The Netherlands has an industrial and commercial
services heritage that largely outsizes the tiny size of the country, turning
The Netherlands in one of the 20 largest and arguably one of the most
successful economies in the world.
And undoubtedly, The Netherlands is still the globally leading
agricultural force. It has an estate of fruit, vegetables, potato and cereal
seedlings and seed-stocks and a general knowledge of refinement techniques for
agricultural produce, that is second to none in the world. So far the good
news...
The bad news is that The Netherlands seems to slowly lose
track to other countries in Europe, the United States and the Far East;
especially when it comes to sheer innovation and technological development.
The current emphasis of The Netherlands seems to lie on
the development of less distinguishing products and services, which are
increasingly vulnerable for competition from other countries all over the world. In the process, the country allows the circumstance to occur, that gathered
knowledge, technological evolvement and fundamental research and development
are more and more outsourced to other countries.
To this concept I was triggered by a tweet of Kees Verhoeven, a Member
of Parliament for D66, the liberal-democratic party in The Netherlands:
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| Tweet of Kees Verhoeven, MP for liberal-democrat party D66 Click to enlarge |
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| My answer to the tweet of Kees Verhoeven, Click to enlarge |
I responded to him: “I
wonder whether that is indeed a good sign? The link with tax avoidance is
easily made and such headoffices seldomly yield many jobs!”
Of course I cannot prove that Netflix establishes its
European headoffice in The Netherlands merely for fiscal reasons and probably the
company does not.
I guess that the multilinguality of the Dutch population, the
perfect air links of Schiphol Amsterdam Airport with the rest of the world and the advanced data and traffic infrastructure play also an
important role for this decision by the Netflix management. Still,
that is not the point…
My point is that – in my humble opinion – The
Netherlands increasingly turns into a country, which picks up the breadcrumbs
that other countries, large companies and institutions leave for it. Very
efficient and cost-effective in the execution of its job, but increasingly harmless as a
competitor in heavyweight technological areas, in which the real money is earnt.
Instead of standing on its own two feet with its own
products, innovations and a substantial number of globally leading companies,
the country seems to become more and more satisfied with being the Olympic Champion of the Servants. To me,
that is a worrisome development:
- As
the focus of The Netherlands increasingly lies on the low-cost
distribution of imported goods and bulky materials – domestically as well as all
over Europe – through cargo vessels and trucks, The Netherlands has seemingly
turned into the official ‘mailman’ of China and
the Far East: cautiously taking care that every
consignment is delivered at the perfect place and perfectly on time, but with a relative importance that is becoming more and more futile;
- With its massive web of tax rulings and its generally
favourable fiscal legislation with many mischievous loopholes in it, The Netherlands
is the spider in the web for multinationals, large popgroups (f.i. U2 or
Rolling Stones) and wealthy persons to avoid (‘some say’ evade) their corporate
and income taxes.
This led to a host of ‘fake’ head-offices and letter-box firms in the country, that are simply there to easily avoid taxes; not for the entrepreneurial atmosphere in The Netherlands; - And last, but not least, another new spearhead in The
Netherlands is data storage, hosting and data distribution for large internet
companies and internet services providers. The consequence is that The
Netherlands is currently establishing a massive data hosting infrastructure
(i.e. internet backbones) and large number of data storage centers for
companies as Microsoft, Google, Amazon and
the likes of them.
Very high profile and convenient for these large US companies, but futile when it comes to real numbers of jobs and genuine innovation.
The real, painful question is, however, why The
Netherlands does hardly have such globally leading, technology-driven companies anymore like
Apple, Samsung, Facebook, Google, Uber, AirBnB, Twitter or Spotify?!
A few very large companies, like Philips, Unilever and
Shell are unmistakenably of Dutch descent. Nevertheless, the last two are
already half-British and operate in a nearly stateless environment, in which
the Dutch heritage becomes less and less important for them.
The third one, Philips, is more and more changing from
a cutting edge technological juggernaut – a so-called ACME-company (A Company
Manufacturing Everything) – into a trading house, that mainly sells products
under its own name, which have been developed and built elsewhere. While that is totally
normal for other companies, it is unworthy to the legacy of Philips.
Philips has become a company that slowly
sells all its family jewels. Televisions and monitors, microprocessors, computer
equipment and a large share of its consumer electronics division have already
been sold in the past, while the lighting division – Philips' bedrock in earlier times – is currently for
sale.
Now the company has only a few key product ranges left: medical equipment
and consumer lifestyle products. And to makes things worse: Philips has become a
company, which got more and more in the spotlights for various large-scale scandals and criminal investigations, as a consequence of corruption and for breaking international rules for
competition.
