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North American Business in Luxembourg

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Special editionOctober 20, 2010

AmerN Americah Ahh

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The destinies of my country, the United States

of America, and my currently “adopted” home

of the Grand Duchy of Luxembourg, have been

forged in partnership together – whether it be

economically, politically or just plain

emotionally – since the resolution of World

War II. From General Patton’s eternal resting

place at the American Military Cemetery in

Hamm, to the new Cargolux Airlines hangar

across the road ready to welcome the new

generation Boeing 747-8F aircraft to its fleet,

and across the fast-growing universe of the

Plateau de Kirchberg, the vibrant

Luxembourg-American collaboration is ever

more omnipresent and multidimensional.

The United States of America and The Grand Duchy of Luxembourg

An enduring strategic partnership… with more to look forward to in the years to come!by Cynthia Stroum*

Luxembourg has been a key trade and business ally of the

United States of America for over fifty years, shaped and

continually reinvented by a shared vision of developing

economic vitality through hard work, skills training and di-

versification. The two countries enjoy a unique and enduring

partnership stretching over generations of people and across

all facets of life. The upcoming biannual Luxembourg-Ameri-

can Business Award, presented to a North American company

operating in Luxembourg, in recognition of outstanding cor-

porate citizenship and bilateral trade success, is certainly a

prime example of this alliance!

In the educational sector, Luxembourg and the U.S. have es-

tablished a scholarship exchange program at the fast-growing

University of Luxembourg to support Luxembourg students’

study abroad in the U.S. for cultural and academic immersion

– a vote for a common future of growth and understanding.

On foreign policy, Luxembourg supports many of the United

States’ priorities in Europe and beyond. Luxembourg donates

humanitarian assistance to nearly a dozen lesser developed

countries, and Luxembourg’s per capita Overseas Direct As-

sistance (ODA) ranks as one of the highest in the world. Lux-

embourg also remains a leader in the EU’s efforts to combat

money-laundering.

Even in the midst of the world financial crisis over the past

two years, Luxembourg has maintained fiscal stability and

relative strength in productivity and growth as compared to

other EU countries. In considering business in particular, Lux-

embourg and the U.S. share a common attractiveness for for-

eign direct investment and bilateral trade. This year President

Obama launched the National Export Initiative (NEI) which

aims to double U.S. exports over the next five years. This ef-

fort includes educating U.S. companies about opportunities

overseas, directly connecting them with new customers.

Bilateral trade between our nations practically doubled from

451.9 million dollars in 2008 to 849.2 million dollars in 2009.

Both Luxembourg and the U.S. are now projected to return to

positive GDP growth in 2011 thanks to extraordinary and bold

economic stimulus programs implemented swiftly and effi-

ciently. Both countries have recognized the critical role played

by infrastructure in economic development and have made or

are making significant investments to benefit the long-term

– whether it be in transportation to improve roads, bridges

and tunnels (like the Howald renovation project going on right

now!) or to expand and modernize the railway system (as in

the case of the U.S.), or in schools and health-care facilities

– and to provide higher attractiveness in quality of life and

efficiency of doing business. In Luxembourg, the openness

and accessibility of government officials and decision-makers

and their ability to coordinate a harmonious vision for the

country’s future development has furthered a diversification

of the economy over the past five years – from the dominant

financial services industry into new areas of growth, such as

logistics, health research and technologies and e-commerce

and information technology, the linchpin of all business op-

erations now. Many prominent American e-commerce firms

such as Amazon, Digital River, PayPal and Skype now have

their European headquarters in Luxembourg and are taking

advantage of the government’s actions to increase electronic

connectivity and speed through state-of-the-art datacenters

and fiber-optic networks.

Luxembourg and the U.S. have also worked closely together

in recent years toward a stronger bilateral relationship in the

financial sector. The signing in 2009 of an amended double-

taxation treaty for information exchange was a critical factor

in solidifying this relationship. As U.S. Commerce Secretary

Gary Locke said earlier this year when he unveiled details

of the National Export Initiative, “Trade starts with the un-

derstanding that it only works in a system of rules where all

parties live up to their obligations. The United States is com-

mitted to a rules-based trading system where the American

people – and the Congress – can feel confident that when we

sign an agreement that gives foreign countries the privilege

of free and fair access to our domestic market, we are going

to be treated the same in their country.”

It is clear that the future is bright for both our countries, in-

dividually and in tandem . It is essential now not only to con-

tinue on the path of economic recovery and renewed growth

through strong public as well as private initiatives, but also to

capitalize on the major investments already made toward in-

creasing attractiveness for business and bilateral trade. When

I fly into the magnificent, expansive new Luxembourg Airport

in Findel, I dream of filling it with more activity, especially

direct flights to the United States which would be hugely

beneficial to the American businesses here as well as to the

American community and the millions of travelers from the

Grande Region wanting to travel to the U.S. who could easily

come into Findel to travel. When I see the amazing plans for

new shopping mall projects, to make Luxembourg the shop-

ping hub of the Grande Region, I dream of filling them in part

with great American retail outlets!

Working together and in friendship, as the United States and

the Grand Duchy have successfully accomplished for so many

decades, is the best way to continue on the road to economic

recovery and renewed growth. Our enduring friendship ben-

efits not only our bilateral trade but also, and more impor-

tantly, supports our shared visions of world peace, growth

and sustainability.

* Cynthia Stroum is U.S. Ambassador to Luxembourg

H.R.H. Crown Prince Guillaume serves as

honorary president of the Luxembourg Board

of Economic Development once every two

years at the Luxembourg American Business

Awards ceremony in New York City. The H.R.H.

Crown Prince has been traveling regularly to

the US since his childhood. He particularly

admires the American people for their

spontaneity, openness, and straightforward

demeanor. The US is Luxembourg’s most

important trading partner outside of the EU.

For North American companies, the Grand

Duchy is in turn a gateway to the internal

European market. “We also need to focus on

sectors with high added value, for which the

EU remains attractive,” explains H.R.H. Crown

Prince Guillaume to the LW.

Interview with H.R.H. Crown Prince Guillaume, Honorary President of

the Luxembourg Board of Economic Development

The US Remains the Most Important Trading Partner

by Joseph Lorent

Your Royal Highness, 65 years after the end of World War II, a major worldwide change has taken place from an economic perspec-tive, which is giving rise to new trends. What is the significance of this radically altered global environment for Luxembourg-American economic relations?The US remains Luxembourg’s most important trading partner

outside of the European Union. Now as before, most direct

investment in Luxembourg comes from the US, which in turn

is also the preferred destination for direct investments from

Luxembourgian companies. What is increasingly connecting

our two countries is our shared economic challenge of assert-

ing ourselves in the global economy with creative and innova-

tive ideas and concepts. Moreover, numerous US companies

have long recognized that Luxembourg is a superb gateway to

the internal EU market.

What active role does the Board of Economic Development, which you head, play in fur-thering economic ties between the US and Luxembourg? The BED is a committee where actors from the public and

private sector discuss their shared concerns regarding eco-

nomic development. The executive secretary of the BED and

the nine Luxembourg Trade and Investment Offices are under

the Ministry of Economic Affairs. For the meantime, only the

brand ‘Luxembourg for Business’ will be used, in the interests

of a unified presence in the outside world. We have two Trade

and Investment Offices in the US: one in New York and one in

San Francisco. These offices actively seek out local compa-

nies with an interest in European markets, in order to high-

light Luxembourg’ benefits. In addition to this, they also help

Luxembourgian companies get a foothold in the US.

What arguments do you use to try to con-vince investors to choose Luxemburg when you are on promotional trips in the US?In Luxembourg today, we can hardly solicit for aid anymore.

The arguments have become much more nuanced and are of-

ten based on so-called ‘soft’ criteria. The Grand Duchy mostly

wins people over with its geographic location and its multi-

lingualism. Naturally, our infrastructure and our legal system

are also major factors in our success. Aside from those, our

high standard of living is important, to attract managers and

their families, and their companies along with them, which

build new workplaces. However, it is also true that it takes

a great deal of effort to convince a company’s directors to

settle in Luxembourg.

In the past, it was mainly American indus-trialists and investors who came to Luxem-bourg, so there has been an accelerated shift to other sectors recently. In which areas, generally speaking, is further expansion and cooperation possible?It is getting noticeably more difficult to attract industrial

companies to Luxembourg or Western Europe. We also need

to focus on sectors with high added value, for which the EU

remains attractive. Luxembourg has very strong arguments

in its favor for some promising sectors. In the ICT and e-com-

merce sectors, some large US companies, as well as some

smaller ones, have established themselves in our country.

We enjoy close collaborations between American and Lux-

embourgian scientists in the field of medical technology. This

kind of collaborative relationship seems entirely plausible in

the area of environmental technology as well. We should bear

in mind however, that companies from these sectors do not

create hundreds of new workplaces overnight. In any case, we

need to get closer “to the client”.

