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Envisioning Zug with Dr. Hans Marti, Head Zug Economic Promotion

Interviewed by Carol Gipson, Managing Director

Zug International Business Forum

Carol: Hans, thank you for this opportunity to interview you for the Zug International Business Forum. As the head of Zug Economic Promotion, what are you in charge of?

Hans: Actually, the Economic Promotion office has two main goals: The first is to take care of the existing companies – that is our main goal. The second one is to promote Zug around the world.

First of all, we want to keep the existing companies in Zug happy. I’ve seen a lot of different things – for example, Amgen started out here as a Swiss sales company, and then they became a European headquarters, and today they do the world-wide business out of Zug except to North America. So, this internal growth is important to us – when you look at other companies like Siemens or Roche, they pull together Research and Development functions from all over Europe, and this is very interesting for Zug.

Half of my team’s job is taking care of the companies that are here. We act as a one-stop shop for the companies and their needs as to permits, mobility, building etc., parking space: they come to us. Though we cannot always help, we try to bring the relevant people into contact with each other and to get the problems solved. We have a big advantage in the Canton of Zug because the canton is small – if we want to do something we can do it very quickly, very easily. For example, right next to my office is the minister of economics – so I can just walk over and talk to him! You can’t do this in other places. They are simply too big.

I used to live in the Canton of Zürich and was pleasantly surprised by how much more quickly everything happens in Zug. First of all, everyone is friendly and helpful – and I think that has to do with size. Once you become too big, it becomes less personal. But here, there is little government bureaucracy: things are facilitated personally.

That is our goal – some other cantons try to copy us with low taxes, but the mentality cannot be changed from one day to another. So that’s why I feel that a business-friendly environment, not only from the government offices but from the population, is very, very important – it’s one of the big advantages that people have here. So our first job (taking care of the existing businesses) also includes networking. The canton of Zug has done a lot in respect to bringing people together. Let’s take the Technology Forum – I don’t know if you’re familiar with it…

Yes, our company is a member.

This is an initiative we supported – and now it’s self-perpetuating. We have different sectors and they meet, and it’s very interesting. I heard from one person in Unterägeri that he bought parts from a factory in Berne because he didn’t know that there was a supplier next door! It’s easy if you can match these people up. So these are the types of initiatives we do… we also do a lot of public-private partnerships (Zug Tourismus for example) and it’s also a way of thinking – to initiate, and then leave it to the private industry to take it from there.

What about next year, then? For 2009, 2010 – do you have a personal vision for any new initiatives?

Maybe I have to talk about the second part of my job – attracting new companies. The federal government has delegated this function to OSEC – and OSEC provides a platform:  internationally diverse markets - and the cantons can join OSEC and join these events.

What is OSEC?

In the past, OSEC’s main goal was to help and promote Swiss companies going abroad. But in these days they have an additional function: to help cantons bring new companies into Switzerland. It’s an organization working on a federal level.

And this gives us a platform. We join them and we carry out investor seminars, road-shows, where we can attract companies. In the past, we did these things and we also organized our own activities, including seminars; for example, in Benelux, in the U.S., in India and Japan…. Next week, for example, I’ll travel again to attract mining companies to Zug.

We do have a lot of commodity trading companies, and don’t forget we are number three or four worldwide in commodity trading – together with London, Tokyo and New York. When it comes to metals, we’re number three or four, and when it comes to oil or energy, I’ve been told we’re number two worldwide. With coffee we’re number one worldwide!

Commodity trading for Zug is very, very important. So I have the goal of attracting a few mining companies. In the past, mining companies gave their goods to the commodity traders, and now there is a new development: these mining companies are doing that business in-house. So, one mining company after another is founding their own trading company. And for these companies, Zug is very attractive. So that’s why Iorganized a seminar and I’ll contact some companies directly.

Coming back to your question – what do I expect for next year? Life is tough now, even for us.  Zug is still growing, which is nice, and there are other cantons that cannot say that… so we’re still growing but not as much as the last couple of years. In the last few years, we’ve had 1,300 – 1,600 new companies net.

That’s a lot!

Yes, for this small place, it’s incredible!  So, what is our main goal for our department?  To focus even more on the existing companies, to help them as they go through this economic downturn, to keep the work in place here. There are a few things we can do. For example, there is the possibility of short-time work (Kurzarbeit), one of the federal instruments against unemployment.  

Rather than having complete unemployment benefits when it’s possible that business will pick up again?

Exactly – so this is where we can help…and try to overcome this period of downturn, when we see a light at the end of the tunnel.

Are you seeing a lot of job losses right now? Are there statistics on that?

Interestingly, in general Zug is still doing okay.  The recent April statistics showed that the unemployment rate is 2.7% for Zug and 3.5% for Switzerland overall. If you compare from canton to canton, we’re doing still okay.  I’ve just heard a few days ago from a company who asked for Kurzarbeit… one week after they started, they got a big contract from a Chinese company, and they have fulltime work again now. Sometimes they go into the system and after a short period, they can get right out again. The main goal of the Kurzarbeit is to avoid unemployment… but if it goes on and on, then sometimes you still need to do layoffs. So the main goal is to spend even more time taking care of the companies, which are here.

