Business and management
Vienna as a business hub
Baroque ain’t everything
Dec 9th 2011, 12:19 by D.S. | VIENNA
WHO would swap the baroque splendour of Vienna, its Spanish riding school and Hofburg palace, for bourgeois Geneva or even post-Communist Prague? Alas, more and more companies locating a regional headquarters for central and eastern Europe (CEE) tend to now put good communications and an internationally-minded labour force ahead of grand opera and Sachertorte. That includes The Economist, which moved its regional office from Vienna to Geneva in 2008.
To be sure, Vienna is still the regional hub. At the last count, 303 companies have their CEE headquarters in Vienna, 14 more than two years ago. But during that period eight companies pulled out, or were lost through mergers. And firms no longer just look to Vienna’s west, where Munich, London and Amsterdam loom large, but east—to Bratislava, Budapest, Prague and Warsaw. Between them, these four cities now boast 80 regional headquarters, according to a study by Wolf Theiss, a consultancy.
Vienna has not played its cards well recently, says Leo Hauska, whose public relations firms fronts for Headquarters Austria, a local initiative. Take infrastructure. The expansion of Vienna airport has been dragging on since 2004 and may not even be completed by mid-2012, the latest new target date. Worse, Austrian Airlines, the national carrier, has been bought by Lufthansa and is likely to see its hub shifted to Munich—a heavy blow for an airport that today has more connections to central and south-east Europe than any competitor. Taking the train is no pleasure either: the fast rail link from Vienna airport ends in a concrete jungle and regional railway links are underdeveloped. To boot, the road to Prague is a nightmare.
Still, a few companies still swear by Vienna. Henkel, a German detergent maker, has huge regional headquarters and a logistics hub there. The generally good economic environment, the quality of life and the city’s central position are Vienna’s most important assets, says Günter Thumser, head of Henkel CEE.
If others have hopped across to Bratislava in Slovakia, for instance, it is mostly because the cost of living is lower. Johnson Controls, an automotive supplier, moved its global financial headquarters there from Mexico. Darby Overseas Investments, the private-equity arm of fund managers Franklin Templeton, decided to relocate from Vienna to Bratislava last year. Bratislava is also gaining weight as a cluster for information technology firms: Citrix Systems, Hewlett Packard and SAP use it as a regional base.
Glen Farrell, an Irishman at Sario, Slovakia’s agency for inward investment, says attracting headquarters has become his big mission. On a recent trip to America, he found that Slovakia’s finer points were largely unknown, such as its membership of the euro zone. “That blew their minds,” he recalls.
Yet Vienna will not be beaten so easily. Headquarters Austria and the Austrian Business Agency are planning a big congress next October to tout the city’s horn. They will still have plenty of things to boast about. According to the Economist Intelligence Unit’s liveability ranking, the quality of life Vienna is second only to Melbourne: it has great international schools; the city is stuffed with everything from cafés and restaurants to parks and palaces; and inner city transport is a delight.
Other than its infrastructure Vienna has one big weakness, however: languages are not its peoples’ strong point; nor, apparently, is the readiness to move to another location at the behest of a global employer. But who can blame a Viennese for that?
Correction: Prague is, of course, west of Vienna, at least geographically. Sorry!
In this blog, our Schumpeter columnist and his colleagues provide commentary and analysis on the topics of business, finance and management. The blog takes its name from Joseph Schumpeter, an Austrian-American economist who likened capitalism to a "perennial gale of creative destruction"
Advertisement
Money talks audio
- Analects | China
- Americas view | The Americas
- Babbage | Science and technology
- Bagehot's notebook | British politics
- Banyan | Asia
- Baobab | Africa
- Blighty | Britain
- Buttonwood's notebook | Financial markets
- Charlemagne's notebook | European politics
- Clausewitz | Defence, security and diplomacy
- Democracy in America | American politics
- Eastern approaches | Ex-communist Europe
- Elysée | France’s presidential election
- Free exchange | Economics
- Game theory | Sports
- Graphic detail | Charts, maps and infographics
- Gulliver | Business travel
- Johnson | Language
- Leviathan | Public policy
- Lexington's notebook | American politics
- Newsbook | News analysis
- Prospero | Books, arts and culture
- Schumpeter | Business and management
Most commented
- The euro crisis: The Greek run
- Foreigners in China: Barbarians at the gate, again
- Brazil’s economy: A bull diminished
- Russia and NATO: Rethink the reset
- Gay marriage: North Carolina begs the question too
- Nationalism online: Backfired
- Politics and private equity: Bringing the Bain
- Turkey’s cultural ambitions: Of marbles and men
- India-China relations and the media: Blame the messenger
- Greece and the euro: Exodus, chapter 1
Over the past five days
Most recommended
- The euro crisis: The Greek run
- Foreigners in China: Barbarians at the gate, again
- Greek politics: Slouching towards the drachma
- Brazil’s economy: A bull diminished
- The euro crisis: Going, going, gone?
