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May 29, 2023

German company expansions reflect European country’s strong trade, business ties to CT

PHOTO | CONTRIBUTED Founder Christian Tidona (left) and America CEO Mark Johnston lead Germany-based biomedical research institute BioMed X, which recently established a U.S. foothold in New Haven, near Yale University’s campus.

Over the past several years, Germany has established itself as Connecticut’s largest export partner, further building on a relationship that has led to a number of the European country’s businesses expanding within the state.

In 2022, 14% of Connecticut exports were shipped to Germany, and the state has annually sent more than $2 billion in goods to the country over the last five years. That’s allowed Germany to surpass other countries, including Canada and France, that previously were Connecticut’s top export destinations, according to U.S. Department of Commerce International Trade Administration (ITA) data.

And the ties between the two countries — strengthened by similar advanced manufacturing bases, skilled workforces and cost structures — go beyond just trading goods and services. Connecticut is home to 98 German companies, according to state economic development officials, several of which recently announced or completed major expansions:

  • In March, TRUMPF Inc. — a maker of laser-cutting, bending and welding fabrication machinery — announced plans to add 55,800 square feet of advanced manufacturing space in Farmington. The $40-million project is the German manufacturer’s seventh expansion on its growing Connecticut campus.
  • German specialty chemicals manufacturer Roehm recently debuted a new 15,000-square-foot innovation center adjacent to its existing Wallingford facility that will add eight employees and now be the headquarters for its global medical research and development.
  • Earlier this month, Hamburg, Germany-based laboratory equipment manufacturer Eppendorf debuted its new Enfield distribution center. The company now employs 450 workers in the northern Connecticut town, which serves as its American headquarters.
  • German biomedical institute BioMed X recently launched its first operation in New Haven, which will focus on immunology and tissue engineering research. BioMed will employ six researchers located near Yale University.

Combined, these projects have added dozens of new jobs and tens of millions of dollars in capital investment, according to AdvanceCT, the state’s nonprofit economic development arm.

The expansions also provide examples of how Connecticut can serve as an attractive regional hub to international companies looking to expand in the U.S., particularly within the Northeast’s knowledge corridor, economic development officials said.

“You always want to attract companies, but the ultimate validation on if you’re doing something right is if a company expands,” said Ron Angelo, president and CEO of the Connecticut Center for Advanced Technology (CCAT) and a former deputy commissioner of the state Department of Economic and Community Development. “When you get companies like TRUMPF, Eppendorf and Boehringer Ingelheim that have been here for years now doubling and tripling on their investment, it shows what you’re doing is working — you’ve got the right business environment and you’ve got the right workforce for these companies to grow.”

The makings of a trade partnership

AdvanceCT CEO Peter Denious said a like-minded business environment is key to a good relationship between foreign trade partners like Connecticut and Germany.

“Our economies are well aligned — to start with the obvious, Germany is an epicenter for Europe when it comes to precision and advanced manufacturing, and if you think about the Connecticut base of manufacturing, it’s the exact same thing,” Denious said. “We’re not just making widgets here, we’re making highly sophisticated machinery and leveraging technology.”

Jeff White

Hartford attorney Jeff White, a partner at law firm Robinson+Cole, has several German company clients. He said Germany’s economy is primarily made of “mittelstand” firms — the German word for small and medium-sized enterprises — much like Connecticut.

“The German economy, while very big, is mostly made up of small to midsize companies, … especially in manufacturing,” White said. “I think that similarity and level of comfort” is a big factor in the strong trade relationship and business ties between Connecticut and Germany.

Since 2018, Connecticut has annually exported more than $2 billion in goods to Germany, even during the pandemic, which significantly hampered foreign trade amid economic disruptions caused by lockdowns, production and labor issues and supply chain bottlenecks.

Connecticut’s overall commodity exports grew to $15.3 billion in 2022, up 5.5% from a year earlier; 14% of those goods valued at $2.1 billion were shipped to Germany, according to ITA data. Nationally, Germany is the U.S.’ fifth-largest export market, behind China, Canada, Mexico and Japan.