 We’ve reduced some of our activities in Germany… we will wait until the elections in Germany are over and we’ll see if things calm down and we may do more promotion activities later. Guido Bulgheroni, my deputy, just came back from the United States, and he was rather satisfied. He met several representatives of companies and did a road-show, and stopped at five or six places, and he was very positive.

About bringing in U.S. Companies? Is he targeting specific industries?

We do, of course, have our targets when it comes to certain business areas – where is Zug strong? Pharmaceutical, commodity trading, medical devices, and we have to take into account that pharmaceutical and biotech have world headquarters and intellectual property functions here, as well as medical device R&D functions, and of course financial services are important to us, as well as other areas. But when we want to attract certain sectors, sometimes you can do so but not always!

Have you targeted any new areas, or industries to develop?

We’re focusing on the ones we do have – we’re happy that we have the right ones already. I would rather think in terms of functions than in terms of industries – you know, Zug is interesting for headquarter functions, intellectual property functions, and it doesn’t matter if it’s for pharma or high-tech. High-tech, by the way, is also very important – when you look at the inauguration of Obama, the high tech security badges were made by a company just a few meters from here… these were not just developed but are actually produced here…

Yes, I don’t think of high tech in Zug, I think of Google and Microsoft operations in Zürich. These computer technologies that are important for the future, do they have potential in Zug?

For example, there is RapidShare. Nobody knows about it yet, but it’s an interesting company. There are a few here, not such big names yet, but they’re very interesting.

So, coming back to your question about next year. Zug will not escape; it will also have companies where there is a downturn. At the moment, the Swiss internal market is still “half-okay” but the international business is really affected. We will support them wherever we can – and of course we will try to attract interesting projects. Last year there were a few very big ones that came to Zug. Oil platform/producing companies, drilling companies, to name a few, came in the last six months.

A recent article in the Tages Anzeiger said that since 2006 there has been a mass migration of Zug residents out of Zug – that two years ago, 50% more Swiss were moving into Zug than are now moving in. The caption was “Rich immigrants are forcing the Zugers out of Zugerland!” They discussed why this might be – that wealthy expats with very high disposable income are pushing property values up and the middle classes can no longer live here and afford the quality of life they used to have. One thing they’re saying is that unless more affordable housing is built, the Swiss residents can’t afford to stay anymore. What’s your opinion about this?

We have known about this issue for many, many years. We know that housing is difficult. We know that the price for land is high. Building costs are more or less the same as everywhere else, but in total, housing in Zug is expensive. However, expensive means roughly the same prices as Zürich. For us this is very expensive. Internationally speaking, compared to Frankfurt, London, we are still moderate. Now this has nothing to do with the local situation. It is true that the prices have gone up and are still going up, and the international companies want their expats here…In the last two years, most of the newcomers were Germans, who are predominantly employed in health care, gastronomy, and industry. And as one might think, they are not just affluent newly arrivals.

But when the companies promise their employees tax equalization, and they have employees from all around the world, then it is important where the people live. So they want to bring them into Zug also. We build about 1,000 apartments each year in Zug, which is a lot in this tiny canton. We have an initiative going on currently to build additional affordable housing as well.

Yes, the paper said that about 50 million Swiss francs were going towards this initiative?

Just now, there is a new law to promote home ownership – a law that gives advantages if you build your own house (not for investment or speculation, but your own primary residence). The Zug government sees this problem and they are doing a lot, but at the moment the pressure on housing is still quite great.

Is there land available to build more, to take advantage of these initiatives?

There is the so-called Richtplan (regional development plan), which designates in which areas new housing is allowed. This was approved by the federal government, and this is a good idea, but at the end of the day, if the owner of the land doesn’t want to sell, you can’t force them to do so!

Even if it has been re-zoned for housing?

That’s the problem: you cannot force someone to sell, or to build something on their land.

I understand some of these pressures. I was the director of an affordable home ownership program in Seattle. As soon as Microsoft moved into Seattle, suddenly, what had been a sleepy little town became a great magnet for high-tech people all over the country and the world grew at an enormous rate. In the course of five to ten years, people who had grown up in Seattle could no longer afford to live there, because the wages had gone up and so the housing prices went up. For many years we worked on public-private initiatives to try to bring in more affordable housing. I see similar pressures here – it’s on a smaller scale but you have the same issues. You have success, and you have the companies doing so well, which creates a wonderful standard of living- but it becomes less affordable for the civil servants and employees who maintain basic services.

I remember when Boeing moved their headquarters out of Seattle…

That was a big controversy!

I think we have a big advantage in Zug these days with the diversity of companies. Fifty to a hundred years ago, we depended on one big employer, Landis and Gyr. Every third or fourth person depended on Landis and Gyr.

There is a parallel with Boeing in Seattle’s past, before Microsoft – if Boeing did well, everyone did well, but if Boeing went bust, everyone lost their jobs. That economy was tough on the residents. When Microsoft moved in, other high-tech companies moved in, and even though you had higher costs of living, you finally had the diversification of business which was actually beneficial for the residents as a whole.