- Jacob Zuma: Portrait of a president
- Rival versions of capitalism: The endangered public company
- Bo Xilai v Chen Guangcheng: Who is the mightier?
- Facebook goes public: Not top of the pops
- Global Zero: Fewer nukes, more security
Over the past seven days
Advertisement
Readers' comments
The Economist welcomes your views. Please stay on topic and be respectful of other readers. Review our comments policy.
Sort:
Prague is west of Vienna. Zurich and Geneva don't fit most of the definitions of Central Europe. Since this article the Hungarian airline Malév went bankrupt so Austrian Airlines has lost one of its most important competitors in serving the CEE region. Nothing against Bratislava as a city, but I am pretty sure that one of the factors in choosing it for any operation is its vincinity to Vienna and the Schwechat Airport of Vienna.Also about the rail the tracks towards Germany are being renovated and there is new higher speed rail connection to Budapest as well as a new modern train station is being built. I really don't understand the concerns except for the fact that Vienna is truly an expensive city.
I have long been missing Austria in The Economist, thinking, how can one write so much about germany and all its neighbours without ever even mentioning Austria? I almost suspected a conspiracy, but now i see. You got lost on Praterstern, then tried talking english to the taxi driver who was from anatolia, and german to the lady in the sausage stand who was a native viennese retired prostitute. Next time just do it the other way round, you'll be best buddies with both!
The Economist did not move its regional office in 2008. It moved in 2009.
As some companies may migrate out of Vienna to other countries let's not forget employees are not robots and lifestyle also plays a factor. For anyone who's been to Bratislava, any reasonable person would need think long and hard prior to living there as opposed to Vienna. Vienna might have a high speed rail ending in concrete jungles however I'd take that any day compared to a filthy bus running once in a while from the Bratislava airport to the even filthier train station. Not to mention Bratislava fails in practically every other factor one would use to evaluate the two cities- not even a comparison really.
It seems that the attractivity of Vienna is now simply becoming more spread to the cities it onces subdued as an imperial (exploiting) capital. Which is normal. Except Warsaw which a bit more distant to the north-east. The ultimate outcome will likely be the lack of a trully big city among those cited. A situation of fragmentation.
Now, what about that chunk of Central Europe which is not in the local mini-city network of Vienna-Prague-Budapest-Bratislava: Romania. Like Poland, another big chunk of Central Europe, Romania cannot be overshadowed by Vienna. And Bucharest is bigger than any of the cities cited above - it is the largest in Central Europe and the 6th in the European Union (after - in order - London, Berlin, Madrid, Rome and Paris, and ahead of Hamburg), with big growth potential still and without much competition around.
To joke a bit with words, the urban pole of Central Urban will move to Romania, or rather it already did. But Vienna is much better for concerts, I completely agree. By the way, what was the topic here: economy-geo-politics or music?! Still playing that old piano about Mitteleuropa?
Bucharest? You are certainly not giving enough weight to the slothfulness of Romanian Governmental workers.
Oh, those are also now gradually lost in their past ... Times are changing my friend.
Romania might be up and coming, but its resource lies in the more developed mid-sized cities of Timisoara, Cluj or Iasi. It is something other Central European countries lack that is regional centers with proper infrasturcture for example working regional airports. Bucharest might also be big, but its is geographically on the outskirts of Central Europe, don't forget Prague-Vienna-Bratislava-Budapest are all in central loacations.
After living in Vienna for the last three years, I feel its only problem is the Austrians and their mentality. I doubt I've ever been in a more xenophobic major city. As far as languages are concerned, for the most part, almost everyone speaks some English. My complaint, as someone who has spent 10+ years of his life learning German, is that Austrians speak a peculiar dialect of it amongst themselves which again, creates these xenophobic tendencies. Don't even get me started on the World War II legacy! I still can't believe the day the "occupiers" ie. Allies left is a national holiday.
