Will Donald Trump's visa restrictions slow down America's economic revival?

Stefan Heffner’s business plans for the United States have been turned upside down recently. The US representative of German medical equipment maker Richard Wolf moved to Chicago about a year and a half ago with the ambitious goal of cracking the company’s US sales record of $100 million (€85.3 million) by the end of this year.

But the global COVID-19 pandemic has thwarted this effort, with 2020 sales of the endoscopic devices Richard Wolf manufactures having plunged 60% during the current health crisis so far.

“We’re not going to be able to make up for this,” the 39-year-old salesman told DW.

But the spreading coronavirus hasn’t been Heffner’s only problem this year. The company’s expansion plans are also being slowed down by US President Donald Trump, who’s trying to stem a mounting tide of virus-induced unemployment in his country with curbs on labor immigration.

People wait in line for help with unemployment benefits at the One-Stop Career Center in Las Vegas.

About half of working Americans say they or a member of their household have lost some income due to the coronavirus

As the US jobless rate threatened to spiral out of control amid the pandemic, the US president in April announced a two-month moratorium on the issuance of visas for some foreigners working in the US. In June, he extended the ban until December, saying this continued to be necessary “to protect unemployed Americans from the threat of competition for scarce jobs from new lawful permanent residents.”

The legislation has even been extended to workers within several nonimmigrant visa categories, with the ban now including H-1B (skilled workers), H4 (for dependents of H-1B), H2B (for seasonal workers in the landscaping and hospitality industries), L1 (intra-company transfers), L2 (dependents of L1) and J1 for students.

The provisions barring entry for skilled workers and intra-company transfers are hitting foreign companies like Richard Wolf especially hard because many of them are hugely dependent on specialists visiting the US.

Aerial view of BMW's sprawling auto factory complex in Spartanburg

BMW’s factory in Spartanburg, South Carolina, is one of the biggest investments a German company has made in the US

The elusive ‘mechatronic engineer’

German companies currently employ about 770,000 Americans in more than 4,800 subsidiaries based in the US. That makes them the third-biggest foreign employer in the country. In addition, thousands of German specialists are regularly flown in to support operations there.

Companies like automakers Volkswagen and Daimler need their home-based specialists desperately, because some professions like that of a mechatronic engineer simply don’t exist in the US, or workers with those skills are few and far between.

German machine builder Groninger, for example, which employs 60 people in a plant in Charlotte, North Carolina, has had to stop “more than a dozen” in-house projects due to the Trump ban.

“Many jobs are so complex that we simply can’t cope without the skills of our German specialists,” said Heiner Dornburg, CEO of Groninger USA, during a video conference organized by German trade and commerce officials on a visit to Washington recently.

The Crailsheim, Germany-based firm manufactures machines and complete production lines for the pharmaceutical and cosmetics industries worldwide, and says only its specialists from Germany are able to get factories up and running.

‘A difficult year’

Other German companies that said they were hugely dependent on the skills of their home-based engineers are Bestar Steel Group with operations in Georgia and mechanical engineering specialist Wittenstein in Illinois.

They, and Stefan Heffner of Richard Wolf, are now cut off for months from crucial German knowhow and skill sets. Heffner says prospects for his company’s business in the US have turned from bright to bleak virtually overnight, as the COVID-19 pandemic has dramatically reduced demand for the firm’s endoscopes. Emergency health care measures imposed in the US health system, for example, have led to a massive drop in the number of gallstone surgeries, for which their equipment was needed, he says.

Looking ahead, he notes that the challenging business environment in the US may force Richard Wolf to halt a planned relocation of production from Germany to the US, and adds: “This is definitely going to be a difficult year.”

The relocation was carefully planned as the American market for medical equipment has grown to become the world’s biggest in recent years. Richard Wolf has already invested heavily in the firm’s headquarters in Chicago. But Donald Trump’s visa ban means the move is off for this year, says Heffner. “I just can’t fly in the specialists needed to train staff and support us here.”

