Europe’s CEOs Eye Shift in Spending Plans Toward North America

https://www.bloomberg.com/news/articles/2023-05-23/europe-s-ceos-eye-shift-in-spending-plans-toward-north-america

by chewz • 3 years ago

28 71 3 years ago

vandahm• 3 years ago

I mean, Europe is dominated by US corporations. Every high street in Europe has multiples of US owned businesses so why shouldn't we return the favour.

The US is still the worlds largest economy, this shouldn't really be a new idea.

raverbashing• 3 years ago

as the continent reels from geopolitical risks, inflation and energy costs, along with skills shortages and supply-chain disruptions.

While energy costs probably weren't too affected on the US, it is funny that the business up always signed up on the plans for NS/NS2 and never looked one centimeter further into the geopolitical risk. Well, then

Inflation and skills shortage are also an issue in the US, possibly even more (and remains to be seen if they can get the same skill with European salaries)

But that being said, moving production to the US is a better choice than China.

WastingMyTime892• 3 years ago

That tends to happen when one country starts giving large free handouts to corporations, yes. It’s a shame that the EU is so spineless. Tariffs and severe commercial restrictions should have been de rigueur following the passing of the IRA.

ChuckNorris896• 3 years ago

Reminds me of Linde AG from Germany, the world's largest industrial gas manufacturer. It merged with US based Praxair in 2018 and then moved to Dublin.

At this rate, every large company in Europe will move to Dublin.

blitzar2• 3 years ago

At this rate, every large company in Europe will move to Dublin.

And will still be in Europe ...

jcarrano• 3 years ago

So you are blaming the countries that have reasonable laws and taxes? It's literally the meme of the guy putting a stick in his own wheel.

ChuckNorris896• 3 years ago

Most of Europe's amazing social security benefits are funded by taxes, pot which is shrinking.

To combat rising wealth inequality, we need to tax the super wealthy who have vacuumed most of the worker productivity gains of the last decades, but we can't because they exclusively go to the jurisdiction where they have "special deals" where they pay next to no taxes.

Europe can't keep having amazing social benefits if it starts an internal race to the bottom of who can give the best tax breaks to billionaires, and then the tax burden moves on to the already shrinking middle class.

WastingMyTime892• 3 years ago

You can’t at the same time pretend to be an exporting country in a free market world and give billions of no string attached subsidies. That’s extreme market distortions not reasonable laws and taxes. Market distortions should be met with a strong answer from commercial partners. That’s what the US keeps saying China while themselves doing worse on nearly every points.

RobotToaster• 3 years ago

Without capital controls the EU is fairly toothless.

Of course EU rules ban capital controls.

candiodari• 3 years ago

I wonder why an organisation once called "The European Coal and Steel community" would favor big business interests ... strange.

LatteLazy• 3 years ago

Every country to try currency controls in the modern world has just failed harder...

cpursley2• 3 years ago

Alternative geopolitical and economic voices have been predicting this since the outbreak of the Ukrainian-Russia conflict.

The reality is without cheap energy (nat gas, nuke power), European manufacturing just can’t compete with other industrial economies.

thc-271822• 3 years ago

Sounds like a win for N. America. A lose for Russia. Guess they probably shouldn't have started the war then.

nmlwr• 3 years ago

Of course. That was the plan and one of the reasons why the U.S. did not back down on Ukraine NATO membership in 2021, with the anticipated result (article is from before the war and there are plenty of other sources):

https://www.vox.com/22900113/nato-ukraine-russia-crisis-clin...

All that is left for the EU is to fight over some of Ukraine's mineral rights, competing with Blackrock etc.

dmpk2k6• 3 years ago

Not sure if it's a win. The vast resources in Russia will now be channeled into China (and India). If you're an American strategist, a China with Russia's resources should be giving you serious jitters.

And European manufacturing should be terrified.

ChatGTP• 3 years ago

This sounds like a take by Peter Zeihan :)

RandomLensman3• 3 years ago

Europe has a lot of shale gas it isn't using - it's a political decision.

cribbles• 3 years ago

If we limit this claim to _just_ German manufacturing competitiveness (which is often synonymous with "European manufacturing" in the context of these discussions -- and I will assume this is true of your comment as well, given the nuclear energy remark), this really isn't true.

