Global Move Strengthens Hercules
We caught up with one of the site selectors involved in Hercules’ recent Swiss expansion to get some insight into the corporate site-selection process.
By Michelle Janowitz
Hercules’ new European headquarters in Schaffhausen, Switzerland. Image provided by Hercules Incorporated
Switzerland’s stable economy has long made it a sanctuary for investors, and it seems that this trend of foreign investment is only on the upswing these days. In fact, during 2004 a total of 526 firms made new or expanded investments in Switzerland, creating 2,289 new jobs. This is up from the 446 projects and 2,091 new jobs recorded during the prior year in 2003. According to Mario Brossi, North America’s senior representative for investment attraction agency Location: Switzerland, out of the 526 investments, 43 were made by companies from the U.S., Canada, and Mexico.
Some examples of recent investments by North American companies in Switzerland are projects by Biogen Idec, Cellgene, Sigma-Aldrich, Honeywell, UPS Supply Chain Solutions, Salesforce.com, and Zimmer Holdings. Examples of recent North American-based companies relocating from elsewhere in Europe to Switzerland include Nova Chemicals, Cargill, Gillette, and General Mills from the UK; Colgate-Palmolive, Invacare International, and Polo Ralph Lauren from France; and Fischer Imaging and John Deere from Germany.
In May, Delaware-based specialty chemicals company Hercules Incorporated announced it will open its European headquarters in Neuhausen—in the Swiss northern canton of Schaffhausen—in October 2005. We caught up with Cees Vandersmeede, Managing Director of Hercules BV in the Netherlands, who helped in the site selection process for the company, to explore some of the reasons why Switzerland is such a palatable option for foreign investment.
Business Facilities: Could you give me a bit of background regarding how long you have been with Hercules Incorporated, and what your position is now within the company?
Cees Vandersmeede: My current position within Hercules is Managing Director of Hercules BV in the Netherlands. I have been with Hercules for almost 20 years and have held several, mostly finance functions, in Belgium, the U.S., and the Netherlands. I will start a new challenge on October 1 of this year at our regional headquarters in Shanghai, China.
BF: What purpose does this new facility serve? How many employees will you have there, and what will they do?
Vandersmeede: The new facility will house our regional headquarters for Europe, Hercules International GmbH, which is expected to drive growth for the corporation. We will employ between 40 and 50 people within the next five years. By the end of 2006, we expect to employ around 25 people at this headquarters location. The head office in Schaffhausen will manage Hercules purchasing, manufacturing, sales, and marketing activities. Certain support functions will also be centrally managed in Schaffhausen, Switzerland, such as Human Resources.
BF: What led to Hercules’ decision to establish a new European headquarters?
Vandersmeede: One of my key responsibilities during the past three years has been the development of the ideal organizational model to better serve our customers and optimize our Finance & Control organization. That model included setting up a new regional headquarters for Hercules in Europe.
Let me explain this concept in more detail: Hercules went through some critical financial challenges in 2001 and 2002, during which time we made significant management changes in Europe. As a result, European operations were managed through a matrix organization in which the different European managers reported directly to the corporate headquarters in Wilmington, DE. These European managers—representatives from our key businesses Aqualon, Pulp and Paper, FiberVisions and the support group—were located in different Hercules entities in Europe—Germany, Italy, Sweden, the Netherlands, France, Belgium, the UK. This approach proved to be less than optimum for effective communications across the business. This prompted the idea to bring our key European managers together in a newly-formed regional headquarters through which we would create growth for Europe and improve overall communication.
BF: What role did you play in the site-selection decision?
Vandersmeede: I led a team whose mission was to investigate prime locations in Europe that could serve as our regional headquarters.
BF: Beside yourself, who was involved in making this decision?
Vandersmeede: I only recommended the ideal site. The final decision was made by the Hercules Steering Team, which consisted of Chief Executive Officer Craig Rogerson and his direct reports. They approved our team’s recommendation during the Steering Team Meeting held in Wilmington last year.
BF: What other locations were considered?
Vandersmeede: We considered Prague in Eastern Europe, Ireland, and Switzerland. We were particularly impressed with the Canton of Schaffhausen in Switzerland.
BF: What factors ultimately made Switzerland, and more specifically Schaffhausen, the right choice for this expansion?
Vandersmeede: Benchmarking with other companies, central location, availability of local talent, availability of international schools, availability of quality offices at a reasonable price, close to a major airport, those kinds of things. Schaffhausen is an excellent location where Hercules will be able to attract the talented people it needs to manage its business. Schaffhausen is centrally located in Europe, close to France, Germany, Italy, Austria, and is within a 25-minute drive of Zurich’s Kloten airport. There are quality offices in Schaffhausen at reasonable prices, especially compared to Zurich and Geneva. In addition, Schaffhausen has an international school, and other international schools are within driving distance. The area around Schaffhausen is beautiful along the Rhine River, and it gives our new regional headquarters a representative office facility. In addition, the traffic situation around Schaffhausen when compared to other cities in Europe is very quiet.
BF: Is Hercules going to use the local workforce to staff its new operations, and did the local workforce play a role in the decision to locate here?
Vandersmeede: We are relocating our key European decision-makers from the different countries in Europe to Schaffhausen. In addition, we will also recruit positions locally. It is our expectation that once our office is fully staffed we will have 60% existing Hercules employees and 40% new recruits. The quality, education-level, and availability of a multilingual local workforce is very high in Schaffhausen.
BF: What assistance, if any, was Hercules given by country, state, or local economic development organizations in Switzerland? Were any grants, incentives, or workforce training programs, etc. being offered?
Vandersmeede: The city of Schaffhausen has been very involved through its Economic Promotion Office in helping Hercules during the complete process through contact with key local companies, assistance with the selection of an office facility, contact with the local press. Some incentives have been offered to Hercules.
BF: Is any further expansion by Hercules anticipated?
Vandersmeede: Apart from my earlier comment [about Shanghai, China], there is currently no additional expansion of our European Regional Office foreseen.
BF: What were some of the biggest challenges you faced while working on this project?
Vandersmeede: The biggest challenge was the fact that this project touches all disciplines within the Hercules organization—different businesses and functional groups. This made it crucial to have regular meetings with the key representatives of these different businesses and functional groups in order to ensure that they understood the process and were committed to the project. This was realized through regular presentations at our corporate headquarters in Wilmington to the Hercules Steering Team and face-to-face meetings with all key executives during the project. In addition, it was a challenge to prevent different rumors from spreading, especially in Europe, where people were starting to be concerned that their job would disappear as a result of the formation of the regional headquarters. It was also a challenge to manage this project with my day-to-day position—weeks of 60 hours or more were more the rule than the exception.
BF: Through your own experiences, do you have any advice for other companies that are planning expansion/relocation projects?
Vandersmeede: People do not like change even though they will not admit this. This is a real challenge, in my opinion, for any major project. It is crucial for the main project lead to be respected within the company, and to be able to interface well with people. I believe it is also beneficial to be firm but fair since there can be quite some opposition during the project. Be aware, especially for projects that have more than 12 months duration, about changing rules and regulations, and do not underestimate the different legal limitations when a project covers different countries. For example, what is quite normal in the Netherlands may not be accepted in Italy.