What are your personal ties to the United States, and what impresses you the most when you travel there?I have been traveling to the States in a personal context since

I was a child, especially since I had family living and studying

there. I feel very much at ease in the US: privately, but also in

touch with the business community. I particularly admire the

American people for their spontaneity, openness, and straight-

forward demeanor. Their often quite distinctive spirit of entre-

preneurship is certainly the source of their innovative power.

In your view what is the significance of the Luxembourg American Business Award, which you will present in New York on October 20th?Getting new companies to settle in Luxembourg is absolutely

vital. Nevertheless, we should not lose sight of the fact that the

companies that are already established here are playing a sup-

porting role in Luxembourg’s economic development. The Busi-

ness Award bestows a distinction upon a North American com-

pany that has played an important role in Luxembourg in the

past, and which will assuredly continue to do so in the future.

The ceremony serves to reinforce the amicable ties between

Luxembourg and the upper management of key US companies.

In this way, the Grand Duchy can make itself a personal refer-

ence point on the world map for American companies.

Interview with H.R.H. Crown Prince Guillaume 2

The US and Luxembourg:

An enduring strategic partnership 3

Husky receives Luxembourg

American Business Award 4

Recognition for long-term commitment 5

Numerous corporate groups from the

US operate in Luxembourg 6+7

Luxembourg and the United States: a fund story 8

American investments and laws helped create

the Financial Center 9

LACC: Luxembourgs bridge head in “Big Apple” 10

Survey: How important is the

USA for Luxembourg? 11, 12, 13

Interview with Jeannot Krecké,

Minister for Economic Affairs 14

Challenges and opportunities for

Trade and Investment promotion 15

Launch of the Alternative Investment

Fund Manager Directive 16

Cargolux and Boeing Make Industrial History 17

Tax competitiveness for U.S. Investors 18

Living the Dream – Luxembourg a Safe Heaven 19

An Eldorado for Internet giants 20

Acquisition of Americom turned SES

into major global player 21

From Pre-School to MBA 22

The first immigrant 23

Content

Editor:Luxemburger Wort

2, rue Christophe Plantin, L-2988 Luxembourg

Concept:Paul Lenert

Coordination:Andreas Holpert

Contribution:Georges Bock, Cordelia Chaton, Petra Garnjost, Fausto

Gardini, Daniela Hockelmann, Andreas Holpert, François

Knaff, Pierre Leyers, Frank Muntendam, Pierre Oberlé, Nadia

Di Pillo, Tatjana Schäfer, Cynthia Stroum, Camille Thommes

and Ronny Wolff

Photos:Anouk Antony, Serge Waldbillig, Marc Wilwert, Paul Lenert,

Gaston Roderes, Joseph Lorent, Shutterstock, AFP, José

Correia, AP, Charles Caratini, Gerry Huberty, Boeing, Delphi,

Advertisement:Saint-Paul Luxembourg/régie publicité-annonces

Layout:Sabina Palanca, Michèle Zeyen-Winandy

4

6, rue Antoine de Saint-Exupéry, | L-1432 Luxembourg | Tel. (+352) 43 17 56 | Fax: (+352) 26 09 47 04 | Email: info@amcham.lu

www.amcham.lu

The American Chamber of Commerce in Luxembourg A.S.B.L. (AMCHAM)

is an international voluntary organization of business and professional persons

committed to fostering business relations between the U.S. and Luxembourg,

promoting cross-cultural understanding and enhancing the quality of life of

Americans and other expatriates who live and work in the Grand Duchy.

� Networking

� Special purpose committees

� Seminars

� Publications

Interested? Join us at

www.amcham.lu

Every two years the Luxembourg American

Chamber of Commerce confers its Business

Award. This year Husky was the winner. The

injection molding plant manufacturer from

Düdelingen has struggled well through the

crisis and despite everything hasn’t forgotten

about training and the environment.

World’s leading provider of injection molding systems and services receives award

And the winner is... Husky!by Cordelia Chaton

Every 10 seconds the injection molding machine opens and

spits out a remarkable structure: in front a screw closure

made of transparent plastic, at the rear a mold roughly 10

centimeters in length. “These parts are called preforms,” says

Stefano Mirti. “In a second stage the rear part is heated and

then blown up,” explains the employee at Husky Injection Mold-

ing Systems. And the 1.5-liter coke bottle is finished.

Mirti is the General Manager for Sales & Service in Western

Europe. The injection molding specialist based in Canada, with

production centers worldwide, has resided in Düdelingen since

1985 – unknown to most Luxembourgers, however, since the

customers come only from industry: Manufacturers of soft

drinks, vodka, mineral water, ketchup and detergent need pack-

aging. And Husky supplies the molds. “Usually the bottle is

more expensive than the contents,” Mirti says with a grin. The

second pillar of the Group is the heating ducts that inject the

plastic into the molds. In addition Husky provides all services

related to injection molding.

The molds from Husky have to withstand a lot. For example, up

to 250 million preforms are manufactured each year in such a

PET preform system. “Even a tiny problem here would mean a

catastrophe,” Mirti notes.

But he can afford to joke – in Düdelingen everything runs per-

fectly. And on top of that his company has received a coveted

prize: the Luxembourg American Chamber of Commerce Busi-

ness Award. On October 20th Mirti will receive the award on

behalf of the work force from the hands of Grand Duke Guil-

laume at a gala dinner in New York. Several hundred guests will

be attending the event, held every two years.

The purpose of the award is to strengthen the trade relations in

existence for decades between the USA and Luxembourg, and

to promote the development of the company in the USA. “Of

course, we’re very pleased,” beams Mirti. “We’ll be discussing

the award at our monthly meeting with the employees.”

For Mirti, Luxembourg is not just a great location because it’s

his home. “Our work here is very automated. We’re one of the

most efficient factories in the entire Group. And on the man-

agement level Luxembourg is considered a springboard to the

Executive Board of the Group,” the engineer confides.

John Galt, President and CEO of Husky, agrees: “Husky Injection

Molding Systems has resided in Luxembourg since 1985. That

has geographic advantages. Moreover, the employees here are

multilingual, the government is flex-

ible, the quality of life is high and the

economy is healthy.” As the facts show:

the 750 employees in Luxembourg have

altogether 20 nationalities and speak

26 languages.

Today Husky is present throughout the

world; from Canada to Moscow and

Singapore. Around 40 service centers

serve customers in over a hundred

countries. Products are manufactured

in Canada, the USA, Luxembourg and

China. More than 70 percent of all plas-

tic bottles worldwide come from Husky.

Besides production, the Luxembourg location is also responsible

for service and sales in Europe, the Middle East and Africa. “We

maintain a 24-hour hotline so we can answer customer inqui-

ries at any time,” Mirti explains. Parts are also shipped around

the clock. “Our customs clearance is so exemplary that we’ve

become a model for other companies,” the General Manager

reports. Goods totaling 20 million euros in value are stockpiled.

10,000 moldsMirti next takes us through the factory, which has been located

for 25 years in the “Riedchen” industrial district next to the

Düdelingen freeway. It’s evident that the company received the

award for many reasons. In a giant hall work is carried out be-

hind closed curtains. “Here we’re setting up a production line

for a customer,” Mirti explains. This will take a few weeks. De-

velopment requires more than a year, followed by half a year of

testing. Ultimately the machine will be producing up to 300 mil-

lion parts each year. Husky doesn’t sell everything, but advises

on the assembly of such complex constructions.

Meanwhile the customer structure has changed. “We have more

and more detergent manufacturers selling one liter of concen-

trate instead of 5 liters. And they need good-looking packaging,”

Mirti explains. At the end of the month the Husky Group will be

presenting a new machine platform for medical technology as

one new trade fair item, among others.

The models are constantly changing. Worldwide there are about

10,000 different bottles and containers for which Husky has

produced the molds: from the 0.5-liter mineral water bottle to

detergent packaging. Large customers like Unilever, Coca Cola

and Procter & Gamble demand the highest quality.

“Of course, this poses a challenge to our employees. It’s not

easy to find good people,” Mirti notes. The people working at

Husky can have liquid refreshment at the “Main Street Café”

during their breaks, or work out in the fitness room under a

trainer’s supervision. A physician is available once a week. The

factory operates between five and seven days a week, so the

mood of the employees should be good.

Whoever has suggestions for improvement can present his or

her ideas on a monitor. “We’re also committed to SOS villages.

As an employer, we have to go with the times and meet the

needs of people,” says Mirti, who’s been on board since 1995.

Recycling also plays a role. According to Mirti, more than half

the PET bottles are recycled in Europe. “But most end up in

clothing,” he notes. Husky tries to produce increasingly lighter

and sturdy containers. “Developments at Husky are aimed at

simplifying the recycling of PET bottles. The first industrial tests

are already in progress,” Mirti reports. It’s still exciting ...

