At the very north of Germany, bordered by the Baltic Sea, with Poland to the east sits the region of Mecklenburg-Vorpommern. To the west is Hamburg and south is Berlin. This region has built a modern, progressive economy in the 25 years since German reunification and has a very keen sense of where its strengths lie. Jo Murray asks Michael Sturm, Managing Director of Invest in Mecklenburg-Vorpommern, which sectors will dictate the future direction of the economy.
There are two key sectors Mr Sturm wishes to talk about. The first is machine-building and the second is life sciences. No real surprises for a German region. However, Mecklenburg-Vorpommern really does distinguish itself in the detail.
Machine-building in this Baltic coast region has a very nautical flavour. It is no secret that shipbuilding and its support industries have been challenged worldwide and this is no different in Mecklenburg-Vorpommern. However, the German region has caught the attention of Malaysian group Genting, operating as MV Werften in the Wismar, Rostock and Stralsund shipbuilding industry. Just recently, MV Werften invested a further $14.4 million in the Wismar Yard though founding a new cabin factory. Overall, €160 million will be invested and the number of staff in the region will be doubled from 1,500 today to more than 3,000. “Shipbuilding is a huge tradition in Mecklenburg-Vorpommern,” comments Mr Sturm.
Nevertheless, this investment heralds a whole new era for the region’s shipbuilding. Roughly two months after the Malaysian group took over Nordic Yards, the first shipbuilding contracts were signed in Wismar. In September 2016, when the announcement was made, Malaysia’s Prime Minister Najib Razak paid tribute to Genting’s commitment, saying that the investments pave the way for an impressive newbuilding programme and provide the shipbuilding industry in Mecklenburg-Vorpommern with stability. The order book of MV Werften includes a total of 10 vessels in the next five years, among them the “Global-Max class”, the world’s biggest cruise ships in terms of passenger capacity.
Then there is the clean technology industry that is harnessing the region’s machine-building know-how. Russian investment in Deutsche Großwälzlager is a case in point. A total of €15 million has been invested in a new production facility in Rostock. At the heart of its production portfolio is the manufacture of complex and customized large-diameter bearings for various industries, including wind energy, turbines, cranes and agricultural machinery. The company plans to manufacture bearings of up to 6.50m in diameter.
At the inauguration ceremony, Minister President Erwin Sellering praised the economic cooperation between Mecklenburg-Vorpommern and the province of Leningrad Oblast: “This cooperation continues to bear fruit, as is shown by today’s opening ceremony. It was in the context of our first ‘Russia Day’ two years ago that the Kirov Group first discovered Mecklenburg-Vorpommern as a highly attractive business location. This is exactly the message we wanted to send. We would like to work together to continue developing these good relationships and to implement new projects, like the Deutsche Großwälzlager GmbH here in Rostock.”
Of course the maritime and energy sectors go hand-in-hand and this region has expertise in both. At the heart of this expertise lies Nordic Yards, a specialist in the offshore sector. Since its inception three years ago, this shipyard group has consistently looked to new markets and niche areas, and it has established itself as what it calls a “maritime system integrator“ for offshore structures, high-tech ships and system solutions. With the three converter platforms for Siemens and the wind turbine service vessel for DBB, which are currently under construction, it says it is making great strides in its role as designers of the maritime future. This is bound to be an attraction for international investors over time.
Machine-building extends beyond shipbuilding in Mecklenburg-Vorpommern. To the west is situated Hamburg and its huge aerospace cluster. Mecklenburg-Vorpommern has benefitted from playing host to niche areas of the aerospace supply chain. The company ZIM Flugsitz GmbH from Markdorf in Baden-Württemberg is investing in the production of aircraft seats in Schwerin which means 64 new jobs.
Mecklenburg-Vorpommern’s other key sector for the future economic growth of the region is life sciences, says Mr Sturm, with particular emphasis on technologies that relate to ageing. He calls it “the Florida effect”. We are talking about R&D as well as the bringing to market of regenerative technology such as artificial bones and teeth, as well as cardiac medicine.
Since the year 2000, the number of life science companies in the region has almost tripled from 44 to 134. These young companies benefit from specialist universities, state-of-the-art university hospitals and regional research facilities. There is plenty of incubation, acceleration, development programmes and collaborative research to support the sector. Most companies have chosen to establish themselves in one of the university towns in the region, Rostock or Greifswald. Additional locations include: Schwerin, Wismar, Neubrandenburg and Teterow.
There are three key initiatives that support north-east Germany’s life sciences industry. The first is BioCon Valley® which connects the expertise of companies, universities, colleges and research groups working in the fields of medicine, medical technology and pharmacy. Then there is the BalticNet-PlasmaTec e.V. network which provides a base for technological and market-oriented cooperation between science, research and industry in the field of plasmatechnology. Finally there is ScanBalt which is a network of entrepreneurs from life sciences and biotechnology businesses in northern Europe (Scandinavia, the Baltics, Poland, northern Germany, north-west Russia). The ScanBaltBio region consists of 11 countries, 85 million people, more than 60 universities and 2,149 life sciences and biotechnology companies, including 671 small and medium-sized enterprises based on biotechnological research.
A recent key life sciences investment in Mecklenburg-Vorpommern is Swiss med-tech company Ypsomed. It has settled in the state capital of Mecklenburg-Vorpommern, Schwerin. By 2018 it will have invested more than €50 million and it will create 200 new jobs in the next six years. The Ypsomed Group develops, produces and sells injection systems for administering liquid medications. They are being used by people with diabetes for self-medication, amongst other therapeutic areas.
Part of the attraction of the Mecklenburg-Vorpommern region for manufacturing – be it machines or life science products – is its accessibility and location on the Baltic Rim. It offers ideal connections to northern and eastern European markets, and has one of Germany’s most modern transportation systems given its location in the immediate vicinity of the metropolitan regions of Hamburg and Berlin.
Such considerations have assisted in attracting companies like Deutsche BOGENN GmbH, a subsidiary of MİR Holding, headquartered in the Turkish city of Istanbul, which manufactures plastic pipes. This company has celebrated the topping out of its new production facility at the Mukran Port (formerly Sassnitz Ferry Port on the island of Rügen). With this investment project, at least 65 new industrial jobs are being created. The company plans to invest a total of €31 million. The Ministry of Economics is supporting the investment project with €9 million from the Joint Task Program for the Promotion of Industry and Trade.
In Schwerin, the Swiss company Nestlé has built one of Europe’s most modern coffee-capsule plants which is already producing 2 billion capsules per year. Once all production lines have been completed, a total of 450 jobs will have been created in the state capital.
A further 130 jobs have been added by the Danish company Schur Pack in Mecklenburg-Vorpommern under a €69 million investment programme. Schur Pack Germany operates a new folding box plant. The company is also investing in new production equipment. Again, the Ministry of Economics is supporting the project with nearly €17 million investment.
Mr Sturm points that such FDI projects have gone a long way towards plugging the gaps in employment; indeed the employment rate has halved in recent years. The targets for FDI purposes are sectors rather than locations, although Mr Sturm concedes that there is an emphasis on working with the region’s neighbours such as Russia, Poland and Scandinavia for FDI purposes.
A location’s geography and history will always have an impact on its future economic development and Mecklenburg-Vorpommern is no different. This north German region located on the Polish border has a strong understanding of the Baltic Sea Region with its neighbours to the east and north. But that is not to say that it does not also provide a handy stretch of coastline for companies from landlocked countries or states such as Switzerland or the United States. With current marketing activities in these markets, Mecklenburg-Vorpommern is being promoted worldwide.