The Germans Are Coming

West German businessmen have long been mighty figures in foreign markets, but nearly always as exporters. Now they are increasingly taking a new role --as owners of foreign factories. In the past two weeks, executives of Farbwerke Hoechst, a huge chemical manufacturer, have played the part with particular bravura in Britain and France. Climaxing a long contest, they outbid the U.S.'s Sherwin-Williams Co. to win a controlling interest in Berger, Jenson & Nicholson Ltd., a major British paint producer. In France, Hoechst executives encouraged a merger of two concerns, Roussel-Uclaf and Centrale de Dynamite, which together sell about $200 million worth of Pharmaceuticals a year --or almost as much as Rhone-Pou-lenc, the French pharmaceutical leader. Hoechst has ties to both concerns and will come out owning 20% to 25% of the merged company.

In 1968, for the first time since World War II, German companies invested more money abroad ($575 million) than foreign firms put into enterprises in Germany ($550 million). The trend gathered steam last year, partly because the revaluation of the mark increased the quantity of foreign plant, equipment and stock that German currency could buy. At the present rate of expansion, German business within a few years will own more plant abroad than foreign companies own in Germany.

The move overseas has been led by the highly advanced chemical industry, specifically by the three companies into which the victorious Allies shattered the old I. G. Farben cartel. The three are: Hoechst, Farbenfabriken Bayer, and Badische Anilin--& Soda Fabrik. B.A.S.F. recently spent $95 million to buy out Michigan-based Wyandotte Chemicals Corp., the biggest U.S. maker of urethane plastics (1968 sales: $147 million), and it is now putting up $100 million to expand a Wyandotte plant in Louisiana. The firm has also budgeted $200 million to $300 million to build a chemical complex of its own in South Carolina (TIME, Jan. 26). Farbenfabriken Bayer has earmarked $140 million to expand its facilities in the U.S.

Other companies are following the chemical makers' lead. Siemens, a major electrical firm, expects its 1969-70 overseas investment to total more than $100 million. It is expanding plants in Europe, Australia and Canada. Volkswagen expects to enlarge an assembly plant in Brazil, and Daimler-Benz will put $68 million into Brazilian and Argentine auto plants during the next three years.

Wooed by Pennsylvania. Such ventures represent a recurrence of an old pattern. Early in this century, German industrialists built an immense network of foreign interests, but nearly all were seized during the two world wars. Twice burned, German businessmen were hesitant about reaching abroad again. German direct investment in the U.S. still lags behind the holdings of Britain, Canada, The Netherlands and even Switzerland. Lately the Germans have been hard-pressed to fill booming domestic and export orders and have shown a fresh interest in manufacturing overseas as a way to keep their foreign sales growing.

The foreign investments should benefit everyone. More manufacturing overseas might reduce the giant German export surpluses that have added to inflation within the country and have been an unsettling influence in world finance. German investments in the U.S. could help trim the balance of payments deficit and introduce American companies to healthy foreign competition at home. Industry-hungry state governments are eagerly courting the Germans. Pennsylvania Governor Raymond Shafer last fall signed an ad in a West German newspaper that appealed to industrialists to write to him personally about investment opportunities. The ad closed: "Willkommen in Pennsylvania."

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