26 Feb Hessen prioritizing vocational training, digitalization and accelerating the energy transition
Frank Aletter, CEO, Hessian Chamber of Commerce and Industry talks about the province’s strengths across sustainability, energy and skilled labor
Would you give us an overview of Hessen’s unique industrial makeup? Why has the state been so successful at attracting and developing industry, and how does it differentiate itself from other regions in Europe and beyond?
One of 16 provinces in Germany, Hessen is very centrally located in the country. We also have Frankfurt International Airport, which is a large traffic and logistics hub, comparable to London Heathrow or Amsterdam Airport Schiphol with many international flights passing through. In just three hours you can be in any city in Europe. Because of our location, there is a lot of traffic and logistics by road and train, too. It runs through our province from east to west and north to south.
The most well-known area is, of course, Frankfurt, as it houses the business and financial district with around 200 banks and financial institutions, including the European Central Bank, the German National Bank, Bundesbank, and the Frankfurt Stock Exchange. It is also important to note that the largest internet hub in the world, DE-CIX, is based in Frankfurt.
There are also quite a few worthy companies in the province of Hessen that either manufacture or house their headquarters here. One, for example, is B. Braun, who supply medical device equipment. There is a big pharmaceutical sector here in Hessen. For example, Biontech is manufacturing its COVID vaccinations here in the city of Marburg. Additionally, the European Space Agency is located in Darmstadt, which is in the southern part of Hessen.
What recent key milestones has the Hessian Chamber of Commerce and Industry (HIHK) achieved that showcase the region’s industrial development, and what is the organization working on right now to enhance the private and public sectors?
There are 10 Chambers of Commerce and Industry in Hessen, with a total of 400,000 member companies operating in the province. The important topics that we, on behalf of the members are supporting and exploring solutions in public-private partnerships, fall across three key areas.
One is infrastructure. There are noteworthy challenges in transport infrastructure on the roads and in rail. There is a lack of investments when it comes to the reconstruction of bridges on the highway, and these are urgently needed to make traffic run smoothly as we are a transit province. We also need to explore how goods can be transported faster by rail to avoid backups.
The second part is concerns securing skilled labor. It is challenging to find people with certain necessary skills. The Chambers of Commerce and Industry are key partners in dual vocational training; quite a unique system in Germany, in which practical and theoretical training are combined. The Chambers coordinate it, do the testing, and are promoting its importance.
It is a hands-on, practical modality that is recognized on a bachelor’s or sometimes even master’s level. The 10 Chambers are promoting it very strongly, particularly in our region, in order to make sure that jobs are not only created in metropolitan areas.
And the third part concerns sustainability. If we want to go beyond political objectives and implement them, we need the innovative and implementation strengths of Hessian companies.
What impact has the COVID-19 pandemic had on Hessen’s industry, and what kind of permanent changes has it brought about? What is the HIHK doing to support the economic regrowth of the most affected sectors?
Negative GDP growth has not been as bad as in many other countries. I would say that Hessen is mirroring the economic situation in Germany. The decline was still better than the financial crisis in 2008 when the impact was much harder. That shows just how robust the economy in Hessen is, especially the industrial sector. One of the strong points in Germany are our middle-sized companies. We always speak about the family enterprises that are strongly rooted in Hessen and in Germany as the backbone of the German economy.
The impact of COVID has been very similar to many other provinces and even countries where the worst impact was noted in the entertainment sector and everything that runs on events, such as trade shows. Due to logistics restrictions, supply chains have been interrupted and logistics costs have been increased. In addition to that, obviously everything that is related to the restaurant sector was quite badly affected.
Something more unique in Europe than maybe in other countries, such as the U.S., is that we still have these lively inner cities. Because of the pandemic, retail stores that were not food-related had to close. They have struggled greatly with the restrictions and with not being allowed to open. Consumers are now shopping more and more online which we knew was a trend already, but which has certainly increased a great deal.
As a Chamber of Commerce and Industry, we got involved in the development of assistance programs of the State of Hessen and Germany-wide. Furthermore, we continuously advised our member companies and provided state and federal politicians with assessments of the economic situation, as well as our perspective on the need for a change to COVID-19 restrictions to doing business.
What impact has the Russian occupation of Ukraine had on German and European markets and industries and what kind of challenges are we expecting? What is the HIHK planning to do to deal with the upcoming ripple effects?
