Format is a grand duchy-based events company specialising in the installation and assembly of stages and stands, interior fittings and museology. Located in Niederanven, it has its own workshop to offer its customers tailor-made solutions. Here, Format has two buildings: one dedicated to administration, and another for storage covering an area of 800 m², but which has become too small for the company. For some years now, it has been renting another 3,000 m² storage building.
"We've been thinking about investing in property for a long time, I'd say since 2012. In our view, this is more attractive than paying rent. Initially, we naturally wanted to invest in Luxembourg. Except that land prices are prohibitive, even more so when it comes to storage", said Format's managing partner, . He says he first turned to the country's industrial estates, which often offer land on long leases. "But often there are around forty applicants for a plot of land. We clearly weren't a priority.”
Hence the idea of looking at opportunities on the other side of the border, whether in France, Belgium or Germany. In the end, the company decided to go ahead with its project just outside Thionville, in the Metzange-Buchel area. It was “a choice based on accessibility and location", said Witwer. But that's not all.
4-5 times more expensive in Luxembourg
Format is not alone in adopting this strategy, according to an elected official from the Thionville region with whom we spoke a few months ago. Jean-Charles Louis, vice chair of the conurbation authority in charge of economic development and the development of industrial and small business zones, said at the time: "We are receiving more and more requests from Luxembourg companies interested in our business zones, often because land is cheaper here. But also because our proximity to the motorway, the train and the Moselle river is an advantage".
On Rue des Terres rouges, work is underway and should be completed by the end of the year. "For us, this represents an investment of €2m. But if we had developed the same project here in Luxembourg, it would have cost four or five times as much, because of the price of land. We could have opted for a high-rise building, which takes up less land, but in our case, with our storage activities, that wouldn't have been ideal at all," stated Wittwer.
New development opportunities
For Format, this new site represents more than just a landmark; it also represents an opportunity to relaunch its activities in France. "Between 2009 and 2012, we were quite active in France, for major events such as the Foire de Metz. But that sometimes created controversy because we were from Luxembourg. So the local authorities turned to French companies. That's fair enough," said Wittwer, who is determined to promote his expertise in ecological materials in France.
Arthur Welter's French subsidiary is based in Ennery, near Metz. Photo: Arthur Welter
Like Format, transport and logistics specialist Arthur Welter has also chosen to develop certain activities in France. That was in 2018, in Ennery, near Metz. "Not at all for property reasons", stressed finance director Ben Frin, but rather "for purely opportunistic reasons, to expand our activities. We already have other subsidiaries in Germany, the Netherlands, Belgium and Slovakia. We wanted to expand even further, with a new plot of land on which to build our own warehouse", he explains. As a result, Arthur Welter now has 14 transport units in France and 7,500 m² of warehousing space. And the company is delighted with the results: "It has enabled us to broaden our horizons. This has been reflected in our activities, which have developed very well, both in transport and warehousing. Thirty minutes separate the Luxembourg and French operations, which means that the teams can still work in close proximity," Frin pointed out.
It's difficult to establish yourself in a foreign economy and get up to speed
To establish themselves in France, the two companies had to create new legal entities under French law. This was an obligation. Format says it plans to recruit on the French side. Employees will be paid according to the French model, "because in terms of accounting, there are differences between the two countries, for example in terms of contributions or subsidies", said Wittwer. Arthur Welter follows the same practice: "In France, we pay employees according to national indices, plus a small bonus to remain a competitive employer. But we don't apply Luxembourg wage levels in France, it's impossible", stated Frin.
Learning period
Frin nevertheless points to a number of difficulties. "The playing field is different. The labour market is different, and so is labour law.” To remedy this, Arthur Welter has hired the services of trustees, "because it would be difficult to manage everything from Luxembourg. You need experts on the ground to ensure that the laws and conditions of each country are respected, and to manage salaries. We rely on trustees in every country where we have subsidiaries, as well as lawyers and tax experts. Without all that, it would be impossible”.
Today, the French business accounts for one-tenth of the group's total activity. "It's difficult to establish a foothold in a foreign economy and get up to speed. But today it's a success", concluded Frin, who offers a word of advice: "any company that wants to do what we're doing needs to plan for a sort of learning period. It's important to rely on people who know the market, and it's a great advantage to have people you can trust in the field".
Read the original French version of this article