What changed my view on this was one of Adam Tooze's newsletters from last year.[1] The relevant points here are:

- Germany manufacturing is less gas-intensive than the global average.

- Energy costs only constitute a small and decreasing share of total industrial costs -- about 5.8% for the German manufacturing industry as a whole, and 3% for leading export sectors (namely the auto industry).

- Most German manufacturing -- and this is true of European manufacturing more broadly -- is primarily in high-margin, value-added sectors where quality, rather than cost, are the competitive factor.

Another important detail lost in the invocation of "cheap gas" is that Europe as a whole, and German in particular, has never had particularly "cheap gas." European natural gas prices have long been well above those in the US, and Germany's have been above the European average for the last 15 years or so.

I agree with both Tooze and the majority view that, notwithstanding the above points, Germany's post-war energy policy has been a catastrophe. It has certainly limited its manufacturing potential. But the effect of the Ukrainian war on its _already_ limited manufacturing sector, due to _already_ not-so-cheap energy, tends to be exaggerated.

[1] https://adamtooze.substack.com/p/chartbook-150-why-cheap-rus...

omneity5• 3 years ago

Hot take. Europe cannot compete without working closer with african countries. Same time zone, geographic proximity, many existing commercial relations, economic complementarity, logistics etc. This will allow this hypothetical Eurafrican block to become extremely competitive with East Asia giants (China & friends, India), and with NA (USA, Canada, wait until Mexico wakes up).

I believe the balance of powers will change when the Nigeria-Morocco gas pipeline [0] opens up, connecting all coastal countries of West Africa (already working to a certain extent together as ECOWAS [1], with a unified currency [2], not without its warts of course) and significantly bringing down the price of energy in the region.

[0] https://www.gem.wiki/Nigeria-Morocco_Gas_Pipeline

[1] https://en.wikipedia.org/wiki/Economic_Community_of_West_Afr...

[2] https://en.wikipedia.org/wiki/CFA_franc

mathieuh• 3 years ago

What would prevent this from becoming another round of colonialism?

omneity5• 3 years ago

No one said this comes without challenges, just like every great opportunity. But it can be handled with solid business acumen. Unlike the (bloody and disgusting) past, the african diaspora as well as the local actors have a much better education and understanding of various global dynamics, as well as (some) level of local infrastructure.

China did manage to improve its side of the trade equation, not without sacrifices for sure. Arguably, it was also already a unified large nation and it just needed to "direct" its energy. In the case of Africa, we're talking about 54 countries, organized in 8 regional communities [0]. RECs are functional at different levels (some are completely dysfunctional such as the UMA - the North African community), and there's a lot of coordination work to do.

But I believe working together towards a shared goal would do a massive uplifting job for the second continent in terms of land and population size and unlock an incredible future for the 1.3B africans today.

[0] https://au.int/en/recs

gumballindie5• 3 years ago

If east eu is any indication of how things will develop, then it’s guaranteed to end up with colonialism.

BurningFrog3• 3 years ago

Don't send armies, only goods, services, and payments.

Barrin92• 3 years ago

For one virtually nobody has any interest in colonialism, not just from a moral but even from a self-interested standpoint. Colonialism is a huge drain. One of the major reasons for France to unwind its colonial presence in the first place was to reduce political, military and economic burdens that came with maintaining an empire.

The negative consequences are arguably visible in Britain which stayed in empire mode quite a bit longer than its peers and lost a lot of global industrial competitiveness as a result.

gavaw2• 3 years ago

You forget the part wher African countries have terrible political stability and no money. The only way of making this work would be neocolonialism, which is ok imo (in the end it benefits both parties), but it's frowned upon by some political circles.

BurningFrog3• 3 years ago

Since 1-3 decades, Africa is developing quite nicely and peacefully.

I read somewhere that they're ~100 years behind economically, but are catching up 3 years per year

omneity5• 3 years ago

Many african countries are extremely resource rich. They do have money, but also corruption sapping a lot of it away.

That and I don’t think political instability is a fact of life.

I like to think of it through Maslow’s pyramid of human needs. As the lower layers start to be satisfied, even the conduits for violent impulses change in nature (from physical fights to toxic gaming behavior let’s say).