Hessen is a transit province with a strong industry. That means that, for now, we are dependent on oil and gas. Although there is not yet a lack of it, the terrible war that Russia has waged on Ukraine has already had an impact on the economy.
Nonetheless, Hessen’s economy supports the sanctions against Russia. The energy situation is difficult: it has become quite clear that not only Hessen, but also Germany, is very dependent on the gas that comes from Russia, and that is now the challenge.
We have to look into an energy transition, but that is nothing new. As we all know, ever since Fukushima Germany has wanted to carry this out but hasn’t had much success. Now solutions need to be developed around how to accelerate this energy transition, and private and public sectors have to work together to develop solutions in this regard.
At the same time, with energy prices high–and rising–HIHK is in favor of tax breaks for companies. Energy taxes in Germany are very high in international comparison.
What kind of public and private sector initiatives are leading the charge in lowering the region’s carbon footprint and creating more circular economies? What is the HIHK doing to push this transition?
Sustainability is, I would say, in companies’ DNA. Their business is meant to stay and they have already learned over decades that to be able to survive, besides good products and ideas, you need the right workers, skilled people and to see operations done in an environmentally friendly manner. Companies are looking into energy-efficient solutions and seeing how they can reuse certain products or goods, and refeed them into recycled systems. Therefore, it is something that is already happening to a certain extent.
In our chamber system, we have a high level of competency in areas such as sustainability and energy and we bring the relevant stakeholders together to form working groups and put on workshops and seminars. For example, we have launched a series this year on EU taxonomy to make companies aware of what is expected and to try to get the buy-in of the private sector and bring to light the challenges that they are facing that need to be addressed by the government. We are working on this at governmental level together with the provincial government in order to solve these challenges, or to at least work out which direction to go in.
What role do new digital technologies play in Hessen’s industrial regrowth? How has digital adoption been handled by the public and private sectors, and what new opportunities has it opened up?
You can always find something positive in a crisis. In the case of COVID-19, the digitalization of many processes increased drastically. Digitalization is not only dependent on technical solutions, many of which are in place, but also on human resources applying these technical solutions. The public administration in Germany is about to digitalize its administration for consumers and this will ready by 1 January 2023.
When it comes to Hessen as a digitalization hub, and to industry 4.0 in particular, we have certainly taken a leading role. There are two reasons for that: one concerns the financial sector and the fact that the environment for fintech is very fertile in Frankfurt. It is also a good location in that you have DE-CIX, the internet node, in Frankfurt and this is an excellent framework for startups looking into new technologies.
The other part that plays an important role is that science and universities are coming together here, in particular in Darmstadt which is known as a technical science hub where, through spin-offs, new ideas can be developed and brought to market. The state government is very active in supporting start-ups and has established a center for applied quantum computing.
In the industrial area, nearly everything that is being developed is being applied in manufacturing. Next, we need to make it a priority to create standards when it comes to industry 4.0. It’s under discussion on a national level, and we hope it will be able to boost Hessen’s position further.
What personal goals have you set to achieve as CEO? What kind of expectations do you have for Hessen’s industry and what needs to happen for this potential to be achieved?
I have spent some time working abroad, most of the time for German Chambers of Commerce and Industry, and have found that the challenges outside of Germany are the same challenges we have in Germany, including in Hessen. If you run a company, you need skilled people and, as I mentioned, dual vocational training is at the heart of our organization. We are pushing it because it is extremely important to our member companies.
The other part is how to assist the transformation processes in the private sector when it comes to sustainability, the circular economy and supporting the goals of the EU Green Deal. It is certainly something that we need to address, not only us as an organization, but also with the government and other partners.
The third point is to see how digitalization can ease our lives, by helping us to work more efficiently and flexibly. That is something I believe should be the future; as long as progress is made and we get results, it doesn’t matter where we sit down. We need to make the most of these opportunities, especially when it comes to companies connecting industries in order to provide a better or easier after-sales process. There are lots of small to medium-sized companies in Hessen that have yet to tap into these opportunities. Therefore, it is something we most definitely want to address.
Do you have any final comments for the readers of Newsweek magazine?
Hessen is a very attractive and diverse province. It has many rural areas with mountains where you can go hiking and cycling with lovely people. Then, of course, you have the really bustling center in Frankfurt, but also a similar vibe in neighboring cities. As well as all that, you have a very nice wine region along the Rhine and Main rivers. It truly is a province worth exploring.
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