Finished and packed: From Luxem-

bourg goods are shipped round the

clock to customers between Helsinki

and Johannesburg. Goods totaling 20

million euros in value are stockpiled.

Since 1999, the Luxembourg American

Chamber of Commerce (LACC) has been

giving out an award to acknowledge the

commitments of US and Canadian companies

in Luxembourg. Since 2002, the trophy has

been presented at a bi-annual awards

ceremony in New York City. This year the

prize goes to Husky.

The Luxembourg American Chamber of Commerce

Has Been Awarding the Prize Since 1999

Recognition for Long-Term Commitmentby Andreas Holpert

The winner of the first Luxembourg American Business

Award, back in 1999, was tire producer Goodyear, in

recognition of their 50-year presence in Luxembourg.

“It was a unanimous decision,” recalls Fernand Lamesch,

then president of the Luxembourg American Chamber of

Commerce. The award was presented by Grand Duke Henri,

who in 1999 was still Crown Prince. Since then, his eldest son,

Guillaume, has taken over the distinguished duty of present-

ing the award, in his capacity as H.R.H. Crown Prince.

Samir Gibara, at that time the general director and president

of Goodyear Tire & Rubber Company of Akron, Ohio, called it a

privilege to be able to lead the company in a time of so many

challenges.

In 2002, the prize went to technology giant DuPont. In that

year, the company was celebrating its 200th birthday, as well

as its 40th year in Luxembourg. This long-term commitment

merited a Business Award, which was presented to William O.

Walker, then head of DuPont in Luxembourg, by H.R.H. Crown

Prince Guillaume in his capacity as honorary president of the

Luxembourg Board of Economic Development.

New York City Mayor Michael Bloomberg attended the 2004

awards ceremony as a special guest. The prize was awarded

to Guardian. William Davidson, president of the glass pro-

ducer, accepted the award with enthusiasm. Six years ago,

in front of over 350 of New York’s public figures and business

elites, Davidson imparted that the company’s success was

primarily the result of the close partnership between the Lux-

embourg government and Guardian.

In 2006, Avery Dennison took home the Luxembourg Ameri-

can Business Award. Dean A. Scarborough, President and

CEO of this producer of adhesive office supplies based in

Pasadena, California, expressed his pride at the recognition

of their factory in Rodange, which he characterized as one of

the group’s most profitable production sites. The trophy was

crafted by Luxembourgian Artist Victorine Hinger.

Finally, in 2008 the honor was bestowed upon automotive

parts supplier Delphi. Group President and CEO Rodney O’Neal

insisted on traveling to New York in person, even though two

years ago the US auto industry was experiencing intense

fallout from the severe economic and financial crisis. In his

speech, H.R.H. Crown Prince Guillaume also recalled the long

and mutually beneficial history of the company, at that time a

subsidiary of GM, in Luxembourg.

1999: Grand Duke Henri – then still Crown Prince –

presents the prize to the President of Goodyear,

Samir G. Gibara.

2004: Guardian CEO William Davidson accepts

the award from H.R.H. Crown Prince Guillaume.

At center: Fernand Lamesch, President of the LACC

6 7

UThey go by the names of Goodyear, Delphi,

Avery Dennison and Guardian Luxguard, for

example. Not every person is familiar with

these names. But they enjoy good reputations

in the business world: Over thirty companies

from the USA are active in Luxembourg. They

employ nearly 9000 people. Their products

are to be found throughout the country – and

worldwide.

US companies are important employers

in Luxembourg

From Grooved Tires to Protective Glass

by Cordelia Chaton

Driving over the Kirchberg, you’ll see glass facades. Only

few people suspect that the glass mostly comes from

the US plate glass manufacturer Guardian.

Whenever you drink from a plastic water bottle, there’s a 70

percent chance you’ll be holding a product from Husky. This

North American company has been operating in Luxembourg

for 25 years.

If you write on tiny Post-its to remind you of things, you’ve

probably been using products from Avery Dennison. Items like

these have made the Californian company one of America’s

Fortune 500 companies. It’s been coating films for all types of

labels in Rodange for decades.

All companies have one thing in common: they are among

the 31 companies from USA operating in Luxembourg. The list

ranges from A as in Airtech to V as in Viking. They employ

around 9000 people in Luxembourg, making them a very im-

portant economic factor – one often overlooked.

One reason for this low profile lies with the nature of their

customers, often companies located in all parts of the world.

Another reason is that many companies are often perceived

as Luxembourgian. Goodyear simply belongs to Colmar-Berg.

Some produce here, while others conduct research or have

established their service centers in Luxembourg. Still others

use Luxembourg as their European Headquarters. The mul-

tilingualism of the Luxembourgers facilitates such decision-

making, as does the flexible government.

Luxembourg’s Minister for Economic Affairs, Jeannot Krecké,

never tires of stressing the important developmental role

played by these companies after the Second World War. And

he makes a point of maintaining good relations by making vis-

its – and of promoting the settlement of new companies here.

“I’m often the first minister for economic affairs who goes to

a company,” he remarks with a smile. That’s well received.

Airtech is an example of a company that became convinced.

Since 1991 this vacuum specialist has maintained its Europe-

an headquarters in Luxembourg. The company sells kits that

can contain vacuum bags, separating foil, absorbent non-wo-

ven material and peel plies, sealing tape, adhesive tape and

temperature sensors, to allow the complete production of

specific components. In 2007 the company expanded its base

in Differdange a third time to encompass over 6000 square

meters. Today the Airtech composite mixtures are even being

installed in the Airbus A380.

In the early 1950s Goodyear was one of the first US

companies to produce in Luxembourg. Pneumatic tires

were manufactured on Colmar-Berg.

Goodyear, on the other hand, is a name familiar to many, with

its Technology Center in Colmar-Berg. Luxembourg is the lo-

cation of the tire research and development department for

Europe and Asia. There the second largest tire manufacturer

in Europe develops tires for nearly every type of vehicle that

are sold worldwide in over 180 countries. In recognition of

its achievement, two years ago the company received the in-

novation prize of the Luxembourg Industry Association FEDIL.

In 2004 Guardian Luxguard was similarly honored. At that

time the plate glass manufacturer had put a new windshield

on the market that according to the manufacturer’s infor-

mation reflected over 30 percent of the direct insolation,

resulting in less heating of the car. The company with its

headquarters in Auburn Hills near Detroit, Michigan, has been

operating in Luxembourg for nearly 30 years – with produc-

tion sites in Niederkerschen, Dudelange and Grevenmacher,

and headquarters in Bascharage.

Its wide range of products extends from picture frame glass

to elaborately coated glass. Glass from Guardian is used in

the European Court of Justice, the Chamber of Commerce,

the Mudam and the Philharmonie. The commitment to Lux-

embourg also has financial consequences: Since the opening

of the Niederkerschen plant the plate glass manufacturer has

invested nearly half a billion euro in the continued develop-

ment of its business in Luxembourg. Besides the training of

some 500 employees, this includes above all research.

The latter also plays a crucial role for the automotive sup-

plier Delphi. The former GM subsidiary has been operating in

Luxembourg since 1971. In 2006 it was decided to relocate

the research center for power train systems to Luxembourg.

Corporate Head Rodney O’Neal emphasizes: “This is the first

time that Delphi has moved one of its division overseas.” He

explained the decision by noting, among other things, the

“pro-business government, the wonderful quality of life and

the superbly trained workers.”

In the meantime the Group was struggling in Detroit with

creditor-protection proceedings and had to report reduced

working hours in Luxembourg. In recognition of having none-

theless stuck with Luxembourg, the company received the

Luxembourg American Business Award two years ago.

Many Luxembourgers don’t even know that the parent com-

pany of Dupont de Nemours lies in Wilmington, Delaware. Op-

erating in 70 countries, the chemical giant turns out special

polyester and polymer products as well as chemicals, films

and foil used the world over in industry and in consumables.

This year the company received the Technology Innovation

Award from the Wall Street Journal. In Luxembourg the com-

pany from Contern already received the Environmental Award

from FEDIL five years ago.

Founded in 1802, the company operates in nearly 80 coun-

tries worldwide. The DuPont location in Luxembourg manu-

factures polyester films, spunbonded fabrics and technical

plastics. It’s also a European business center for DuPont Teijin

Films, DuPont Protection Technologies, DuPont Electronic

Technologies and DuPont Chemical Solutions. Nearly 1200

people from twenty different nationalities work here; alto-

gether the corporate group employs 58,000 people.

Like many other companies, it too suffered during the crisis –

and was glad about the reduced working hours. Luxembourg’s

government in turn needs companies like this one, in order to

offer people employment who cannot be placed in the finance

industry.