As Africa lifts itself and addresses the basic needs of its population, many of the challenges it is currently experiencing will start to fade away. It’s a bit of a chicken and egg problem but I also happen to be an optimist :)

badrabbit• 3 years ago

Sir, I thank you for your honesty. People hate it here if I even mention that term but you openly admit your acceptance of it.

See, the reality is, the strong will always desire to rule over the weak. The colonized should not have relied on the good conscious and will of the colonizers to begin with. They should have become strong enough to resist neo-colonialism, they only have their own weakness to blame.

What truly revolts me is when neo-colonialism is packaged as democracy, human rights, etc... instead of just like what you did, openly admitting that is your goal and the people who will be colonized will benefit from it, so that is your moral justification.

TMWNN• 3 years ago

Hot take. Europe cannot compete without working closer with african countries.

Why hasn't this happened in 60 years of post-colonialism?

From 1961 to 2015 <http://www.worldeconomics.com/papers/Global%20Growth%20Monit...>, real GDP per capita in Africa grew by 1.1% annually (!), compared to 3.9% for Asia, 1.7% for the Americas, and 2.2% for Europe. Growth from 2001 to 2010 of 2.9% is included in that figure; it was the first decade in that period in which Africa outgrew any other continent.

GDP per capita in US 1990 dollars <http://www.worldeconomics.com/Data/MadisonHistoricalGDP/Madi...> for several African countries:

  Country      | 1980 |  2008
  -------------|------|------
  Algeria      | 3152 |  3520
  Botswana     | 1765 |  4769
  Cameroon     | 1192 |  1212
  Gabon        | 6777 |  3811
  Ivory Coast  | 2041 |  1095
  Kenya        | 1051 |  1098
  Liberia      | 1162 |   802
  Madagascar   | 1054 |   730
  Malawi       |  630 |   744
  Mauritius    | 4367 | 14529
  Niger        |  810 |   514
  Nigeria      | 1305 |  1524
  Seychelles   | 4444 |  6109
  South Africa | 4390 |  4793
  Zimbabwe     | 1295 |   779

For every Mauritius, Botswana, and Seychelles there is a Zimbabwe, Niger, and Ivory Coast.

wait until Mexico wakes up

Mexico is, while poorer than the US or Canada or Western Europe, so, so, so much wealthier than anywhere in Africa (including South Africa and Zimbabwe/Rhodesia, both once with more or less first-world wealth) that there is no comparison.

s1k3s• 3 years ago

How is a multi-national company (aka large enterprise) worried about "lack of competitiveness"? Isn't this what they all want? Or maybe they're complaining about the lack of startups that they can acquire?

firstSpeaker• 3 years ago

The article does not say anything about what sectors of industry these CEOs belong to, or what is the total capital of the businesses they represent in absolute and in % to total cap in the included industry sectors in their survey.

So, all in all, the article says nothing substantial backed by any solid statistics and figures.

RandomLensman3• 3 years ago

Why not go for a richer and more unified market? Europe seems to have settled a bit into a mindset of low growth and at least relative decline. GDP per head is already quite a bit apart between the EU and the US.

touwer2• 3 years ago

GDP shouldn't be the only measure to look at https://www.wired.com/story/happiness-measurement/

RandomLensman3• 3 years ago

Perhaps but not sure how much that matters from the perspective of a corporation looking for more revenues.

touwer2• 3 years ago

Well, it's Bloomberg reporting on Europe, so take it with a big grain of salt.

No news either: CEO's wan even less taxes for their already rich companies and more freedom to make people work for a lower wage so their already rich shareholders get even richer. In short, the American Dream

0zemp2c• 3 years ago

on a long enough timeline, all cars will be manufactured in Mexico

jackhack• 3 years ago

It's important to note that "North America" != "United States." It likely means a shift to production in low-cost Mexico, Costa Rica, Guatemala, El Salvador, Honduras, etc.

I'm in the USA. I've seen this subtle dishonesty in packaging "Made in North America" which most consumers equate with "made in Canada or USA". The joke's on us.

Europe’s CEOs Eye Shift in Spending Plans Toward North America

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