Heffner’s foiled expansion plans are the kind of stories Hilde Holland hears a lot these days. The 29-year-old lawyer is based in New York, where she also sits on the board of the German-American Chambers of Commerce. Never before have US visa regulations been so “bad,” she told DW, adding: “They’re an absolute catastrophe for businesses.”

Campaign of ‘electioneering’

Virtually all visa applications are being turned down these days, Holland says, even those based on an emergency claim. Moreover, the COVID-19 pandemic has “de facto shuttered” all German consulates in the US, meaning not even investors or people eligible under green card requirements can apply for US entry. She claims the ban imposed by Donald Trump was clearly politically motivated.

“That’s purely electioneering tactics,” she argued, and adds that she doubts Trump will succeed with his aim of US companies “massively hiring American workers.”

Decrying the idea as a “naive fallacy,” Holland expects that most of the vacancies emerging as a result will simply remain unfilled because leadership or specialist positions cannot be easily taken up by Americans. “Should the need arise, companies will simply resort to video calls to make sure managers participate.” 

Richard Wolf’s US representative Stefan Heffner, however, doesn’t have the slightest problem with hiring American workers if this would help the company’s expansion plans in Chicago. “We are determined to produce here and create jobs, not only for our own sake, but also for those US companies supplying us here.”

Unfortunately, he stresses, relocating production from Germany has been made impossible by the visa restrictions, and he even had to lay off some of his US staff due to slumping US revenues.

He doesn’t expects the firm’s business in the US to rebound until next year at the earliest. Hopes are rising, however, that Richard Wolf’s products may soon play a role in the US struggle against the pandemic, he adds. Its endoscopic devices could help in the long-term treatment of the damage done to the lungs of COVID-19 patients, and, as a welcome side effect, softening the blow to the company’s bottom line caused by postponed gallstone and appendix surgeries. 

Stuttgart and Hamburg: Bundesliga fallen giants' rocky road towards revival

Eleven German championships, six German Cups, European triumph, huge modern stadia and over 160,000 members between them – VfB Stuttgart and Hamburger SV might be located at opposite ends of the country, but they have a lot in common.

This season, however, they have been united by less positive traits, with both battling desperately to get out of Germany’s second division and return to the Bundesliga, where clubs of their size feel they naturally belong.

If only it was that simple. Myriad coaching changes, wild transfer policies, inconsistent performances and humiliating derby defeats – Stuttgart and Hamburg (HSV) have endured them all in a 2. Bundesliga season which has made up for its lack of quality with its predictably unpredictable drama.

It wasn’t meant to be this way when members of both clubs were convinced to vote to out-source their clubs’ professional football operations into limited companies – Hamburg in 2014, Stuttgart in 2017 – a common process in German football known as Ausgliederung.

The decisions were accompanied by promises that the moves would encourage greater investment and help propel the clubs into European football. Away days in Sandhausen, Osnabrück, Regensburg and Aue were not part of the plan.

Ultimately, after a final few dramatic twists and turns at the top, Stuttgart have all-but sealed promotion back to the top flight at the first attempt. Hamburg might well need a third run at it, with the last regular season round of fixtures on Sunday (table above).

But while they may be in different leagues next season, many of their shared problems will remain, and there will be other German giants taking note.

Stuttgart heading back to the big time – just

Thomas Hitzlsperger has experienced VfB Stuttgart’s historic highs and lows at first hand. In May 2007, it was his strike which set them on their way to their last Bundesliga title. And in May 2019, he was on the touchline at the Stadion an der Alten Försterei as sporting director, turning away in horror as Union Berlin took Stuttgart’s place in the Bundesliga.

After 84.2 percent of club members voted for the Ausgliederung in June 2017, local automobile behemoth Daimler invested €41.5 million in exchange for 11.75 percent of the club. Stuttgart were aiming to attract further investment in order to capitalize on their location in one of Europe’s industrial hotbeds and re-establish themselves at the top level.

But Hitzlsperger, a young and immensely popular figure who has since taken over as chief executive at the age of just 38, had more immediate concerns: returning to the Bundesliga.