Mr. Dennewald, are there still good prospects for strong US/Luxembourg ties – or are they on the decline?We should bear two things in mind: the Americans were

the first to invest here in Luxembourg on a large scale. They

made diversification possible here first. Many names come

to mind: Goodyear, Cleveland, DuPont, Avery Dennison, Del-

phi, and at that time also Monsanto ... It is vital that we

expand our ties. Because – and this is the second point –

something has changed here in Luxembourg. We’ve lost

some of our competitiveness. It is precisely for this reason

that our ties are so important. That is why I am also happy

to attend the presentation of the Business Award.

What does an event like the Business Award have to offer?Decision-makers need role models, in business as much

as any other area. The award offers a good opportunity to

bring together a large number of people at the same time

and place. I attend the event to represent the Luxembourg

business community,

as well as my own

company of course.

As president of FEDIL

and a businessman, I

make contacts and

represent my com-

pany. I believe we

need to create a

broader foundation

for building contacts

with the US business

world.

What’s your assessment of the future for ties with the US?We aren’t limited to just the US. There are certainly other

countries, such as Turkey, China, or Brazil, that are also im-

portant to build contacts with.

The American companies that are here today should stay

here as well. We certainly would not come by another part-

ner like Goodyear very easily. In such a case, prospective

new partners would prefer to go wherever wages are more

cost-effective, typically elsewhere. We do not have a very

good hand at the moment when it comes to traditional

industry. Wages are high and indexation is a burden on

business growth. Americans in particular find this counter-

intuitive. On the other hand, high-tech businesses would be

a possible option for the future.

by Cordelia Chaton

Robert Dennewald, President of FEDIL, the Luxembourg Business Federation

But a lot has changed since the first US com-

panies came to Luxembourg after the war. On

the one hand, Asia has become more attrac-

tive for production. On the other hand, other

countries are also intensively courting inves-

tors.

That’s why Luxembourg is relying on research

as a field less susceptible to crisis. Minister for

Economic Affairs Krecké accordingly brought

the SurfMat Cluster into being in 2002 for the

cooperation between companies and research

institutes engaged in surface coating. 60 of

the 50 SurfMat members are companies.

In addition, the government brings compa-

nies along on economic missions in order to

establish contacts and advertise for Luxem-

bourg, Inc. On this year’s economic mission to

Moscow participants met at the local offices

of Husky and the production centers of Guard-

ian. The US companies on their part then often

promote the Grand Duchy, to the latter’s profit.

Admittedly, not only do many Luxembourgers

not know which US companies are here, many

Americans don’t even know where Luxem-

bourg is located, and what can be produced

and invented there.

DuPont de Nemours

is represented in

Luxembourg by

altogether four com-

panies, including the

European Research

Center.

Plate glass from Guardian is used in

many banks, the European Court of

Justice and Mudam – here part of

the facade.

8 9

Over the last 20 years, Luxembourg has

become the second fund domicile in the

world, after the United States. The country

has established itself as the most popular

domicile for UCITS funds, the European type

of funds first created in 1985, and as the hub

for global distribution of funds. By the end of

2009, 76% of all funds sold in at least 3

countries were domiciled in Luxembourg. In a

study, Lipper FMI confirmed that

Luxembourg’s leadership in cross-border fund

distribution made a decisive contribution to

its development. In parallel, the financial

center has developed a strong track record in

alternative investment products such as

hedge funds and funds of hedge funds,

private equity vehicles and real estate funds.

American players were amongst the first to

understand the advantages of being present

in Luxembourg.

Luxembourg: bridge between the United States and Europe…From the beginning, American asset managers understood

the benefits of the UCITS fund framework. Indeed, a key char-

acteristic of UCITS funds is their European distribution pass-

port: a UCITS fund domiciled in one European country, such as

Luxembourg, can therefore very easily be sold to retail inves-

tors in the other 26 countries of the European Union.. By set-

ting up their funds as UCITS funds in Luxembourg promoters

were able to benefit from the distribution passport just like

any other player and this is precisely what they did. Today,

almost 50 American fund promoters are present in Luxem-

bourg. They represent 21.5% of total assets under manage-

ment in Luxembourg ($577.500 billion) and more than 1,100

funds. This makes the United States the number one country

of origin of promoters established in Luxembourg.

…and the WorldWhile UCITS were initially designed for the European mar-

ket, Luxembourg UCITS funds have become a strong global

brand, recognized around the world and sold in more than 65

countries with a particular focus on Asia, Latin America and

the Middle East. The total number of cross-border fund regis-

trations worldwide has grown from 3,260 at the end of 2001

to 7,441 at the end of 2009, and the appetite for global fund

distribution is clearly here to stay.

Banks and service providers have set up full operational platformsOther American players have gradually established them-

selves in Luxembourg to service these globally distributed

Luxembourg-domiciled funds. Luxembourg counts 6 Ameri-

can banks and 11 American “Financial Sector Professionals”.

They provide both operational support and reporting solutions

for all EU and non-EU distribution countries. Dedicated plat-

forms support funds throughout their entire life cycle, from

regulatory approval to order routing, registration, clearing and

settlement and fund accounting. Today service providers are

no longer mere back offices handling fund administration; in-

stead they are a key partner in a global distribution strategy.

They have also adapted to new regulations and the use of in-

novative structures and products, such as the SIF (Specialized

Investment Fund) for alternative funds.

Alternative funds brought interest from a new kind of actorsIndeed, the introduction of Specialized Investment Funds (SIF)

three years ago has paved the way for a new generation of al-

ternative investment funds (hedge private equity, and real es-

tate) for an international, qualified investor base. More than

1,000 SIFs have been launched to date. The SIF is adapted

to the needs of sophisticated investors seeking closer super-

vision, while offering flexibility in terms of structure, invest-

ment policies and techniques.

The European Union’s draft AIFM (Alternative Investment Fund

Managers) Directive and the global trend towards increased

regulation have further intensified interest from a new cat-

egory of American asset managers keen to (re)domicile their

alternative investment funds to Luxembourg.

In addition to its positive impact on the country’s economy,

the community involvement of American industry actors is

also considerable. While it all started some 20 years ago

with traditional well established American players coming to

Luxembourg to create UCITS funds, the last few years have

witnessed a growing interest from smaller American asset

managers setting up funds in Luxembourg. The trend is set to

increase in the coming years. This is obviously just the begin-

ning of the story.

* Camille Thommes is general director and Pierre Oberlé is Business

Development Manager at Alfi (Association of the Luxembourg Fund

industry)

© 2010 KPMG S.à r.l., a Luxembourg private limited company, is a subsidary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Printed in Luxembourg.

It’s not about doing different things …

... it’s about doing things differently

Luxembourg and the United States: a fund story

The community involvement of American industry actors is

considerableby Camille Thommes and Pierre Oberlé*

Thanks to Goodyear, the Kredietbank came to

Luxembourg. The Belgian financial institution

became a major player on the Euromarket.

This came about, in turn, as a result of foreign

exchange restrictions from the US

government. The foundation for the rise of

the financial center had been laid.

did not have any interests of its own in the rising automotive

industry, presented itself as a natural base of operations. Good-

year set up in Colmar-Berg, on land that the American company

had acquired from Grand Duchess Charlotte. The Kredietbank

presented itself as the partner of first choice to fund the tire

factory’s loading bay, an enormous investment project.

On October 17th, 1949, the Kredietbank opened its first coun-

ter, at that time still on the Rue Notre-Dame. The Flemish-Bel-

gian bank would play a major role in building the Euromarket

over the coming years. This in turn created the foundation for

the beginnings of the financial center.

It started with the “Interest Equalization Tax”

The main trigger for the Euromarket, which resulted in (most-

ly German) banks establishing themselves in Luxembourg,

was when the US government decided to curb capital outflow.

In a speech before the US congress on July 18th, 1963, Presi-

dent John F. Kennedy announced an Interest Equalization Tax

to control deficits in the US balance of payments. Reinvesting

massive sums of dollars from non-US banks in the US became

unappealing overnight. With loans in dollars, projects in Eu-

rope could be financed more profitably. So ‘Euromarket’ is a

bit of a misnomer because it is actually a market for dollars

outside of the US’s sphere of control. Thanks to its open at-

titude towards capital investment and its liberal bank regu-

lations, Luxembourg offered the ideal framework for devel-

A few years after the end of World War II, the United

States began investing in Europe. Goodyear decided to

make Luxembourg its base of production. The Ameri-

can tire producer impelled the Kredietbank, with which it was

doing business in the Benelux countries, to set up a branch

in Luxembourg. In the years that followed, the KBL would

become one of the largest and most influential financial in-

stitutions around. Factors were in place at the beginning of

this development that would later prove to be very beneficial:

Luxembourg’s neutral economic policy and our openness to

foreign investors.

By the end of the 1940’s, the Goodyear group was looking to

establish itself in the Benelux countries. The Belgian automo-

tive factories appeared to be suitable clients for their tires.