There seems to be a slight misunderstanding here. Austria commemorates on its national holiday the declaration of its permanent neutrality, which although obsolete from a politcal or strategic point of view, is still seen by many Austrians as a cornerstone of their national identity btw the attitude towards Western allies after WWII was quite positive since they were regarded as protectors against the Soviets.
It seems to me this is all based on perspective. From my understanding, Austria didn't declare permanent neutrality, rather this was the condition upon which the Allies left the country and the reason why Austria remained out of NATO.
Austria had to declare permanent neutrality. The Russians who occupied the eastern part of Austria would never have agreed to any solution that would have permitted Austria to join NATO.
The Russian occupation of Austria after WWII was not that nice, they even deported Austrians to Russia and put them in prisons and Gulags, e.g. if they criticized the way the Russians ruled in Eastern Austria and sometimes also without any reason at all. Some of these deported people died in Russia.
A prominent political example is Ms. Ottillinger who was a young Austrian civil servant whose job it was to evaluate the amount of German/Austrian property that was confiscated by the Russians (400 factories/companies, 140 agricultural or forestry operations, all the oil/gas ventures, 157.000 hectare of land). She spent 7 years as a prisoner in Russia, was maltreated and nearly died. However, being a very strong-minded young woman she survived and became the first female executive director of Austria's biggest oil and gas company OMV.
I think its an interesting article from an outsiders's point of view.
One objection though - Languages not a strong point?
I disagree; first people practically all speak English. Secondly, many do speak either French (a bit in decline I think though) or Spanish, but an increasing number also speaks Czech, Russian or other Eastern languages - as Vienna has become the emigration city of choice for many Easterners (which I personally think is great) often people are perfectly fluent in German, English and the respective Eastern language.
The comparison with Milan, Paris or London is definitely won by Vienna in my experience.
"Vienna has one big weakness, however: languages are not its peoples’ strong point"
Are you for real? I have taught english in Vienna for many years and without fail every student I have ever had had at least a basic grasp of English. Go to the stores, shops, restaurants, museums, hope on a tram - EVERYONE speaks english here. I also had the unfortunate job of teaching english in bratislava - it was the polar opposite over there - although most students had a fairly decent grasp of the language, it was nearly impossible to find anyone in a restaurant or shop or bar or store that spoke english. On top of that, they are some of the surliest people on the continent and God forbid if you speak english or german - you are immediate target to be instantly ripped off.
You owe the Viennese a HUGE apology!!!
On the matter of logistics, is the Danube navigable at Vienna the way the Rhine is at Basel or Strasbourg, ie. cargo barges of up to 1,000 tonnes can be navigated?
It is, and according to: http://hafen-wien.com/en the port handles about 1.8Mt cargo a year.
Last year I had chance to speak to Mr. Farrell briefly on a quite similar subject, and can say he was very well informed and engaging to talk to. From his perspective, which this article seems to somewhat belatedly confirm, Slovakia (primarily Bratislava) is poised perfectly to pick up on any significant drop-off of companies from Vienna. All Bratislava would need is a slightly enlarged M. R. Štefaník airport, and perhaps a more stable air carrier deal, and they would be fantastically set!
Johnson Controls is far more than a mere automotive supplier.
Perhaps the City Airport Train (the fast rail link from the airport) does end in a concrete jungle. But perhaps Schumpeter refers to the ongoing renovation of the Wien Mitte train station. As an American student here this past semester, I certainly did notice this monstrosity, but I must point out that the artist's rendering of the new station, posted on a big board on its southwest corner looks downright beautiful.
..but definitely not east!
Nice to encounter another pedant
Geo-politcally east
Last time I looked at a map, Prague was well west of Vienna.....
Forthview, I was inspired by your comment to look at a map. Prague is north-northwest of Vienna (za presné.)
Vienna is awesome. The only rationale for companies to move these other cities is cost, but quality of life on any measure is better in Vienna. The comment about English is plain hogwash, every person I've met in Vienna speaks decent, if not excellent English. Geneva or Zurich, give me a break - I yawn just thinking about them. Prague might be the only city that even should be in the discussion, but even it has significant shortcomings (its airport is even less well-connected). I wish the Austrians the best in marketing their city, and look forward to visiting it again in the very near future.