U.S. slowdown coming? Europe says ‘So what?’


In European boardrooms, the prospect of a slowdown in the United States - still Europe’s largest export market - is producing little more than a shrug. Years of restructuring have left companies significantly better able to weather a rough patch than five years ago, the last time the European economy fell into serious trouble.


Hans-Peter Keitel, chief executive of Hochtief, the largest construction company in Germany, has some enviable problems that help explain why a European company can be sanguine in the face of an expected slowdown at home.

Though Hochtief’s German business may slow somewhat next year, its Australian subsidiary - from which it services the booming Asian market - cannot lay bricks fast enough. Constrained only by a shortage of building engineers, the outlook is sunny, to say the least.

“This kind of strength allows me to be a little more relaxed when I look at the other regions like Germany,” Keitel said. “In Australia there is not a cloud in the sky.”

Figures released Friday showed the U.S. economy grew at a pace of only 1.6 percent in the third quarter, the slowest in more than three years.

But in European boardrooms, the prospect of a slowdown in the United States - still Europe’s largest export market - is producing little more than a shrug. Years of restructuring have left companies significantly better able to weather a rough patch than five years ago, the last time the European economy fell into serious trouble.

“If you are just reliant on the United States, then it’s an uncomfortable position to be in,” said Julian Waldron, chief financial officer for Thomson, the French technology and media company. “But there are opportunities in the world that are much more interesting than people give credit for.”

Many companies have sought to wean themselves from relying too heavily on the American economy - particularly after the technology bubble burst six years ago - to inoculate against potential shocks if the U.S. market begins to cool too rapidly.

With the housing bubble on its way to deflation an easy means of short-term investing is about to disappear. The heart of the U.S. economy depends on consumerism. Are we prepared to make the same adjustments Europeans have already made?

Posted: Mon - October 30, 2006 at 06:32 AM