However, Belgium, and later the Netherlands, pushed them

away out of fear of competition for their own companies,

Englebert and Vredestein, respectively. Luxembourg, which

opment of the Euromarket. The new international loans in

Eurodollars needed a trading center: the Luxembourg Stock

Exchange’s development into a leading global center in this

niche activity was underway.

The Kredietbank organized its first syndication of a major loan

in 1965 for the Four Seasons Nursing Centers of America. This

was just the beginning. Over the coming years, the institute

would become the leader in Euro issues, a position that it

would retain until later being unseated by the German Euro-

banks in the financial center.

So American investment and regulation lies at the heart the

creation of the financial center. Without Goodyear, without

the Kredietbank, and without the Euromarket, our develop-

ment into an international financial center certainly would

have taken a different course. The fact that today, US insti-

tutions like Citibank, J.P. Morgan Bank, and State Street are

among the major employers in the center would be inconceiv-

able if Goodyear has not lit the fuse 60 years ago.

American Investments and Laws Helped Create

the Financial Center

Goodyear Lit the Fuseby Pierre Leyers

10 11

Ties between Luxembourg and the U.S. are historically strong and deep. For

many years, Luxembourg and the U.S. have been allies, friends and business

partners. Due to immigration during the 1800s, more people with Luxembour-

gish heritage are living in the U.S. than now live in Luxembourg. There has

even been a rise in the number of people learning Luxembourgish in the U.S.,

with new partnerships being created between organizations in both countries

to serve this need. Indeed, the U.S. is serving as a guardian of Luxembourgish

culture.

Both countries share the same abiding interests and values such as freedom

and respect for human rights. During World War II, the U.S. provided a place of

refuge for the royal family. In addition, General George S. Patton’s forces helped

liberate Luxembourg; such sacrifices are evident even today at the U.S. Military

Cemetery in Hamm, Luxembourg. After the war, companies such as Goodyear,

Delphi, DuPont and others came to Luxembourg, helping redevelop and restart

the economy of the Grand Duchy. The U.S. has thus historically helped protect

Luxembourg’s interests and values.

In modern times, there remain industrial companies which are the pillars of

the Luxembourgish economy, along with a full range of U.S. banks and financial

institutions—Citigroup, J.P. Morgan, State Street Bank, Chase and more—with

established EU headquarters and operating centers in Luxembourg. These U.S.

business interests have guaranteed continuing business ties and promoted lo-

cal economic prosperity as a result of direct U.S. business investment. Such

investments are not only very helpful to Luxembourg, they also show the abid-

ing appreciation Americans have of the Grand Duchy. Luxembourg is the ideal

location in Europe for U.S. companies to have their headquarters as well as

show support between the two countries which exists at all levels, including

through AMCHAM. AMCHAM members and staff are fully committed to promot-

ing Luxembourg as a prime location and business center.

The ideal location in Europe for U.S. companies

Paul Michael Schonenberg,

Chairman and CEO of the

American Chamber of Commerce

in Luxembourg (AMCHAM)

The other day I was welcoming the family of the third American e.commerce

executive to move into our street in Luxembourg City. As I was explaining the

benefits of living in the City it reminded me that Luxembourg’s relationship to

the US today is very different from 10 years ago when I moved here to set up

the AOL Luxembourg office. Before 2003, Luxembourg was known in the US

primarily as an established, global finance center which rivaled in its own way

London, Paris and Frankfurt.

When we arrived, the only Americans we encountered in town were tourists.

The “new” Americans in Luxembourg are coming to town to live and work,

thanks to the significant investment by US e.commerce companies in Luxem-

bourg. It is possibly the greatest influx of Americans into Luxembourg since

World War II and will be of more than just economic benefit to the two coun-

tries. American accents can be heard everywhere: in the restaurants, coffee

bars, shops, and in the schools. In a relatively short time, Luxembourg is now

recognized by the major e.commerce companies in Silicon Valley as one of the

most attractive, if not logical, jurisdictions in the EU in which to set up central-

ized operations for EU expansion. From the arrival of the first major player,

AOL, 10 years ago, a valuable economic cluster has emerged, leading to the

creation of local jobs, the introduction of new skills and ideas into the economy,

the generation of tax revenues and a greater demand for high value services

locally. But success can be fleeting. Given its importance to the economy, the

e.commerce cluster must continue to be supported by the Companies and the

Government alike. It is hoped that both Americans and Luxembourgers will

continue to cherish and promote the US-Luxembourg economic and cultural

relationships through this bridge across the Atlantic. There is a solid founda-

tion in place on which to build.

A valuable economic cluster has emerged

Rick Minor,

the former CEO of AOL

Luxembourg

The Luxembourg American

Chamber of Commerce in New York

Luxembourgs bridge head

in “Big Apple”by Tatjana Schaefer *

Since its inception the Luxembourg American Cham-

ber of Commerce (LACC) has created a platform and

infrastructure which is open to the Luxembourg busi-

ness community in the United States and the Grand Duchy

alike. None of the work could be accomplished without the

support of the Chamber´s members; the 80 members which

comprise Luxembourgish, French, Dutch, Belgian nationals as

well as Americans, therefore constitute the backbone of the

organization. The leading positions of the Board of Directors

and the Executive Committee are held by personalities from

the business community who dedicate their time as volun-

teers: Fernand Lamesch (Chairman), Michel Franck (Presi-

dent/ Spacesmith Architects), Cynthia Kalathas (Secretary

/ Arendt & Medernach) and François Knaff (Consul General)

are committed to the Chamber with great enthusiasm and

competence.

In close cooperation with the Luxembourg „Board of Eco-

nomic Development“, which has offices in New York and San

Francisco, requests for detailed information on Luxembourg

as a business location are being answered.

Furthermore the LACC organizes seminars on a regular basis,

covering topics from cyber security, tax law to intellectual

property. At these seminars participants have the opportu-

nity to receive an update from experts of the subject and to

discuss matters in more detail at the following networking

receptions.

The LACC is an active member of the European American

Chamber of Commerce in New York which opens the per-

spective to pan European aspects. In this framework the 15

bilateral chambers have been jointly hosting very successful

events. For Luxembourg as founding member of the European

Union, the link to the European level is of high relevance.

The activities of the LACC are reflected in the quarterly

magazine „Luxembourg Business Journal“ which reviews the

events held in previous months and offers members a plat-

form to showcase current developments and to further cover

economic trends in the Grand Duchy and North America. The

distribution on both sides of the Atlantic supports the ex-

change of information and fosters close ties between North

America and Luxembourg.

Every two years the aspect of close economic cooperation is

at the center of attention: The “Luxembourg American Busi-

ness Award” recognizes the outstanding commitment of a

North American company in regards to trade and investment

in Luxembourg. In 2010 the award will be bestowed upon the

CEO and President of Husky Injection Molding Systems, Mr.

John Galt. The Chamber is especially pleased that this year a

Canadian company is the award winner, as this expands the

geographic reach of the LACC and to showcase Canada.

In conclusion the LACC is dedicated to promote Luxembourg

as ideal gateway to Europe. Especially in the context of the

global economic and financial crisis an international chamber

can offer a platform for an exchange of ideas. The LACC is

supporting Luxembourgish companies located in New York

and continuously communicates the key advantages of Lux-

embourg as a business location. Analogies to New York are

evident: Luxembourg equally boasts a cultural diversity of the

people living and working in the Grand Duchy, furthermore

it’s an economic engine for the Greater Region, which attracts

people from the neighboring countries.

The entire LACC team is committed to foster the transatlantic

economic relations in the “Big Apple” and beyond.

www.luxembourgbusiness.org

* Tatjana Schaefer is Executive Director of the LACC

New York City is without doubt among the

busiest cities in the world: more than 8

million people originating from over 200

nationalities live and work in this metropolis,

creating the vibrant energy which is so typical

for New York. It therefore is an ideal location

to establish and foster economic relations and

to guarantee an intense exchange of ideas. In

this context the Luxembourg American

Chamber of Commerce was founded in the

presence of then Crown Prince, now Grand

Duke Henri in 1991. For the past several years

the chamber has been located at the so-called

“Luxembourg House”, a building which boasts

a highly interesting history, situated only a

stone´s throw away from the United Nations.

Until 1989 it was home to renowned

composer Irving Berlin and his family; all

time favorites such as “White Christmas”

were composed on site.

How important is the USA for Luxembourg?In terms of size, Luxembourg ranks 170th in

the world. The USA is the world’s largest

economy and politically a super power as

well. Luxembourg’s financial center is the

third largest in Europe. The Grand Duchy is

the domicile of the world’s largest steel

producer, largest satellite operator and

Europe’s biggest media corporation – not bad

for tiny Luxembourg! To list the superlatives

of the United States would burst the confines

of this article; a comparison between the two

countries is pointless. Why then is the

American giant interested in the tiny Grand

Duchy at all? What makes the USA so

important for the little state of Luxembourg?

