Economic Promotion in the District of Schwäbisch Hall

The district of Schwäbisch Hall is situated in the Northern part of Baden-Württemberg and is sharing a border with Bavaria. Among its economic features count a diversified industrial basis dominated by producer goods' industries, a broad "Mittelstand" (small and medium enterprises prevail in comparison to large industries), the proximity to important economic agglomerations with large possibilities for sales, input supply, and cooperation, and, as a further advantage, the connection to one of the most important East-West traffic arterials, the motorway A6. The disadvantages of the region as business location comprise the generally low or, at best, medium technological standard with few high quality products, the absence of competitive high tech industries with strong potential for growth and a relatively low level of qualification among the employed population. The economic downturn in the second half of the nineties has emphasized the evidence of structural problems. The economic agents in the region agreed that concept and measures of economic promotion had to be rethought. Supported by the EU and sponsored by the local savings bank, the district commissioned an expertise in 1997 to analyze the economic perspectives of the region and to make recommendations on how best the local economy could be stimulated in the future.

The expertise concluded that due to the comparatively sound industrial basis the perspectives for growth were, in principle, positive. However, in order to ensure the future competitiveness of the economic location and the necessary structural adjustments of the industry, enhancement and promotion of innovation were considered indispensable. This process could be supported by the various centres of know-how available in the region including the Centre for Technology of Schwäbisch Hall, the Steinbeis Centre of Technological Transfer and the technical high school of Heilbronn. The experts recommended further that promotional efforts should focus on those enterprises and sectors which promised to have a potential for economic growth in the medium and long run and thus would contribute sustainably to the creation of jobs and the consolidation of the labour market. Economic promotion should therefore give priority to producers of special machines, suppliers of the automotive industry, food industries, production- or technology-based craft businesses, providers of business services, start-ups or young industries. To encourage investors from outside the region to invest in Schwäbisch Hall, two particular advantages of the region should be highlighted: the potential for inter-firm cooperation and the favourable geographical position. However, seen that over the past 15 years there had been only one real new investment in the region, the perspectives to attract new investors were relatively low. For this reason the promotion of existing industries should rank first.

Several factors were identified as being the major bottlenecks for economic growth:

• Lack of innovation due to insufficient communication between enterprises and so-called network focal points, lack of transparency and lack of demand orientation of promotional programmes, insufficient exchange of experiences among the regional economic actors and therefore lack of innovative impulses.

• Lack of cooperation between enterprises because of insufficient information on cooperation possibilities, in particular on potential cooperation partners and their offer of products and services; lack of communication and exchange among enterprises and lacking contact between enterprises and the network focal points¹; absence of impulses for cooperation; enterprises' unwillingness to outsource services or production lines.

• Limited availability of highly qualified technical or management staff or of staff with special qualifications and skills, long distances to specialised training institutions, lack of information on existing programmes and lack of demand-orientation of the available training offer in the region, image problems and, as a consequence, difficulties to find well qualified technical or management staff.

• Lack of assistance for start-ups: insufficient communication between the network focal points and business founders, lack of information on the promotional offer, lack of door-openers to special promotional programmes, in particular for technology- and innovation-oriented start-ups or for entrepreneurs who wanted to expand or to restructure their businesses; insufficient exchange of experience among new entrepreneurs, and lack of assistance for business registration or in the contact with the administration in general.

In addition to these deficiencies, the following bottlenecks were seen as hindrances especially for new investments:

• Lack of appropriate business sites which were affordable, sufficiently large and connected to the motorway; unfavourable financial conditions in comparison to the neighbouring business locations in Bavaria (water tariffs, taxes etc.).

• Insufficiencies in the traffic infrastructure, in particular long distances to regional and international airports and lack of possibilities to combine road and rail cargo transport.

• Image problems of the region which made it difficult to attract highly qualified technical and management personnel.

Based on these findings and results, a new concept for economic promotion was conceived. It included a series of core activities to which several other activities should be added gradually. The core activities and the respective instruments were the following:

1. To make the service of economic promotion more transparent and more accessible to the enterprises through enterprise visits, round tables, newsletters and intensification of public relations.

2. To enforce the exchange of experiences among enterprises and to create a basis for enterprise cooperation through the organisation of focus groups working on cross-cutting or sector-specific topics, initiation of workshops and regular meetings for new entrepreneurs or technical and management staff of existing enterprises, creation of an Internet data base to inform on services offered and requested, on free production capacities etc.

3. To intensify the cooperation with the municipalities and to strengthen their promotional capacities through the creation of a special training and capacity enhancement programme for local officers responsible for economic promotion, the organisation of working groups etc.

