In a year of no trade fairs, Germany takes it hard

The funeral directors will have to wait for their big get-together. So will the toymakers, the equestrians and the vegans.

All those groups and many more had scheduled trade fairs to take place in Germany in recent months. But these rituals of business life, a chance for people to make deals, check out the competition and commune with others in the same walk of life, are in crisis.

The mass cancellation of trade fairs has been a disaster for hotels, restaurants and taxi drivers around the world, but especially in Germany. The country has four of the world’s 10 largest trade venues, more than any other nation.

Trade fairs have played a central role in German economic life at least since the Middle Ages, when merchants convened in cities like Leipzig to trade wine, furs, grain and gossip. The first Hanover Fair in 1947, a showcase for machine tools and other industrial goods, was seen as a turning point in Germany’s economic revival after World War II. The fair attracted more than 700,000 potential customers from around the world and helped reconnect Germany to the international economy.

The pandemic forced organizers to scratch this year’s Hanover Fair as well as dozens of smaller events like VeggieWorld in Munich, the International Toy Fair in Nuremberg and Horse & Hunt in Hanover.

In a good year, trade fairs generate 28 billion euros, or $33 billion, in revenue for German convention centers, hotels, restaurants, airlines and various service providers, according to the Ifo Institute in Munich, a research organization.

That revenue largely evaporated, and there were additional losses that are impossible to quantify: the orders never taken, the partnerships never formed, the new connections not made.

“They’re a showcase,” said Jan Lorch, chief sales officer at Vaude, a German maker of outdoor gear and apparel that would normally have been a presence at the ISPO sports industry fair in Munich and the Eurobike cycling industry fair in Friedrichshafen, Germany.

Lorch said that in addition to being a way to meet retailers, the fairs were an opportunity to learn about topics like the latest supply-chain software.

“You meet a lot of people in a short time,” he said. “You learn things you wouldn’t have known about otherwise.”

Conventions are an underappreciated driver of economic growth worldwide, responsible for about 1.3 million jobs. Trade fairs generated revenue of $137 billion in 2018, as much as General Motors, according to the Global Association of the Exhibition Industry in Paris.

But revenue this year is down by two-thirds after the cancellation of events like the Mobile World Congress (which drew more than 100,000 visitors in 2019) in Barcelona, Spain, or the North American International Auto Show in Detroit (which drew more than 750,000).

Some fairs moved online when the pandemic made live gatherings inadvisable. After the cancellation of Leben und Tod, or Life and Death, a funeral industry event normally held in Freiburg, Germany, organizers turned to the internet. They livestreamed presentations on topics such as “Fear of Dying” and “Burial Preparation: Which Shoes for the Final Journey?”

But virtual events do not fill hotels or restaurants, or provide work for the carpenters who build the often elaborate company displays, which can easily cost as much as a house.

“A lot of firms are on the brink of insolvency,” said Jan Kalbfleisch, executive director of FAMAB, an organization that represents firms that design displays, caterers and other service providers. Government aid programs for small business, he said, “are a help if your sales go down 30%, but not if they go down 80%.”

There are already signs that even after a vaccine becomes available, the pandemic may leave permanent scars on the exhibition industry. The Geneva Motor Show was canceled at the last minute in March, and the organizers have already called off next year’s event. The future of the show, once one of the main events on the auto industry calendar, is uncertain, in part because car companies have begun to question whether the shows are worth the substantial expense, which for big automakers can be millions of dollars.

The big worry for the exhibition industry is that companies will discover they can do without trade fairs. As anyone who has ever attended one knows, they can be exhausting corporate speed-dating marathons short on sleep and long on booze and bad food.

“There’s too much drinking. You live on coffee and toasted paninis,” said Kristof Magnusson, a fiction writer who is a regular at the Frankfurt Book Fair, the publishing industry’s premier event. “Afterward everyone is sick.”

A survey by the Ifo Institute found that nearly half of German companies with at least 500 employees want to cut spending on trade fairs and conduct more meetings online. But Horst Penzkofer, an economist at the institute, said trade fairs remained important for smaller companies that couldn’t afford international sales forces.

In a year of no trade fairs, Germany takes it hard In a year of no trade fairs, Germany takes it hard Reviewed by TechCO on 11/26/2020 Rating: 5

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