this group is a sine qua non to attracting new business to Frankfurt. Satisfied customers are the best kind of city marketing. Additionally, we encourage companies in the sectors mentioned above to invest here. The main target markets for us are the US, Asia (China, India, Korea and Japan) and the countries of the EU, as well as Russia.
Companies in these sectors cover growing markets, and being successful in them means additional growth for the local economy.
In the past few years, we have developed close relationships with hot business areas abroad. When we go to, for example, San Diego, New York or Bangalore, we are always accompanied by related enterprises that have been operating successfully in Frankfurt and are ready to tell their success stories.
Q How much FDI did Frankfurt receive last year?
A Unfortunately, there are no local FDI statistics available. But on the federal and state level we do have some figures. In Germany, the State of Hesse, with an FDI stock of €55.4bn, ranks second. That is 19.7 % of the total volume of FDI in Germany, which is €280.7bn (as of 2002). Compared with the share of population (7.4 %), FDI in Hesse is clearly above the German average.
Looking at the international character of Frankfurt’s economy, most of the FDI in Hesse is concentrated in the Frankfurt area.
Q Who are the largest foreign investors in Frankfurt?
A The biggest investor by far is Fraport; the enlargement programme for the airport amounts to €3.5bn in the next five to six years. Frankfurt Messe AG, another big investor, is developing its facilities; it will invest about €300m by 2010.
The European Central Bank will start the construction of its new buildings with a capacity of 200,000m2 this year. IBM opened its new regional headquarters last November, with a workforce of 2800. MAB will invest about €800m in its huge shopping mall project on the Zeil, the most important shopping area in Frankfurt.
The State of Hesse is investing in the relocation of Frankfurt University from the Bockenheim district to the Westend Campus (housing social and economic sciences) and Riedberg Campus (housing natural sciences).
Big investment activities are also taking place in the so-called Industriepark Höchst, the former Hoechst AG site, which amount to some €100m.
The overall investment in buildings in Frankfurt in 2004 was €1.6bn. This was a record – in 2003 there was only €980m following €1.4bn in 2002.
The investment figures of private companies and their local distribution are usually unknown.
Q What are Frankfurt’s competitive advantages in terms of attracting investment?
Frankfurt provides two main strategic advantages for companies. First, due to its central location and transport infrastructure, it provides rapid market access to all key markets in Europe. Second, with its population of five million and more than 320,000 companies, it is an interesting market in itself. And within a radius of 200km, there are a potential 35 million consumers. That is clearly more than London and Paris with 24 million each. As a result of this, Frankfurt has a higher gross domestic product per capita (€74.466) than Paris (€67.200) and London (€35.072).
Compared with the mega-cities of London and Paris, Frankfurt is a city of short distances. For example, from the city centre to the airport takes 15 minutes by car and 12 minutes by railway.
Frankfurt’s most important advantages inside Germany are its central location and the airport. No other German city has an airport of this capacity and level of performance.
Q What are its disadvantages?
A As mayor, I would like to say there are no disadvantages. To be honest, sometimes I would like to see decisions being taken and realised faster. This is mainly a drawback of the German regulatory framework.
Frankfurt’s economy usually has stronger growth than the German average. But its dynamic cannot be absolutely different from the German one. It is no secret that the German economy is limping. Generally speaking, a weak national economy is not favourable for local development. I think that is the most important disadvantage for Frankfurt and other German cities.
Q How do you overcome negative perceptions among foreign investors of the German labour market and regulatory environment?
Even with its weak economy, for foreign investors, Germany is one of the most interesting markets in the EU. There are business opportunities aplenty despite structural problems and high costs.
The influence of Germany’s negative image is overestimated, especially because this image is emphasised too much by us Germans in our internal discussions. But in our own communications, we are also optimistic and stress the great business opportunities to be found here in the region.
Q Is Frankfurt feeling pressure from lower-cost locations in the new EU entrants to its east?
A Presently, we do not have any information that there is an additional competitive pressure from lower-cost locations.
Q How are you working to continually improve the city’s business and investment climate?
A We believe in the strength of Frankfurt and we communicate this. We invest in the business infrastructure. The fact that there are so many building cranes here is a clear signal for a good business and investment climate, and proves the optimistic view that investors have about Frankfurt’s future.