By Brian E. Clark
For WisBusiness.com
Europe may be facing political and financial turmoil, but it’s still a good export market for Wisconsin companies, according to a Badger State executive who has years of business experience abroad.
“It’s worth the (managed) risk,” Paul D’Alberto, director of international development for the Sheboygan-based Vollrath Co., told a Madison International Trade Association gathering on Friday. His company makes cookware and other light equipment. It has subsidiaries in China, Mexico and the Netherlands.
The European market, while it poses difficulties, offers “huge opportunities,” in part because it is bigger than the United States and has an equal purchasing power, he said.
But D’Alberto warned that economic growth in Europe will be flat this year and should only grow slightly next year. On top of that, he said there will be continuing political fallout from austerity programs that were rejected by voters in Greece and France last week.
“There is a huge potential to grow,” he said. “Companies in Europe are going under, so there are great opportunities to buy.”
D’Alberto told his audience that although the European Union may have a common currency and created some uniform standards and market transparencies, it is not “the United States of Europe” and continues to have significant cultural and language differences.
“Going from France to Germany is like night and day,” he said. “You need to keep historical conflicts in mind when doing business.”
Fortunately, he said, Americans are considered somewhat neutral, which can be an advantage for a Wisconsin company. Likewise, he said the Dutch are generally accepted as fair businessmen and women, and can “float across borders with less cultural baggage.”
D’Alberto said the so-called “PIIGS,” (Portugal, Italy, Ireland, Greece and Spain) are in the worst shape of any of the European nations because of their inability to manage debt.
As a result, Greece and Spain, for example, have overall unemployment rates of 22 and 24 percent, respectively. But the jobless rates for young people under 25 tops 50 percent in those countries. Meanwhile, unemployment is much lower in Austria (4 percent), the Netherlands (5 percent) and Germany (5.6 percent).
D’Alberto said Germany, with a population of 81 million, is a market his company would “love to crack.” Unfortunately, he said the country has tight-knit buying groups and Germans are loathe to purchase anything they believe was made outside their own country.
To get into the German market, he said companies need “niche products” that have unique appeal.
France, by contrast, is much more open to U.S. products. It has a population of 65 million.
It’s important, however, for Yanks to say “Je suis American” (I am American) – especially in restaurants – lest they be mistaken for the British, whom D’Alberto said are not terribly popular in France.
He said the United Kingdom, population 63 million, is a good place for Wisconsin companies to get a European foothold because of the language and the country’s sophisticated distribution system.
However, he said, Britain “is an island. It’s not Europe.”
D’Alberto said Spain, population 47 million, has been difficult for his company because of its economic and jobless woes.
“They are extremely price conscious,” he said. “Our competitors are just trying to keep their doors open. It’s a race to the bottom.”
And Italy, population 61 million, has fragmented markets and is undergoing “brutal” austerity measures. His company is competing with many small local manufacturers, who produce stylish products.
“In Italy,” he quipped. “Design is critical. It doesn’t matter if it works, but it has to look good.”
D’Alberto’s advice to executives interested in entering the European market was threefold:
1) Go to trade shows to learn what competitors are already there and to find a distributor.
2) Work with an export management company that takes products from the U.S. to Europe as a way to get “a foot in the door.”
3) And at least at the start, consider finding a local or “master dealer” in Europe. But he said companies should only do this for a short time because it adds another layer of cost.