Conversely, Connecticut imported $1.5 billion in goods from German companies last year, making the country the state’s fourth-largest import partner behind Canada, Mexico and China.

Connecticut’s biggest exports are, unsurprisingly, transportation equipment, spurred by the presence of large aerospace and defense companies like Pratt & Whitney, Sikorsky and Electric Boat, makers of jet engines, helicopters and submarines, respectively.

About $5.3 billion worth of transportation equipment passed through Connecticut in 2022, and ended up in a foreign country, ITA data shows.

Similarly, Germany has the third-largest aerospace and defense market in Europe.

Of course, there is a caveat to export trade data. Not everything that counts as an export from the state was actually made in Connecticut — some goods simply passed through the state’s borders after being built or developed elsewhere.

Regardless, there is significant trade activity between Connecticut and Germany, officials agree.

“Even beyond manufacturing to areas like drug discovery and drug testing, (Germany) just lines up very well with Connecticut’s areas of expertise, which is around high-value research and development, design, engineering and the precision-side of manufacturing,” said CCAT’s Angelo.

Recruiting companies

Denious, of AdvanceCT, said Connecticut’s approach to recruiting foreign businesses starts with identifying industries that the state already has an ecosystem around, such as advanced manufacturing, and figuring out what types of companies could complement these sectors and existing firms within them.

Peter Denious

Promoting the state’s “highly educated workforce” and higher education institutions is also key, Denious said.

“We’ve got 38 colleges and universities, and we’re not shy about making them part of the pitch,” Denious said.

Angelo agreed.

“I think the first thing that drives German companies is workforce,” Angelo said. “They’ve got very modernized models in their education system for how they bring skilled workers through the pipeline, and I think our workforce is a very big attraction.”

Despite a nationwide workforce shortage that has hampered Connecticut’s growth coming out of the pandemic — in-state employers reported 104,000 unfilled jobs at the end of March — the state remains highly educated with a strong mix of four-year universities, community colleges and trade schools.

White, the Robinson+Cole lawyer, said Germany’s apprenticeship and workforce development programs are important, so when German companies are looking to open new U.S. locations, finding those initiatives abroad is valuable.

The state’s workforce contributed to BioMed establishing its U.S. base of operations in Connecticut, according to the research institute’s America CEO Mark Johnston. When the Heidelberg, Germany institute’s founder Christian Tidona wanted to open a U.S. beachhead, adjacency to a top medical school was the most important factor, Johnston said.

BioMed works to solve challenges in biomedical research in collaboration with pharmaceutical companies. For example, it has an Alzheimer’s disease research partnership with U.S. drug company AbbVie, and its focus in New Haven will be on studying the immune system and tissue engineering.

“Yale’s got amazing core facilities with super high-tech equipment that we can’t afford, so access to those things to help facilitate solutions to these experiments was critical,” Johnston said.

After building a list of 80 different medical schools, affordability factored in. The institute ruled out high-cost locales like Boston, New York and San Francisco, Johnston said; New Haven’s housing, child-care and other costs were more in line with its hometown. Another factor was the presence of a bioscience ecosystem, which New Haven has been establishing for years.

“New Haven is becoming a hub — it’s already a medium hub for bioscience, but it’s becoming bigger,” Johnston said. “It’s growing so quickly here, so being part of that was critical.”

Emphasizing easy access to the governor’s office and top economic development officials is also part of Connecticut’s business recruitment strategy, Denious said.

Johnston said Yale University and AdvanceCT have welcomed BioMed with “open arms,” which gave Connecticut the upper hand over other finalist destinations, including Baltimore, Maryland (home to Johns Hopkins University), and Philadelphia (home to the University of Pennsylvania).

“The open-armed attention, the red carpet rollout that came from Yale Ventures and AdvanceCT, and I can’t tell you how valuable that was because it really helped facilitate moving quickly on what we needed to do to get established here in Connecticut,” Johnston said.

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