Frankfurt (Oder): the small city thinking big

Frankfurt (Oder), which takes its name from the river Oder that separates the city and its Polish ‘twin’ Słubice, embodies European co-operation. Though relatively small with roughly 60,000 inhabitants, Frankfurt (Oder) – alongside Słubice, with which it closely collaborates – has become a stalwart of the eastern Berlin-Brandenburg region.

Its position on a major east-west road through major European cities such as Paris, Berlin, Warsaw and Moscow, as well as a strong harbour, rail and air connections, make Frankfurt (Oder) and eastern Brandenburg an enticing proposition for foreign investors on the lookout for a central European location.

Since 2003, Frankfurt (Oder) has attracted 50 greenfield FDI projects from 46 different companies, with an estimated total investment of $1.83bn, according to greenfield investment monitor fDi Markets. The investing companies have come from 15 countries, with the US (20 projects), Japan (seven) and Switzerland (five) leading the way.

Most of the greenfield investment activity has been in the software and IT services sector, with 13 greenfield FDI projects undertaken since 2003, though no projects in this sector have been recorded since 2013. Meanwhile, the highest amount of inbound greenfield investment has been in the semiconductor sector, with an estimated $811.5m of investment, according to fDi Markets.

Semiconductor specialists

Frankfurt (Oder) celebrated success in the semiconductor sector recently as Japan-based Yamaichi Electronics, which has been present in the city since 2006, announced in November 2018 its intention to build a new plant at its existing production site in the Markendorf industrial area.

While the specialist manufacturer of high-quality electromechanical components considered investment conditions in many regions, it found that its “existing strong team in Frankfurt (Oder) has created so much knowhow in the field of milling and cutting technology over the past 12 years, that [it] had a huge advantage in terms of manpower”, says Helge Puhlmann, European president at Yamaichi Electronics. “Besides the good financial structure in the locality, the available workforce, the highly developed infrastructure and the highly professional location support in Frankfurt (Oder) in particular were the deciding factors,” he adds.

Underpinning the semiconductor industry in Frankfurt (Oder) is the work done at IHP, a research institute for innovations in high-performance microelectronics with 300 employees from more than 20 countries. IHP, part of the Leibniz Association of 95 German research institutes, is spending €15m to extend its clean room, a strictly controlled environment used for both basic and applied research “to ensure [its] technical competitiveness”, says IHP scientific director professor Bernd Tillack. “Our investment will strengthen Frankfurt (Oder) as a research location in the long term,” he adds.

Fibre optic links

Through research into wireless communication technologies and its connection to the German communications network for science and research (DFN), the IHP has also become a base for Frankfurt (Oder)’s software and IT services sector. To ensure sufficient readiness for the sector, the city of Frankfurt (Oder) is investing more than €10m into its communication infrastructure, with both the state of Brandenburg and the German federal government investing €4.4m each.

“By installing fibre optics in all our industrial areas, but also in every school and research institute in the city, we are preparing the city for the future challenges of our economy and society. Through this combination with innovative regional projects, such as the new sensor-based embankment monitoring of the river Oder, we are creating a solid basis for the European twin-city of Frankfurt (Oder) and Słubice to continue their growth together and their leading role in crossborder co-operation,” says Christopher Nüsslein, managing director of Invest Center Ostbrandenburg, the business and investment promotion agency of Frankfurt (Oder).

Frankfurt (Oder)’s smaller neighbour Eisenhüttenstadt, located about 30 kilometre south along the river Oder and the Germany-Poland border, has been an important manufacturing base for the region for both the steel and paper industries. The city was founded in 1950 through its steelworks, which today are operated by ArcelorMittal and employ 2500 people. Together with Progroup’s corrugated paper facility, which has been active in Eisenhüttenstadt since 2010, the east of Brandenburg is hoping to build on the industrial strength of the whole region.

“The growth area of Frankfurt (Oder)/Eisenhüttenstadt is a prime business location situated in the east of Brandenburg, an area that combines scientific knowhow with the strengths of an industrial location with a rich tradition that is at the same time modern,” says Jörg Steinbach, the minister for economics and energy of the state of Brandenburg.

Right logistics

Motorway, rail and nearby air and harbour connections, coupled with proximity to Berlin and Poland, have also enabled the east of Brandenburg to become a logistics hub. Frankfurt (Oder)’s intermodal terminal for combined transport, which has connections to European seaports and Polish economic centres, handled 107,000 TEUs in 2018, and nurtures hopes of increasing the handling significantly.

“Frankfurt (Oder) is striving to increase its presence as a gateway to central and western Europe for transport along the New Silk Road and to become an international e-commerce hub, to utilise the good connectivity, infrastructure and proximity to Berlin and Poland,” says Mr Nüsslein.

Companies keen to exploit the proximity of Frankfurt (Oder) to Berlin are Osmab Holding and Alcaro Invest, which are planning to set up a light industrial and logistics park in the freight village, positioned on a major east-west motorway passing the city.

Through the purchase of 34.5 hectares of land, the companies will develop several real estate complexes of different sizes and characteristics in the hope of uptake by companies in the logistics sectors as they see “great potential in the economic development of Frankfurt (Oder)”, says Peter Bergman, project leader for Alcaro Invest. “The region’s workforce and the availability of big land plot sizes to develop even a big box of up to 170,000 square metres were crucial for our decision to invest here,” he adds.

MBB Logistics is a provider of integrated logistics solutions for crossborder e-commerce that has benefited from the twin-city location by operating warehousing in both Słubice and Frankfurt (Oder). It recently invested in 57 robots to automate some of its processes and continue its commitment to the region. Song Gao, founder and CEO of MBB Logistics, says: “The location is the ideal logistics base for us, [and] the investment in Frankfurt (Oder) and Słubice is profitable.” 

This report was published in association with Investor Center Ostbrandenburg, GVZ Frankfurt (Oder) and Oder Frankfurt Słubice. Reporting and editing were carried out independently by fDi Magazine.