In surveying numerous personalities from

politics, industry and society we sought and

found answers to these questions.

The good relations between the two countries

are the result of a historical development. The

Americans liberated the Grand Duchy from

Goodyear settled down in Luxembourg in 1949, shortly after World War II. The

tire maker, based in Akron, Ohio, was looking for a footprint on the European

continent and elected Luxembourg due to its geographically centralized loca-

tion, its political and social stability and the availability of the workforce. The fa-

cility in Colmar-Berg quickly gained in reputation and expansion projects made

the company grow over the decades. Today, Goodyear Luxembourg counts more

than 3250 associates, has a truck tire building plant with a European distri-

bution center, an R&D facility responsible for the European, Asian and African

markets and several plants producing intermediate components for the tire

building process.

The importance of the Luxembourg facilities has always been valued by the

Goodyear headquarters, which plans for Luxembourg to play an even more vital

role in the European region and beyond. All Goodyear countries are currently

reviewing their organizational structures and processes in order to move to

higher standardization, simplification, adaptability to meet the demands and

external focuses in a more cost efficient way. Luxembourg will play a central

role, in taking over the responsibilities for supplying all tire plants with raw ma-

terials and dispatching all finished products towards the end user. A centralized

management will considerably simplify administrative tasks while improving

the efficiency of existing Goodyear systems. By capitalizing on efficiencies,

Goodyear will be able to further invest in areas such as research and develop-

ment, manufacturing and marketing, enabling the company to further develop

in the European market place. This challenging project was initiated three years

ago and will be finalized by the end of this year. 13 countries will then be operat-

ing on a new business model, using new processes while being supported by a

complete new systems environment, with Goodyear Luxembourg as its Center

of Excellence.

“Center of Excellence”

David Gomez,

Production director,

Goodyear Tire Plant Luxembourg

Nazi German occupation. Afterwards, the USA

provided important aid in rebuilding economic

structures. Today, Luxembourg is an

important bridgehead for numerous US

corporate groups in Continental Europe, and

not only in the financial sector. Both sides are

intensively endeavoring to maintain these

good relations – through Luxembourgian

emissaries to North America and through US

representatives in the Grand Duchy.

Andreas Holpert

Nazi German occupation. Afterwards, the USA

12 13

DuPont was founded in 1802 by a French immigrant in Delaware, U.S.A. The

company diversified during its more than 200 years of history to become one

of the most advanced science companies supplying science-based solutions for

the present expectations and needs of society.

So as to be present in the market of the newly founded European Communi-

ties, DuPont invested in Luxembourg as of 1962. The first contacts between

Luxembourg and DuPont were established by Prince Charles, first chairman

of the Luxembourg Board of Industrial Development (BID), and actively sup-

ported by Paul Elvinger and Pierre Werner. At that time, Luxembourg needed

to diversify its economy, and the DuPont investment was the second largest

investment by a US company after the establishment of Goodyear at Colmar-

Berg.

The Contern site started up in 1965 with two polyester film production lines.

Over the years, DuPont invested more and more into other production lines at

the Luxembourg site: Hytrel® thermoplast mainly used for automotive applica-

tions; Typar® spunbonded polypropylene (nonwoven) used in geotextiles, drain-

age, carpet as well as in displays; Tyvek® spunbonded polyethylene (nonwoven)

used for house wrapping, roofing, in protective clothing, graphics and medical

packaging; as well as into other polyester production lines.

Since the year 2000 the polyester production is operated by a joint venture

between DuPont and Teijin Films.

DuPont Luxembourg grew into an integrated European manufacturing and

business centre with its Research & Development, engineering, manufactur-

ing development, marketing, sales and customer services activities. With 1100

employees, DuPont is today the fourth industrial player in Luxembourg.

What makes DuPont stand out is our ability to take scientific discovery and

transform it into products that correspond to needs of society. The company is

also well known for its leadership in safety that has even become a business.

This is the basis to Sustainable Growth.

As a market-driven science company, DuPont provides solutions that help the

world addressing the needs for more, better and healthier food, reducing our

dependency on fossil fuels, protecting people and the environment and serving

growing populations in developing markets.

Recent innovations at the DuPont Luxembourg site include: solar back sheet

films for photovoltaic applications, solar modules that are directly integrated

into the roof in replacement of tiles, DuPont™ Energain® the solution to thermal

mass in low inertia buildings, new temperature resistant capacitor films with

high electric properties for hybrid car applications, elastomers for automotive

airducts, renewable sourced elastomers, the new extra-strong and fully recy-

clable printing substrate DuPont™ Imvelo® and finally a new process to diversify

a substrate such as Tyvek® by metalizing the surface and/or applying various

functional coatings in a vacuum.

An integrated European manufacturing and business centre

Arsene Schiltz,

Managing Director and Works

Director DuPont de Nemours

(Luxembourg)

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www.ses.com

I was fortunate to follow-up over a period of 40 years the establishment of U.S.

companies in the Grand Duchy, mainly through the activities of the European-

American group created by H.J. Leir (COC / IMC/ S.A. des Minerais etc.). Among

the most significant are industrial investments such as Continental Alloys SA,

Dommeldange, a joint venture of our group with the Arbed-group after integra-

tion of patents and equipment generated from our research facility La Conti-

nentale Nucléaire SA , Bascharage; National Luxalum, Dudelange, today under

control of Novelis group, created by one of our U.S. shareholders. Our group

has contributed in the set-up of several commercial organizations, company

management and consulting firms (assisting the beginnings of Ernst & Whin-

ney, now Ernst & Young Luxembourg) and several banks, including Wells Fargo,

California and Republic National Bank of New York (now part of HSBC).

One must realize that all U.S. investments in Luxembourg (from the first and still

most important one, Good Year founded in 1951, to the smallest one, not to forget

the shining example of Guardian, were generated from a relationship of business

confidence between man and man, before being quickly endorsed and embodied

in the framework of efficient structures like the Board of Economic Development,

Ministries of Foreign Affairs and Economy, embassies / consulates etc..

The moral basis for this “system”? It is, in my opinion, on-going international

credibility and a reputation of high integrity that our country enjoys in the Unit-

ed States, which is obviously not a function of its size or any element of power.

Precisely because of these facts, the voice of a small country, often concilia-

tory and directly disinterested, is as important as that of a larger country. It is

this image, rooted in the subconscious collective memory of both partners for

nearly a hundred years and most carefully maintained with great efforts since

the beginning of the 2nd World War, which is the keystone of a rather unusual

and unmatched situation. The challenge for our dynasty and our local political

system is to preserve that particular relationship.

Today the main contribution of the U.S. economy in the Grand Duchy consists

of abt. forty industrial investments totalling more than EUR 5 billion; this repre-

sents approximately 25% of foreign industrial investment in Luxembourg and

puts the US ahead of our powerful neighbours.

The financial sector is characterized by the domiciliation of investment funds

in excess of EUR 1.5 trillion, representing the largest market after the United

States itself. 20% of the centers’ funds originate from the United States; it is

the largest part and similar to that of Germany. There are currently 6 U.S. banks

in Luxembourg; also many insurance companies, trustees and lawyers’ offices

associated with Luxembourg partners .

One can argue without exaggeration that the Luxembourg economy has been

strongly influenced, if not sculpted, by U.S. presence. In addition to the U.S. eco-

nomic contribution, many interesting side developments in the field of culture,

education and philanthropy emerged over time. There is no limit to develop all

these relations to infinity.

The voice of a small country is as important as that of a larger country

Jean Calmes,

Honorary President of the

American Society Luxembourg,

former President of the American

Business Club of Luxembourg

and Director of the Luxembourg

American Cultural Society,

Wisconsin

The US and Europe have been and still are close political allies. Both stand for

freedom and justice. The US and Europe made historically unprecedented com-

mitments to these ideals in the First and Second World Wars. Moreover, the

Unites States’ decision not to withdraw itself immediately after the World War

II contributed to the stabilization of Europe and enabled the war-torn European

countries to forge closer ties in freedom and prosperity. So it was also only

natural – in light of our shared values on the two sides of the Atlantic – that a

successful internal market would develop over time, which today provides for

the free movement of people, goods, and capital.

From an economic point of view, the EU and the US are the most interconnected

regions in the world. As is attested by the presence of so many US corpora-

tions in Luxembourg, the Grand Duchy is playing a key role in this relationship.

Luxembourg’s international connections and our level of professionalism and

service quality are held in high regard by our resident American companies.

This has prompted a wide array of major US companies to choose Luxembourg

as their hub for cross-border European services.

