The Information of Investment

 

Ambassador Gutman, Baxter International Look for Solutions

 

To Ambassador Howard Gutman, US/Belgian relations means going to all corners of Belgium. Upon taking his post as the US Ambassador to Belgium, Mr. Gutman has made it his mission to visit every commune and corner of Belgium – from historic sites to US company headquarters. On April 23rd, the Ambassador headed to Lessines to pay a company visit to Baxter before visiting the town and, later, Tournai.

According to Jo Benoit, General Manager Baxter Belgium and Luxemburg, his company is a “Valuable Belgian partner”. The point of the Ambassador’s visit was to better strengthen the partnership between the embassy and the company and in the process, better US/Belgian business relations.

Baxter prides itself on being more than just a pharmaceutical company. Instead, they bill themselves as a healthcare company focused on improving the quality of life.

“Every day, our products and services help treat thousands of people around the world with some of the most complex conditions - from hemophilia to cancer and immune disorders to kidney disease,” says Benoit.

Originally founded in Chicago, Baxter International has more than 75 years of market leadership. It is comprised of three business units: medication delivery, bio-science and renal. With over 49,700 employees around the world and 50 percent of sales outside the United States, the company has a turnover of $12.6 billion and invests over $2 million in R&D every day.

Baxter has been in Europe for over 60 years and in Belgium since 1954. In Belgium it has a direct employment of 2,300 people, with 110 million euro spent on external services and supplies, which translates into another 2,500 indirect jobs. In terms of investment, Baxter has made a direct investment in Belgium of over 450 million euro over the past 20 years, and its new investment plan involves up to 70 million and the creation of another 175 jobs.

There’s the Question

Although the company has operations in Lessines and Braine L’Alleud, Brussels lost its headquarter status to Zurich some years ago. Although this may seem like a small side note, as the Ambassador pointed out, it is in fact exemplary of the frustrations he experiences in facilitating US/Belgian relations.

“Why did Baxter move to Zurich,” the Ambassador asked.

“Technically, we did not actually move to Zurich, as Baxter has employed over 300 new people over the past five years in Belgium. However, a number of European roles did move to Zurich as result of the implementation of a true European headquarters in Europe, which did not really exist before. Belgium housed a European Coordination Center that also included a number of European roles,” explains Benoit.

“The new European headquarters in Switzerland was the home for the new European business leadership team, with centralized strategic decision making and planning and the centralization of a number of key functional services and supply chain management processes. The fact Switzerland was chosen at that time was driven by a mix of factors that include more flexible labor laws, overall low income taxes for companies and employees, ruling mechanisms, social insurance costs, etc.”

“I’m always being asked by people what can I do to foster US investment in Belgium,” says Gutman. “To begin, I am looking for something that clearly explains what it means to a company if they decide to move from Belgium to Zurich – what are the criteria that companies use in deciding where to locate.”

“With this type of information we might be able to make some real changes,” says the Ambassador.

“In the Gutman Era, I come in at a point when investment is at its lowest, so naturally it has gone up some. But I need the information about companies’ investment decisions if we are actually going to move towards real change. This information is simply invaluable.”

And Maybe an Answer

Speaking of new investment announcements, Baxter recently announced that they plan on investing 70 million euro in new manufacturing facilities in Lessines by 2012. In terms of jobs, this means creating 175 new jobs. And why continue to invest here? “Lessines continues to be attractive because of the large space, an abundance of labor expertise and its central European location,” says Renaud Mazy, Plant Manager.

But there’s more. “We worked with the Walloon Region, and overall it worked out very well,” says Mazy. “In return for the jobs, the region supported us by 25 percent of the total investment.”

“Wait, wait, wait,” interrupted the Ambassador. “You’re telling me that the Region gave you 25 percent of your total investment? I’m sure that got headquarters in Chicago’s attention.”

“This is what I mean, here’s a solution. Somebody needs to be shouting ‘Two years of free employees if you come to Belgium!’ I’m not sure if US companies understand this, instead we all get stuck on the tax issue.”

“To me, this is a perfect example of how companies and the government can work together to raise investment and the business profile of Belgium. Belgium wants investment and jobs, the company wants something like road access to the highway – there’s a tradeoff. It’s just a matter of getting the two sides to sit down and hash out these things and then promote this to potential investors.”

And maybe then Belgium can compete against the likes of Zurich.