One of the more dramatic contentions was Intel CEO Andy Grove’s assertion that European firms are in serious jeopardy, a charge that startled the approximately 800 business and political leaders who had pulled themselves away from the nearby ski slopes to hear him speak. Brandishing a chart of personal computer use by region of the world, America’s dominant chipmaker and author of Only the Paranoid Survive struck a nerve by pointing out that PC shipments in Europe are not only trailing those to the U.S., but they lag behind those to Asia-Pacific as well. European PC consumption is about half that of the
The business-leader participants, roughly three quarters of whom are European or Europe-based, took Grove’s message stoically. A few thought his remarks self-serving. Others allowed that the raw statistics did support the argument. A recent report by The Financial Times concurred, stating that “European PC sales, which grew only 5 percent last year, appear to be faltering, even though the proportion of house holds with a PC is still only half the
But although Grove’s discourse succeeded in bringing these perturbing figures to light, the issue is just the tip of the iceberg. While the sluggish adoption of technology will likely prove a hindrance, other controversial issues plaguing
The Maastricht Treaty calls for the creation of a single currency, the euro, by 1999. By 2005, all remaining non-EU member European countries become eligible for membership.
The new EU will be so large and diverse that it will need new systems and structures to cope. Will it be a loose confederation of 15-plus nations or a single superstate with vestigial parliaments and governing bodies? Above all, how will these arrangements affect the competitiveness of its enterprises with respect to rival companies in
The creation of the euro by 1999 goes to the heart of the sovereignty question. A single currency governed by a European Central Bank forces politicians to make very different spending choices than those to which they have become accustomed. To what degree should national sovereignty be replaced? And by what? Gradually pooling sovereignty or outright central control? “The debate over the euro reveals a deeper rift,” admits Phillippe Lagayette, CEO of France’s Caisse des Depots at Consignations, a Paris-based institutional bank. “It’s a sticky process watching the governments of
The objective of the single currency is enshrined in the Treaty of Rome and was recognized by all members when they signed it.
This point was underscored by one of the few outbursts to interrupt an otherwise politely serene discussion of which the WEF is justly proud. “How on earth do you expect European companies to be competitive if they have the most holidays with the shortest work week and the highest fixed costs as anywhere on the planet?” asked John Neill, chairman and CEO of Unipart, whose sensitivity to the burdens of bureaucratic costs stems from the 1970s, when labor relations in the U.K. car industry were at the nadir. In 1987, Unipart, the parts division of the state-owned Rover car company, was bought by a management group he headed. While none of the ministers chose to respond to Neill, he later noted that a number of business leaders approached him informally to say they agreed.
The question Europe’s private sector faces is not whether one is pro-EU or anti-EU, but how can union work best if its enterprises are saddled with costs and regulations that are not competitive in world markets? Current performance of the
The contrast between the paralysis gripping the economies of
In the past 20 years, while the U.S.created 36 million new jobs-31 million in the private sector the EU created just 5 million private-sector jobs.Britain alone achieved 900,000 new jobs-45 percent managerial and professional—in the last four years. Jacques Santer, president of the European Commission, parries these figures by scoffing that
The most telling figures are those that show just how expensive it is to employ workers on the continent due to crippling tax and social security costs. While British employers on average spend only an additional $15 for every $100 spent on wages, in
Remarkably few of these facts surfaced directly in the main discussions at Davos. Intel’s Grove hit home when he called attention to
THE GERMAN MIGRATION
Today one hears reference to “the German disease,”—just as 20 years ago it was commonplace to refer to “the English disease”—which is beginning to drive businesses out of their homeland. Wolfgang Neumayer is one of a growing number who has moved his company to
“It is impossible to recruit the right sort of staff in
Twenty years ago there were 380 German companies operating in
Peter Webber, CEO of Technic Group, moved his entire retread tire plant from
The social charter, one is told at rarefied gatherings such as Davos, is not a competitive issue. And perhaps not—for huge companies that can afford it. Failure to implement welfare reform has convinced many bankers and business leaders of the hopelessness of structural change at home. The Allensbach Opinion Research Institute,
Clearly there are many objectives and expectations for
Further economic and political integration for