Particularly in the financial sector, Luxembourg has made itself indispensable

to the US as a ‘Gateway to Europe’. It has also made the US indispensable to

Luxembourg as a key business partner. This is particularly evident in the in-

vestment fund sector, in which Luxembourg and the United States are the two

world leaders. With current figures of 10 trillion dollars in managed assets, the

US and Luxembourg markets in this sector are roughly of equal size. Whereas

American mutual funds are primarily offered to domestic clients, Luxembourg

has developed itself into a truly international market: investment funds issued

in Luxembourg are sold throughout Europe and even the rest of the world.

This fundamental difference also provides an excellent opportunity for long-

term partnerships. With a 20% market share, the US is the top fund promoter

in Luxembourg. Furthermore, the most renowned fund manages and custodian

banks are all present on site. New legal requirements in retail and in the al-

ternative fund sector will enable the US to continue enjoying the benefits of

our financial center and its characteristic openness. Arguably, the associated

developments in pension funds and hedge funds in particular ensure a long and

promising future for our partnership.

As a student in the US 20 years ago, and later as Minister of Justice and Minis-

ter of Finance, I have always felt and valued the American people’s friendship

and loyalty to Luxembourg. I am confident that a strong transatlantic partner-

ship will provide a foundation for solutions to the major challenges our world

is facing.

Unprecedented Opportunity for Long-Term Partnership

Luc Frieden,

Minister of Finance

The celebration of the exemplary contribution of a North-American corporation

to the economic, technological, and social development of Luxembourg by the

American-Luxembourg business community, on October 20, 2010, in New York,

is the opportunity for an updated focus on the economic relationships between

the largest economic power and one of the smallest national economies on

the planet.

These relationships far exceed the usual statistics, such as the hundred Ameri-

can companies present in Luxembourg or the dozen Luxembourg companies

operating on the North-American continent.

They are not limited to the US contribution to employment in the Grand Duchy

of approximately 4%, or to the 10% of direct foreign investment shares in Lux-

embourg held by American investors, or even to the three billion Euro invested

by Luxembourg companies in their US branches. Additionally, the content of

these relationships far exceeds the few billion Euros of annual exchanges of

goods and services as shown in the current Luxembourg foreign trade balance.

Last but not least, these relationships are only imperfectly illustrated by the

over 20% share held by American promoters on the Luxembourg investment

fund market.

Beyond these usual figures describing bilateral economic relationships, the eco-

nomic relationships between the United States and Luxembourg benefit from a

stable foundation and enjoy deep exchange dynamics in the fields of technologies,

know-how, innovation, and people skills, generated by a long history of mutual

openness and trust between the two countries. While they were one-way for a

long time, these exchanges are more and more two-way, with Luxembourg compa-

nies bringing their share of skills and know-how to their American subsidiaries or

partners. The growing relationships between academic and research institutions

on both sides of the Atlantic are reinforcing this foundation and these dynamics.

The deepening and consistency of economic relationships result, not only from

scientific, commercial or financial exchange structures, but also and most im-

portantly from the choice made by men and women to live, study, and work ‘on

the other side of the Atlantic’ to become ‘proximity players’ in ever deepening

and intensifying relationships!

Ever deeper, intensified relationships

Georges Schmit,

Consul General and head of the

“Trade and Investment Office” in

San Francisco

If you ask about the importance of ties between the United States and Luxem-

bourg, you have answered your own question. We hardly ever think about them

in our daily lives because they are an integral part of our lives: our stability has

become our well-being.

It is true that the European Union is the framework of reference in which we

shape our economic and social development, and to a large degree our political

and cultural development as well. However, this does not impair our transatlan-

tic friendship or the closeness of our ties in any way. Quite the opposite in fact,

as this partnership gives our country and our society a second base of support

for our stability.

This is particularly evident in the area of global security. In a time of global inse-

curity, our security is bound up with the only global superpower that is willing

to play the role of stabilizer, from the war on terror and the freedom of the sea

routes, to the war on drugs and cyber crime.

Our sudden closeness to the US should come as a surprise to no one. We share

the same values and pursue the same goals. Our freedom is based on these

shared values and this US commitment to freedom - including our own - and

the human, economic, and social development it affords. Without America’s

intervention in the two World Wars, there would be no free, independent, and

prosperous Luxembourg.

Today, our economy has been successfully integrated into the global econo-

my. This opening-up to the outside is due in large part to early investments

by American industrial and service companies, which have and will continue

to make up a decisive portion of the growth in our economic performance

following the end of World War II. In addition to this, the US market is still

an integral part of every business plan, for all of our businesses and service

providers.

Despite all our differences in size and population, this gives us a strong bond

of friendship, which naturally works to deepen and expand our older connec-

tions, arising in the years of Luxembourgian emigration to the United States.

The Luxembourg American Cultural Center in Wisconsin, which celebrated its

official grand opening this past summer, is living proof of the complexity and

depth of the ties between our countries and the importance of our exceptional

partnership and friendship.

An Integral Part of Our Lives

Jean-Paul Senninger,

Luxembourg’s Ambassador

to the US

14 15

North America remains an important partner, emphasizes Jeannot Krecké,

Minister for Economic Affairs

A privileged relationshipby Ronny Wolff

The relationship between the USA and

Luxembourg continues to be good,

emphasizes Minister for Economic Affairs

Jeannot Krecké. Nevertheless, Luxembourg

must endeavor to continue being attractive

for these companies. But Canada also has

potential. The Minister plans in the future to

visit this gigantic and little known country,

which harbors many resources and also

maintains a strong presence in the

automotive industry.

What is the relationship with the US?We continue to have a privileged relationship with the US,

also economically. In the 1960s and 1970s we pursued a pol-

icy of diversification, and at the time the US companies were

the first ones wanting to avail themselves of the new oppor-

tunities in Luxembourg. I personally have hardly any contact

with the US government. The cooperation proceeds primarily

with the companies. The US government doesn’t want to in-

fluence the companies or dictate what they have to do. That’s

a big difference from the other countries, but it works well.

And the relationship with Canada? We’ve been neglecting Canada a little, spending more time

dealing with the USA. I’ve been in Montreal and Toronto; it’s a

very interesting terrain, but a small country like Luxembourg

can’t cover everything. I plan to devote more time to Canada

in the immediate future, but it’s a very big country, and I’ll

have to concentrate on two or three cities. The country must

not be underestimated, with its very many opportunities, and

it will remain successful, also because of those resources,

which we no longer have in Europe.

Are we on these countries’ radar?We’re probably better known there than in other countries.

The big groups know Luxembourg, but the smaller the op-

eration, the less the companies know about Luxembourg. The

consulting firms working for these companies have had Lux-

embourg on their radar for a long time now and are entering

into discussions with us.

Why is the US of interest to Luxembourg companies?Despite everything, the USA remains the greatest economic

power in the world. It’s still the case that nothing happens

without US support. And when America coughs, the rest of

the world also coughs, especially Europe. The USA is home to

the big companies, but there are also many small companies

that are extremely active and innovative. So it remains a very

interesting target area for Luxembourg.

Which Luxembourg companies are already operating in North America? Which ones want to in the future?We’re not so widely deployed in the USA. Particularly the

very large companies like Cargolux and ArcelorMittal are very

active there. Smaller companies have a hard time getting a

foothold. Many companies in the automotive sector supply

parts to US car makers. But there isn’t a big rush to set up

operations in the US.

Are there new companies daring to make the leap to Luxembourg? In California activities have greatly intensified. It was a bit

quieter in the past, but the interest in Luxembourg has re-

vived on the West coast. Recently it’s been relatively small

companies that have come into question.

What role is played by the representative offices?The representative offices in New York and San Francisco

regularly provide me with information when companies want

to relocate in Europe. If a company fits our framework, we try

to persuade it to come to Luxembourg. The Consul Generals

of Luxembourg and Directors of the Luxembourg “Trade and

Investment Office” François Knaff (New York) and Georges

Schmit (San Francisco) contact the companies and present

Luxembourg as a location. It’s then analyzed what is doable

and what is not. If there’s an interest, I try to visit the com-

pany in the next economic mission.

Can you tell us more about the economic missions to the US?I go at least twice a year to the US in order to visit the East or

West coast. In October I’ll be there again, when the Business

Award will be conferred in New York. This year the honor will

go to Husky; two years ago it was Delphi. I’ll also be making

contact with companies at this event.

Do US companies also say why they’ve chosen Luxembourg? For companies operating in e-commerce, for example, our low

value-added tax was the starting point. That’s no longer the

case. Today, these companies come to Luxembourg because

we have superb infrastructures and can offer them interesting

opportunities. Our central location in Europe is also impor-

tant, so we must keep an eye on our connections to the other

European economic centers. We’ve endeavored to expand our

communication networks, and quite successfully, too. The

available data center and the readiness of Enovos in matters

of energy supply must also not be underestimated. So we

have a few things to offer. In addition, each company wanting

to come to Luxembourg is assigned a contact person in the

Ministry who attends to its concerns.