Of course, there are still a number of very successful
companies remaining in The Netherlands, like Akzo Nobel (chemicals, lacquers
and paints), DSM (bulky as well as tailored chemical products), NXP
(microprocessors) and ASML (lithographic machines for the microprocessor
industry).
Akzo Nobel and DSM are strongholds in their respective
markets and the latter has invented some very competitive new products that can
effortlessly face the competition elsewhere. And NXP and ASML are – not
coincidentially – former Philips subsidiaries (!) that started a successful
life on their own, as once these both belonged to the so-called family jewels emerging
from the renowned Philips NatLab (i.e. Philips fysical laboratory).
Perhaps NXP
and ASML are indeed better off without the Philips umbrella above them, although
to these eyes that is not yet a given fact.
Still, there is no reason for The Netherlands to rest
on its laurels and enjoy its success.
For instance ASML is basically a one-trick-pony, unfortunately,
that currently suffers from Chinese espionage attemps and the general urge of
this country to copy and counterfeit everything that raises their interest. At this
very moment the company is indispensable for the microprocessor industry, but
whether that stays so, remains to be seen.
Besides that, three of these four companies (Akzo, NXP
and ASML) are quite procyclical and dependent on the economic mood in the
world for their success. And all these four companies are of course very good in what they do,
but not so outstanding that the world can’t ‘exist’ without them. In a way, they are all
rather companies of the 20th century than of the 21st century.
Whether there will be a real Dutch, 21st century company
or not remains the question, under the current scientifical and technological atmosphere in our
country. I don’t see such a company emerge at the moment, as all the really decisive new companies
seems to be of US and Chinese descent
And there is an even more worrisome development for the future of The Netherlands: the
exodus of topmanagers from The Netherlands to
other countries, making the Dutch legacy less importance for the originally
Dutch companies, where they work.
The following snippets were printed in the Volkskrant:
After
the plants, the ICT department and the call centre, Dutch multinationals also
move their topmanagers to Asia and the United States.
Of
the 23 investigated Dutch multinationals with a quotation at the stock exchanges, already 14 moved one
of or more members of their executive board to an office abroad. In half of the
cases, this move took place within the last five years.
Until
now, economists, policy makers and politicians reckoned that only the
low-skilled labour poured away from The Netherlands. The brain-intensive jobs within
the Dutch economy – the many jobs for topmanagers and highly skilled
investigators – would remain in ‘the polder’, was their opinion. Hence, this
exodus touches a soft spot, according to various economists.
According
to Professor Strategic Management and Entrepreneurial Policy Henk Volberda of
the Erasmus University Rotterdam, these emigrating managers lure the research
centres away from The Netherlands. The necessity for the large multinationals,
like Philips and DSM, to do their scientifical work and research and
development in The Netherlands, diminishes as a consequence.
Also
the Rathenau Institute in The Hague makes the connection between the exodus of the topmanagers and the diminishing need to keep ‘the smart guys’ in The Netherlands.
According to researcher Jasper Deuten, there is a declining trend in the Dutch research activities and the Dutch home base draws more often the shortest straw,
as the location-of-choice for new research labs.
Under the current lack of really decisive new companies
and inventions in The Netherlands, it is a disturbing development when the ‘old’,
established companies do outsource their ‘brain workers’ to locations abroad. Especially, when there is not a new influx of knowledge-intensive companies from abroad.
The power of the Dutch economy has traditionally been, that
it gave more ‘bang for your buck’ through:
- the entrepreneurial spirit in the country;
- the ground-breaking research, culminating in surprising and extremely successful inventions and;
- the outstanding quality of the Dutch products and agricultural produce.
These factors all compensated for the relatively high
wages in the country. Dutch products might traditionally have been relatively
expensive, but their quality compensated undoubtedly for the higher prices.
Now, there seems to be a decisive shift from highly
skilled factory work and knowledge-intensive commercial services and ICT jobs, towards lower qualified service-oriented
jobs, distribution jobs and maintenance jobs.
The real problem of a concept like ‘Netherlands,
country of distribution’ (i.e. Nederland Distributieland) is that other
countries can become just as good in it as we are now, as a competitive edge is very hard to maintain for a prolongued period of time. And probably they will…
What will then be the next driver for jobs in The Netherlands?!
Of course globally leading companies are not
established overnight – although even that is not always a fact anymore in the
internet age. Still, at least the Dutch government and the Dutch financial and corporate
establishment should start with creating an environment, that could become a breeding ground
for genuine innovation and groundbreaking developments.
Simply establishing another brainport near a large city
is not enough for that, when the real brains are not needed anymore overhere.
Excellent reporting and analysis as always.
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