International companies interested in exploring Luxembourg as a potential European location can count on the support of the Luxembourg Trade and Investment Offices (LTIOs). We spoke to Paul Steinmetz, Executive Director of LTIO New York, about what attracts US companies to Luxembourg and business synergies between the two countries.
- What aspects of the Luxembourg economy and business climate do US companies find interesting?
We regularly ask this question of US companies in Luxembourg because we want to make sure they feel comfortable and well-supported. What their CEOs tell us is that Luxembourg is an ideal gateway to Europe. This might sound like a government slogan but is truthful. The Grand Duchy’s geographical location within easy reach of major markets, the neutral attitude of the internationally-focused and business-minded political class, and especially the officials’ accessibility are constantly mentioned by our US friends. The fact that English is widely spoken and transparently used in Luxembourg, even in legal and administrative procedures, is another strategic advantage. In every office, there are active French and German speakers since Luxembourgers speak these official languages, and the labor force is additionally composed of nationals from those countries. For an American investor, it’s almost as if his or her offices were located simultaneously in the Grand Duchy and in one or more of these neighboring, larger countries. With two-thirds of jobs held by foreigners, Luxembourg is probably Europe’s most cosmopolitan country, closely resembling big US cities like New York. Also, its AAA-rating and nimble but solid public and private institutions offer US companies the economic and political stability that, for them, is paramount in Europe. I could elaborate further on other intrinsic qualities, including the simplicity and quality of our public healthcare system, overall safety, multilingual education, and a clean and green sustainable environment. However, space is limited.
- What are the business sectors where you see particularly strong synergies between Luxembourg and US companies in your jurisdiction?
Finance: by sheer volume, business ties with the U.S. are particularly strong in finance. US-originated firms are by far the most important players in Luxembourg. For instance, US fund administrators represent almost 20 % of the total assets under management in Luxembourg, ahead of the UK and Germany. At least ten US banks and four insurers are also based in our country, and their businesses are growing, as we’ve seen recently with Citi and Bank of America.
Industry: Among the American businesses in Luxembourg, which approximate one hundred, most are industrial and historically a crucial pillar of our economy (Goodyear, DuPont, Guardian, to name just a few). The newcomers are more active in Luxembourg’s robust ICT sector and data technologies (Amazon, Cisco Systems, Hewlett-Packard, Microsoft, PayPal, Oracle, Rovi…). Conversely, there are perhaps fewer Luxembourg businesses in the US, but again the best known are from the industrial sector (ArcelorMittal, Rotarex, or Euro-Composites...). We are in touch with several other Luxembourg companies who are thinking of expanding to the US via the East Coast. I have in mind a company manufacturing concrete laying and finishing equipment, which is about to inaugurate a US subsidiary.
Space: The U.S. has pioneered space exploration, while Luxembourg is developing its very own space resources sector: our cooperation is absolutely natural. Global satellite operator SES has a long-time presence in the US market and is itself the product of a merger with a U.S. company. They provide data and stream media for corporate and consumer consumption. Now the Space Force will buy satellite communications from O3bmPower, SES's new broadband constellation in medium Earth orbit, under a NATO contract. Several American space companies have domiciled their European headquarters in our country, where they find the environment and support to grow on the continent and beyond. It’s about funding, but not only: they look out for sales and investment opportunities, since Luxembourg's robust space ecosystem can boast of numerous other companies who cross-fertilize, creating intellectual capital and an international talent base. Plus, our government has set up research institutions and encouraged space-specific education and accelerator programs. Over the years, our Office in NY has built up a strong space community. We regularly organize investment conferences and networking events to allow this community to connect, reinforce itself, and remain current about industry developments and events in Luxembourg. When Minister Fayot visited in 2022, in excess of 200 people took part in a large Space & Finance event. Space is a new frontier, and people are very enthusiastic on both sides of the Atlantic.
Healthtech: Health, bio, and data, either individually or combined, are new areas in our ties with the US. Our working visit to Boston in 2022 was entirely about health and data. The Luxembourg company B Medical Systems, a global leader in the medical cold chain, was acquired last year by American firm Azenta Life Sciences. Their activities are perfectly complementary. We’d like to develop more of these synergies.
Logistics: Ties such as those between Cargolux and the U.S., both as a destination and also as the home of the airplane manufacturer Boeing, are long and productive. American companies leverage Cargolux and Luxembourg’s e-logistics capabilities to expand their commerce throughout Europe and beyond.
Startups: one of my preferred missions in NY is to be alert for new talents, technologies, and markets. I’m proud that the US accelerator and venture capital firm Gener8tor has its European offices in the Grand Duchy. Their accelerator program in Luxembourg is open to all tech startups, not necessarily those from Luxembourg. American startups are also eligible for Fit4Start, our premier startup acceleration program in Luxembourg. We welcome more to apply. For their part, Luxembourg startups and scale-ups who are ambitious and looking for international expansion, following in the steps of Talkwalker, are showing a strong interest in the huge US market. Since 2019, Luxembourg startups have been participating in the Benelux Catalyst Accelerator program we run each year in New York with our Belgian and Dutch partners. Recently the Luxembourg University Incubator also started to organize yearly immersion roadshows to several US cities with groups of promising startups.
- What do you see as the most important added value that your LTIO can bring to American companies wanting to explore Luxembourg as a potential business location?