4. To make the administration more responsive to the needs of the business community and to facilitate access to administrative services through an institutionalized exchange of experiences between enterprises and administration, the creation of information systems within the administration, guidelines for authorizing procedures, the creation of data and expert banks.

After thus having laid the ground for improved cooperation with the business sector in the region, promotional efforts should then concentrate on the enhancement of innovative capacities, the creation of an integrated start-up service, the improvement and extension of the existing offer of technical and management training and the extension of cooperation network structures to neighbouring districts.

The findings and results of the expertise were presented to the public. In particular the new concept for economic promotion was discussed in different workshops with the responsible officers of the district and municipalities and the representatives of the business community. Like the previous enterprise survey conducted in the frame of the expertise, the workshops contributed to the sensitization of the entrepreneurs and their identification with the new promotional approach. To date, the promotion of the local economy in the district of Schwäbisch Hall is principally based on the creation and extension of networks at very different levels: between enterprises and institutions of promotion, between research and economy, between institutions, between enterprises of the same or of different sectors, between enterprises and municipalities and between municipalities and the district. The overall objective is to stimulate inter-firm cooperations and to create a broad, demand-oriented offer of business services within reach of the enterprises. In the centre of the networking structures stands the 'House of the Economy' of Schwäbisch Hall. Rehabilitated with EU and local funds it accommodates newly created companies and provides them with a 'founder package' (business advice, access to finance, office and production space). On the other hand, it hosts a number of relevant business service providers and associations: Chamber of Commerce and Industry, Chamber of Crafts, Centre for Technology of Schwäbisch Hall and Agency for Economic Promotion of the district. There also exist close relationships with other research and technology institutions, e.g., the Steinbeis Foundation with its technology transfer centres all over Germany. In combining these service providers and their offer, the 'House of Economy' has become a kind of 'one stop shop' for business services.

Within the network structures the Centre for Technology and the Agency for Economic Promotion assume the role of focal points. The Centre for Technology is a privately managed organisation whose shareholders are composed of the City of Schwäbisch Hall, the Steinbeis Foundation and different individual enterprises. Its main task is to establish contacts between the economy and the institutions of promotion and to initiate and maintain the exchange of information between all parties concerned. It also organises the above mentioned services for new entrepreneurs. Income is generated mainly by renting out office and production space which the City of Schwäbisch Hall has made available free of rent to the Centre for a period of 30 years. The Centre has employed two professionals whose terms of reference comprise, among others, to stimulate and follow up networks, initiate working groups, and, as a direct service at the enterprise level, to provide general advisory services to existing and newly created companies. The latter services are organised as follows: selected enterprises are visited either upon request or on initiative of the Centre itself. On the basis of a brief problem analysis a tailor-made promotional concept is developed in collaboration with the entrepreneur. The enterprise is then linked to financial institutions or other specialised service providers. Hereby, the Centre concentrates mainly on those target groups recommended by the above mentioned expertise. In a year, contacts are made with approximately 10 large and various small enterprises.

The Agency for Economic Promotion is also a private institution with one share-holder, the district of Schwäbisch Hall. Apart from the district, several sponsors, in particular local banks, contribute to its income (approximately EUR 100,000 per year). One of its tasks is to improve the training offer for small and medium enterprises through the implementation of special projects. The core element of the project 'SHA-Z', a common initiative of the district and four municipalities, is the creation of a data base to coordinate the training offer and demand in the region. Special trainings can be organised on demand. Another project, the 'learning region Schwäbisch Hall - Ansbach' crosses the border of Baden-Württemberg. Supported by the European Social Fund with an amount of EUR 170,000, an Internet data base system is implemented providing information on available training offers and their providers in the two districts. More than 45 training providers have already been registered.

Together, the Centre for Technology and the Agency for Economic Promotion manage an Internet data base which brings together offer of and demand for services, products, production facilities, etc. in the region. The aim is to enhance and strengthen cooperations between enterprises, e.g., to allow them to jointly identify and supply new markets. Public relations and the promotion of the district of Schwäbisch Hall as economic location inside and outside the region is another joint activity of the two institutions .

In the future, the service offer for economic promotion will be consolidated and extended. As far as possible all services will be privatized. All initiatives, networks and activities shall be conducted under the immediate responsibility of the business sector and the institutions of promotion. The district and the City of Schwäbisch Hall will more and more withdraw from the direct organisation and implementation of promotional programmes.

¹Two of the main focal points are the Agency for Economic Promotion of the District and the Centre for Technology of Schwäbisch Hall.

top

 More of...

 case studies

Latin America
Africa
Asia
Europe /North
America