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Focus on Germany

OCTOBER 2013

HeidelbergCement AG

As part of this month’s special focus on Germany, here we have an exclusive interview with Dr. Bernd Scheifele, Chairman of the Managing Board at Heidelberg Cement. He discusses with us how business has been over the last year, why Germany experienced an easier time than many during the financial downturn and what foriegn investors should know about the country before embarking upon a business venture there.

Please give me a little information about your role as chairman of Heidelbergcement aG – what does your typical day include?

At HeidelbergCement we believe in flat hierarchies, efficient structures and clear reporting lines. This implies that the Top Management is close to the business. In my role as Chairman of the group I spend a lot of time visiting local management and operations. I do this for example as part of our quarterly management meetings where financial and operational key figures are discussed.

addition I like to see for myself how projects and markets are developing and what challenges there are.

How has business been over the last year? are you still feeling any effects from the financial crisis?

All-in-all, business has developed positively in the past year. We have seen continuous growth in demand for our products in emerging markets in Asia and Africa.

austerity measures, like in Eastern Europe. We are glad that we are almost not present in the crisis countries of southern Europe and northern Africa.

Germany seemed to fare relatively well during the financial troubles, why do you think this is?

In

This is essentially due to two reasons: First of all, we have a very balanced business structure in Germany that covers the whole value chain from raw materials to IT and pharmaceuticals, including a strong manufacturing sector for high quality and luxury goods that are demanded in Asia and North America. As such the dependencies on specific sectors, like banking or housing were not as large as in other countries that really suffered and are still suffering from the financial crisis. Secondly, the German economy is very competitive. This also stems from the political reforms at the end of the last century and very low wage inflation over the past decade. Let’s

The cement

consumption in the USA and the UK has finally started to increase from a very low base, driven by the recovery in the housing sector. Germany and Northern Europe have been doing fine. But there are still markets where construction activities are impacted by

not forget that Germany was considered to be the sick man of Europe in the 1990s. I think the Germans have done a good job to improve their competitiveness.

Is Germany a good place for business right now? Why?

The German economy is running very well at the moment. However,

there are some

significant structural challenges ahead that we need to urgently take care of. The most pressing is the transition to renewable energies on the national level. The current system of guaranteed feeding-in of renewable power at a fixed price is

imposing continuously

increasing costs on private and industrial consumers.

This can jeopardize the

competitiveness of our businesses. What should foreign investors know about

doing business in Germany before embarking upon any venture in the country?

If you are an investor who intends to set up a new business in Germany and enter local competition, you should be aware of the high efficiency levels that some German businesses tend to have. In the past, we have seen large foreign retailers trying their luck