Yes, we have all of these industries that I mentioned before. When we go to the medical devices – for example, the heart monitor business, the number one developer and manufacturer in the world is here in Baar. There are certain industries that have developed very successfully. Medela, for example, or Roche Diagnostics, these companies are doing so well…This gives diversity so that the canton today doesn’t depend just on Landis and Gyr, or just on the commodity traders, as it was maybe 30 years ago. It is much more diversified.

Our government at the moment is speaking to the other cantons around Zug - a lot of people live in the Canton of Aargau, Canton of Zürich, the Canton of Schwyz…If you commute from such places like Ägeri or Rotkreuz, it will not take more than 15 minutes to commute.

As an American it is not a big deal to drive for 30 minutes, but if you’re accustomed to working 10 to 15 minutes from your job, then there is a change in mentality if you want the advantages of diversification and stability of the industries. You have to pay somewhere… but I do think it’s important to build some regulated and affordable housing for the lower to moderate income residents.

This is a clear philosophy – we don’t want to be another Monaco – we would like all the advantages and quality of life, but the population should be mixed. That is a clear goal. But it is not always easy to reach it.

No, it’s quite complicated. There seems to be some anger at expats expressed in this newspaper article – I’m not sure if the residents feel that anger or not. But it makes me wonder, if these international companies are coming in, what is being done to promote the Swiss workforce being more involved at the same level as the highly-skilled expats? Why is it necessary to bring in expat employees from Japan or the United States? Can’t a Swiss business person fill that spot?

A new employee from Switzerland does not necessarily have the company background knowledge. There is a certain workplace culture, and you need the knowledge of how things work in that particular company. This is quite different if you’re going from one company to another, and they want to make sure that the new subsidiary has the same culture, so they bring in expat for two years. After two years, very often, they replace the person with a Swiss employee.

So what can be done when there is a problem with not having enough Swiss workers to fill those spots?

In my opinion, for qualified people at top level, we have excellent universities and an excellent education system, but we don’t have enough people – simple as that.

That begs the next question – what about bringing in more Swiss women as employees?

When I studied at the Federal University at Zürich – in my class of 120 students, we had two women in the class! So if there is no supply, you can’t hire them.

Exactly - so it would be difficult to find women at your level, for example, right now.

Yes, that is the issue, when it comes to certain areas, lawyers, pharmaceutical doctors – they may find them - that’s possible. But overall, I would be happy if we had more women at the higher levels in the companies.

That could solve some of the problems with a shortage of Swiss workers…

That’s why we feel that if we want growth, and every economy has to grow somehow, right now we depend on people from abroad. That is my personal view. I think the education system is very good and a lot of young people are studying -- they are there in the companies -- but there are just not enough at this time.

In the Tages Anzeiger article they compare the number of Swiss moving into the canton for the past two years, and they’re showing a dramatic change from previous years, relative to expats moving in.

My personal feeling – I don’t have the details – but I think here are probably two companies - Siemens and Roche – which are responsible for that peak, statistically. In 2008 you might see the same thing. But then in 2009 it will change again. When you look at the long-term movement over ten to twenty years, you see that the number of Swiss moving into the canton is more or less constant. The movement from expats is growing – but that is in line with what happens with our work.

A little about you personally – have you always lived in Zug? Do you have family here?

I moved with my family 14 years ago. And before that I lived in several areas of the world, I grew up in the Canton of Zürich and lived in the Zürich area and also in other areas of Switzerland, and the U.S for a short time, in the Philadelphia area. Then I was in Italy and Belgium – but since I’ve been here in Zug, I know that I’ll never leave Zug!

Why would you?

Yes, we have such a high quality of life. Before, as I mentioned, I worked in different companies, the metal processing industry, headhunting, I was with Schindler for about five years, which brought me to Zug. I just happened to land in Zug by chance. Then later on I was a member of the management team of NCR, the computer industry, and Swiss RE, Ernst & Young, and eventually I came here in 2001.

How have things been since you’ve arrived at the Office of Economic Promotion – how do you do things differently from your predecessor?

I think that what we feel here is that we have a great team. This is the “Spirit of Zug” – open, flexible, you have to feel this in your body. We – my boss, my team, everybody – has a certain enthusiasm, we bring this spirit out to the community, to the business community. I think that bringing this enthusiasm OUT to the community has changed.

Hans, is there anything else that you would like the ZIBF membership to know before we end our interview?

I have one thing: for those people going back to a home country – I hope that they keep Zug in a positive light. If they want to act as a kind of ambassador, I would be very happy. So my wish would be for this community, whenever they go back, think positively about Zug, and if they can speak in a positive way, be something of an ambassador!

Dr. Hans Marti
Head Economic Promotion

Aabachstrasse 5
P.O. Box
6301 Zug
Tel. +41 (0)41 728 55 04
Fax +41 (0)41 728 55 09
hans.marti@vd.zg.ch




© Photos courtesy of Sumner Graphics