Stressing continuity and stability, he installed the relatively inexperienced Tim Walter as head coach, before landing a significant coup when former Borussia Dortmund head scout and Arsenal sporting director Sven Mislintat also came on board. Even the popular former fan activist Claus Vogt replaced the unpopular Wolfgang Dietrich as president.

But despite an unbeaten start, Stuttgart were only third by Christmas. Hitzlsperger himself admitted that continuity and stability would have to be secondary if promotion was in doubt, and Walter was sacked.

His replacement, the American-born Italian Pellegrino Matarazzo, won four of his first five games, before the coronavirus break broke the rhythm. The familiar old problems re-emerged, and the pressure intensified, while suspicions arose that all was not well in the dressing room.

“The team looked scared, disjointed, hesitant,” says Phil Maisel, who covers the club for local papers Stuttgarter Nachrichten and Stuttgarter Zeitung. “The pressure to go up was huge in the city and it seemed to affect the players. They were so scared of making mistakes that they inevitably happened.”

A late season derby defeat to Karlsruhe was a case-in-point – but the subsequent wins over Sandhausen (5-1) and Nuremberg (6-1) showed what the team really is capable of. “We got lost along the way and tried out things which didn’t always work,” said Matarazzo. “Now we’ve found ourselves again and we’ve shown what’s possible.”

Hitzlsperger’s promotion project might not have been as stable as he would have liked, but it has achieved its primary aim: Stuttgart will almost certainly join Arminia Bielefeld in the Bundesliga next season. Whether Hamburg will follow, is another question altogether.

Patience running out in Hamburg

The people of Hamburg have forgiven their city’s biggest football club for a lot.

Like in Stuttgart, HSV fans were also promised glory and success when their club went through its own controversial Ausgliederung in 2014. Instead, they watched as the club flirted with relegation, succumbed to relegation, and then missed out on promotion.

As in Stuttgart, players, coaches, sporting directors, chairmen and presidents have come and gone at a rate so dizzying that many in Hamburg have lost track. But still they filled the Volksparkstadion on the banks of the Elbe – until the pandemic struck.

But patience is starting to wear thin as the season began to resemble Groundhog Day. Just like their previous campaign, HSV started strongly under Dieter Hecking, losing only one of their first 11 games, putting six past Stuttgart and establishing their position as heavyweights at the top of the table. Off the pitch, as well, the Bakery Jatta affair saw players, staff and fans pull together in support of the then 21-year-old who had been wrongly suspected of having incorrect documentation.

But again, just like last season, it didn’t last. Home and away derby defeats to local rivals St. Pauli were humiliating enough, while disastrous late collapses against Fürth, Kiel and Stuttgart since the restart have seen Hamburg surrender second place. After a 95th-minute defeat to Heidenheim last week, even the play-off spot is out of their hands going into the final day, and the blame game is back underway.

Hecking’s tactical adaptability has been questioned, while a series of media interviews before Christmas also had him discussing his potential future plans. 

Meanwhile, further up the hierarchy, Hamburg remain financially reliant on Klaus-Michael Kühne, the German businessman who has a 20.6 percent stake in HSV and whose associates dominate the boardroom.

“Kühne is the catalyst for many of Hamburg’s problems,” believes Daniel Jovanov, an author and journalist who has written a book on Hamburg’s slow fall from grace. “But there is no way of getting rid of him. The bigger the crisis gets at HSV, the more Kühne’s influence grows.”

Warning signs for German giants

A third season in the second division would accentuate that crisis to hitherto unseen levels, and the obsessive media coverage of Germany’s seventh biggest football club will intensify even further – but for how long? Hamburg fans have forgiven their club for a lot, but even their patience will have its limits.

One only has to look at the fates of Kaiserslautern, who announced last week that they would be filing for insolvency in the third division, 1860 Munich and others to see what can happen to fallen German giants who find themselves trapped in a downward spiral of sporting failure, financial mismanagement and unrealistic expectations. Schalke could yet be next. 

Down in Swabia, with promotion as good as certain, Thomas Hitzlsperger and his colleagues will hope that Stuttgart have averted the worst as they look to consolidate and build for the future in the Bundesliga. Up north in Hamburg, the worst could be yet to come.