In the initial stages, we provide them with general and sector-specific information about Luxembourg's political, economic, and business environment. But our real job is to help people make one-on-one connections. Once American companies are keen to proceed, we put them in touch either with the Luxembourg experts in NY (the Big Four and other consultants and law firms) or the officials in Luxembourg at the Ministry of the Economy and partner organizations (Luxembourg Chamber of Commerce, the House of Entrepreneurship, Luxinnovation). We can also count on rapid feedback from sector-specific agencies and organizations like Luxembourg for Finance, Association of the Luxembourg Fund Industry, Luxembourg Private Equity and Venture Capital Association, Luxembourg House of Fintech, Luxembourg Space Agency, Startup Luxembourg, business incubators/accelerators, the University of Luxembourg, and our research centers like the Luxembourg Institute of Science and Technology. Sometimes US companies just ask us to identify and connect with potential business partners. When they are ready to visit the Grand Duchy, we put together a program and help them with productive introductions. With so much happening in our country, we inform them about the events they might be interested in and encourage them to plan their visit around these dates. Depending upon their needs, we also introduce US investors to the like-minded community we built in our US jurisdiction. The Luxembourg-American Chamber of Commerce (LACC) is instrumental. Such introductions often lead to unexpected but fruitful business opportunities. Together with the LACC or on our own, we regularly organize, host, and participate in networking events to keep the flame alive in our community.
- Referring to the economic mission to Boston and New York in November last year, what synergies can you see between Luxembourg and the US in the healthtech field?
The working visit to Boston by the Ministries of Economy and Health was organized to implement the government’s efforts to develop our country’s position as an ecosystem where health technologies thrive and successfully interact with its healthcare system. It’s very much about data management and digitalization. Various initiatives are underway in Luxembourg to translate these efforts into reality, such as the project for a Health and Life Science Innovation (HE:AL) Campus, scheduled for 2024. To avoid mistakes, it is essential to have a global perspective and learn from the achievements of other countries that have managed to build such ecosystems. Boston is a good model. The primary goal of Ministers Lenert and Fayot’s working visit was to understand better how various actors and different public-private partnerships successfully support innovation and business cases within the very large Healthtech and healthcare community. Our team was impressed to learn how the area’s prestigious academic centers, hospitals and regional organizations have built sustainable collaboration models to support and adopt innovation in digital health. This collaborative approach reminded me of Luxembourg and makes me think that perhaps we can accomplish this as well. We returned to Boston in May, this time with a business delegation from the Luxembourg business organization FEDIL , and healthtech was again on our agenda. We had yet another series of eye-opening meetings with Broad Institute, Harvard Kennedy School, MIT, and others.
Luxembourg's healthtech ecosystem is developing, especially in medical devices, diagnostic and digital applications. For Luxembourg health tech startups and scale-ups looking for new markets, the US is an obvious choice as a, if not ‘the’ leading country in healthcare innovation. In NY, we will soon host the next edition of Benelux Catalyst, an accelerator program I mentioned before (the one we conduct with our Belgian and Dutch partners). Some applications that we have received reinforce the interest from this community. Beyond startups and the business community, we also encourage exploring synergies with universities, research organizations and non-profits in the US, especially in areas of particular interest to our research teams in Luxembourg, including neurodegenerative diseases, cancer, immunity and infection.
- Any healthtech-related aspects where you think that Luxembourg can learn from the US and vice versa?
In the US, we can learn how healthtech innovators connect with strategic partners, talent, and investors. These innovators develop and commercialize original solutions in healthcare. We listened closely to their detailed explanations about the role that hospitals, their innovation teams, and venture capital firms play. There are several healthcare systems in the US where hospitals and academic institutions have the freedom to invest in technologies and innovation, finding companies that can provide them with the solutions they seek. The US is also home to the most commercially open practices in data collection and management or healthcare delivery systems. Despite the prevailing business model of healthcare delivery in the US (fee-for-service model), we had a chance to interact with healthcare groups and researchers who seek a shift towards value-based healthcare. It focuses on the outcomes achieved for patients and the cost-effectiveness of medical interventions. Rich and high-quality healthcare data is a tool to enable this shift. On the other hand, there are many areas where Luxembourg, and sometimes Europe in general, can inspire the US, such as universal access to healthcare, well-developed regulatory frameworks, and data privacy.
- What advantages can Luxembourg offer American healthtech companies on their way to Europe?
Within a modestly-sized territory such as ours, they may find a great ecosystem to leverage and grow within the larger European market and beyond. Allow me to list some elements of this ecosystem, like the data and physical infrastructure that the government has been continuously heavily investing in, the various grants and aid frameworks to support R&D, the sectoral networking facilitators, including the Healthtech Cluster, or the startup accelerator programs, such as Fit4Start targeting healthtech ventures.
- Are there any aspects of life in Luxembourg that you particularly like and do not find in other countries?
Coming from larger countries in Asia and the Americas, where I had the honour to serve my country, the local comments about our geographical size may be unnerving at first. In truth, our dimension works to our advantage. Things just work better. The government is small enough to get the job done, bankers and businesses know their clients at a deeper level, teachers are able to give more attention to individual students, and transport is free and well-planned. Luxembourgers know both their neighbors and their politicians…which are sometimes the same. I’ve come to wonder whether some countries are perhaps a tad too big for efficient governance “à la luxembourgeoise”.