Michael Kiesewetter: Promoting competitiveness in small and medium-sized companies

“Our times are so exciting you can only shock people with boredom,” said the late playwright Samuel Beckett, who de­­­­ceased at the end of the 1980s. Nie­der­­sachsen’s small and medium-sized com­­panies really can only be shocked by bore­­­­dom, with the con­­ditions of com­pe­­ti­­­tion on the international markets changing so quickly from one day to the next. Even if a com­­pany has no international commit­­ments itself, it is exposed to ever greater inter­­national com­­petition, since the world economy is so intertwined now­­adays. In order to in­­crease the competi­­tiveness of companies in Nie­der­­sachsen, the state has entrusted large parts of its funding to NBank, Nieder­sachsen’s invest­­ment and development bank.
Offer customised to each company situ­­a­­tion. The key focus is on promoting in­­vest­­ment in small and medium-sized com­­pa­­nies, that is providing the capital needed for equipment, staffing costs or to secure liquidity. The aim is to put to­­gether the ideal overall financing pack­­ages of low-interest loans, grants or secu­­r­­ities for companies.

 Investments are becoming increasingly important in addition to classic promo­­tional instruments. In particular, they cover a higher capital requirement for financing growth. Furthermore, they im­­prove a com­­­­pany’s solvency and credit rating situation, while financing can be adapted flexibly and quickly to the com­pany’s situation. The commer­­cial risk is shared among many shoul­­ders. Via its subsidiary Kapital­be­tei­­li­­gungs­gesell­schaft mbH (NKB), NBank has issued a fund using financial contri­­­bu­­tions from the state and the EU. This strengthens the capital base of small and medium-sized companies, allowing them to grow. The investments are not focussed on a par­ticular sector.

 A working infrastructure is especially cru­cial in a transit state like Nieder­­sachsen. Promoting this is essential for an econ­omy which wants to be competitive. Stim­­ulus for economic growth doesn’t only come from large projects like the Jade-Weser-Port: the range of small promotional pro­­jects also supports entrepreneurial activity: they create new jobs by providing small and medium-sized com­­panies with suffi­cient water and energy, connecting them to transport routes or making their relo­­cation easier.

Innovation is the key to economic suc­­cess. Innovation is the key for small and medium-sized companies to assert them­­­selves in light of the rapidly changing con­­ditions of competition. It is especially when financing these inno­­vations that these companies meet obstacles. The market acceptance of an idea is diffi­cult to judge at the begin­­­­ning. In general, inno­­vations require a large amount of capital, since high staffing and material costs are incurred be­­fore the potential success, without this success being certain. For banks and savings banks, awarding credit is therefore linked to risks which are diffi­­cult to calculate. However, small and medium-sized com­­panies are highly dependent on borrowed capital, since they do not have sufficient financial re­­sources and direct access to the cap­­ital market is almost impossible. Opti­mi­sa­tion in the funding of innovations helps to overcome some of these hurdles and to minimise the risks. Small and medium-sized companies are mobil­­ised to de­­velop new products, processes and serv­­­­ices, rather than merely improving exist­­ing products.

 

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 Using funding to motivate companies to invest in staff. Innovation needs quali­­­­fied staff – knowledge and creativity are the key. With the state’s programmes for promoting the labour market, NBank en­­­courages companies to invest in the initial and further training of their em­­ployees. Such investments secure the urgently needed next generation of spe­­cialist staff. These programmes place a particular em­phasis on improved quali­­fication for older people, migrants and women, in order to make good use of existing potential. In the same way, small and medium-sized companies are supported in gaining the advice of a profes­­sional consultant in decisive company situations. These companies often lack sufficient resources in terms of both staff and organisation. The consultant can help to eliminate man­­age­­ment and informa­­tion deficits.

 Companies which are only just discov­­ering their innovation potential have par­ticular requirements. They need structures and qualified staff to imple­­ment an idea, and look for access to resources in research and development. It will there­­fore become increasingly important to transfer research results from universities to companies. Today, NBank is already using funding from the state and the European Regional Development Fund (ERDF) to promote cooperation be­­tween universities and companies, as well as outsourcing from universities. This coop­­eration be­­tween business and science is happening in a unique way in the “Inno­­vation Incu­­bator” at Leuphana Uni­­ver­­sity in Lüne­­burg. With its many innovation projects, this large-scale project is aimed not only at creating and securing jobs, but also at strengthening the inno­­vative po­­tential of small and medium-sized companies in particular. New ideas and proc­­esses are developed and highly qualified graduates produced.

 

 Consultancy provides transparency in promotion options. Consultancy services from NBank give companies transpar­­ency regarding the range of support from the state, federal government and EU which can be taken advantage of in Nieder­­sachsen. The more intensively a company makes use of this, the more customised their support is and the more sustainable the success promised by the support in the end. The state and the company both benefit.


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 The understanding of consultancy goes beyond general consultancy on funding. In complex applications, such as for EU funding, companies are supported from the first idea to the application. If neces­­sary, financing meetings with house banks are also offered and contacts with inves­­t­ors provided by business angels in Nie­­der­­­­­sachsen or the equity platform NCapital. The expertise of regional partners such as district economic promotion organ­­isa­tions, chambers of trade and indus­­try, chambers of crafts or local banks and savings banks is a vital cornerstone of successful coop­­eration. Chambers and economic promo­tion organisations know the regional mar­­kets, their features and requirements. Banks and savings banks are both the first point of contact for financing ques­­tions and partners for long-term financing. Business and social asso­­ciations are also involved in cooperation.

 Small and medium-sized companies in Niedersachsen have rarely enjoyed as much promotion as they do now. With innovation and qualification, they are able to face the challenges presented by glo­­balisation and demographic change, for example, while relying on the constant support of reliable partners.

Kiesewetter-KopieMichael Kiesewetter (born in 1969) has been the CEO of NBank, Niedersachsen’s invest­ment and development bank, since late 2010. Before this, he worked at NORD/LB from 1995, ultimately as head of cor­­p­­­­o­­rate development at the state bank. Pre­­vi­ously, he was head of department for North-East Europe and managing direc­­tor of a Nord/LB subsidiary in Latvia.