Would those large companies which have already been here for years again choose Luxembourg today? We’ve never discussed this with the companies. But we must

continue remaining attractive. The other countries aren’t

sleeping. We have strong competition from the Netherlands,

Ireland and Switzerland. Especially the Netherlands, with its

good positioning in logistics, is always on the short list of for-

eign companies.

What is being done to strengthen the relationship between Luxembourg and North America?Luxembourg has a good reputation in America. While we suf-

fered a small blow related to problems in the banking world,

having always been under pressure from the G8, I hope that

our good relationship with the US will persist.

Do Americans really perceive Europe as the “old world”? They perceive Europe above all as a world that is not very

dynamic. The growth prospects here are also not of great in-

terest. One senses among the companies that while Europe

remains a target region, it’s no longer their first choice. It

seems to me that many companies are redefining their pri-

orities in order to work more with Southeast Asia, and that’s

alarming.

The diversification policy of the 1960s and 1970s

attracted many American companies, emphasizes Minister

for Economic Affairs Jeannot Krecké. Luxembourg must

continue remaining attractive

CA constant challenge for a Trade and

Investment office is to remain current with,

and also to stay ahead of changes in the host

country’s economic landscape. This is even

more so the case when the local economy is

driven not just by market forces, but also by

creative thinking and acceleration in

technological innovation.

Challenges and opportunities

for Trade and Investment promotion

Stay ahead of changesby François Knaff *

Our country has kept pace through a portfolio of of-

ferings that arise to meet, and even anticipate, the

demands of new types of businesses. Three current

examples of innovative technologies demonstrate the strate-

gic advantages that the Luxembourg Trade and Investment

Offices can deploy on behalf of American companies:

Cloud Computing – The move by technology providers to

migrate software applications and data from the desktop

to a server environment has spawned a host of new compa-

nies, and fostered innovation by traditional leaders, includ-

ing Google, Microsoft, Amazon, Oracle and IBM. Virtualizing

computer hardware and moving office and database ap-

plications “to the cloud” plays into the hands of a country

like Luxembourg, which provides a secure data center envi-

ronment for everything from financial information to multi-

media. In fact, Luxembourg is early to providing a home for

cloud-based businesses: a founding member of Eurocloud, it

was home to the first European cloud computing conference.

Cloud computing complements and in many cases facilitates,

e-commerce, where again Luxembourg has strong offerings in

both infrastructure and regulatory framework.

Life sciences – Biotechnology has emerged as a significant

industry sector within the United States during the past 20

years. It has incubated several large scientific-industrial com-

panies, but more significantly, thousands of smaller biotech

companies and their unique service providers [equipment

manufacturers; bioinformatic software developers, etc.] have

arisen as part of an embedded industry base. Because of the

unique positioning that Luxembourg has developed as a cen-

ter of excellence in personalized medicine, including a bio-

bank, incubator, and affiliations and relationships with scien-

tific institutes worldwide, our country is strongly positioned

to support biotech companies as a platform for scientific

development and European expansion.

Financial Services – While the world struggled to regain its

equilibrium following the meltdown of several Western fi-

nancial institutions, and the drastic measures instituted to

preserve the American economy and those of other nations,

Luxembourg, while not entirely unscathed, remained a seat

of financial stability, and ultimately even sound innovation.

Funds and financial service companies have continued to

look to Luxembourg as a safe, secure, legitimate venue for

their product and service offerings, where both the quality of

the support infrastructure, and the stable regulatory environ-

ment provide necessary advantages for clients. Even in the

midst of financial uncertainty, Luxembourg has continued to

innovate, with a forward-looking regulatory orientation that

enables domiciled funds to take advantage of the benefits of

the new UCITS IV directive.

The U.S. still maintains a fairly robust industrial base, which

Luxembourg has, and certainly will continue to, support with

a talented workforce and a world-class logistics capability.

Our Trade and Investment professionals can thus credibly ad-

dress the needs of the ever-growing “knowledge economy,”

where media, finance, communications and science converge,

now and in the future.

www.investinluxembourg.us

* François Knaff is Consul general of Luxembourg in New York

16

Intense negotiations about the proposed

Alternative Investment Fund Managers (AIFM)

Directive are currently under way to reach

consensus between the EU’s legislative

institutions.

Luxembourg as a favored domicile for funds - an opportunity

for US-based managers and offshore funds

Launch of the Alternative Investment Fund Manager Directive

by Georges Bock et Bastien Voisin*

The finalization of the Directive is expected to take place

in the coming weeks and the Directive should come into

effect in 2012.

The Directive is aimed at establishing a harmonized frame-

work for regulating alternative investment funds (AIFs) such

as hedge funds, real estate and private equity funds that are

not registered as Undertakings for Collective Investment in

Transferable Securities (UCITS).

The Directive has a broad scope and applies to EU and non-EU

AIFMs, AIFs, service providers to these funds and their inves-

tors.

One of the most controversial areas of the Directive relates

to the third country provision, namely the access of non-EU

funds to the European market. The EU Parliament favors an EU

passport with the ultimate face out of national private place-

ment regimes, whereas the EU Council believes a passport is

impracticable and that private practices should be retained

indefinitely.

Non-EU AIFMs have to consider whether and under what con-

ditions they may be able to access European investors with

offshore funds in the future. For instance, US managers could

seek relocation in the EU in order to benefit from the EU pass-

port for the distribution of their funds. At the same time, they

may choose to repatriate their funds from offshore jurisdic-

tions such as Cayman Islands and the British Virgin Islands to

onshore European jurisdictions.

Luxembourg, as the world’s second largest investment fund

center after the US, is lined up to be the destination of choice

in Europe for the switch from offshore to onshore vehicles.

Additionally, as the market leader in Europe for UCITS, Luxem-

bourg is ideally placed to accommodate the new trend among

managers to offer AIF strategies via UCITS vehicles due to the

concerns over the implications of the AIFM Directive. Among

the frontrunners to this trend, Apex Fund Services, the in-

dependent and leading global fund administration business

headquartered in Bermuda, opened an office in Luxembourg in

August while New York based and world’s third largest hedge

fund, Paulson & Co, is planning to set up a UCITS fund in Lux-

embourg later this year.

According to a survey conducted by KPMG earlier this year,

half of the managers interviewed confirmed that they are

waiting for the final outcome of the negotiations before defi-

nitely committing to the location of their funds and their man-

agement businesses.

On October 4th, the Belgian Presidency of the EU Council pub-

lished a draft compromise of the Directive proposing a dual

approach solution to third country rules in an attempt to sat-

isfy competing EU Parliament and Council proposals.

Luxembourg has always been opened to the world economy

and has continuously played his role as a gate to Europe for

non-EU players. With its actual regulatory framework for

UCITS, specialized in INVESTMENT FUNDS (SIF) as well as its

venture capital funds. The countries provide already today

a solid infrastructure to operate investment funds platforms

aiming at international products distribution. The Luxem-

bourg government will do all necessary effort to ensure that

Europe is not ending up in a fortress.

* Georges Bock, Head of Tax KPMG Luxembourg. Bastien Voisin, Luxem-

bourg Center of Excellence (KPMG New York)

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Cargolux and Boeing Make Industrial History

A Cargo Jumbo Jet for Luxembourgby Andreas Holpert

The long-term partnership between US aircraft manu-

facturer Boeing and Luxembourg cargo airline Cargolux

is an excellent example of the close ties between the

Grand Duchy and the United States. The partnership certainly

goes far beyond a typical economic relationship. Together, the

two companies have made industrial history.

Back in 1993, the US group delivered the first Boeing 747F. At

that time, Cargolux was the first official operator of the cargo

jumbo jet. Originally, Air France was supposed to acquire the

first one.

In 2011, history will repeat itself. This time, the Luxembourg-

ian cargo airline is the official ‘launch customer’ for the

successor model to the 747F. Next summer – two years ear-

lier than announced – the first Boeing type 747-8F aircraft is

scheduled to land at Luxembourg’s Findel airport.

Yet the partnership with this US aircraft group extends further

back than 1993. In December of 1977, Cargolux announced its

first order for a Boeing 747-200 freighter. The LX-DCV arrived

in Luxembourg on February 1st, 1979 and was christened the

‘City of Luxembourg’ on February 2nd, 1979 by Mayor Collette

Flesch before the presence of Grand Duke Jean. On Febru-

ary 5th, 1979, the aircraft set off on its maiden voyage for

Cargolux, destination Hong Kong. At the time, it was the

largest aircraft ever registered in Luxembourg, and the first

B747 freighter in service in a European all-cargo airline. Up

to the present day, Cargolux has operated more than thirty

747-200 type aircraft. In anticipation of the delivery of

the new cargo jumbo jet next year, the fleet will be reduced

by one aircraft a month over January, February, and March.

Cargolux started off with one CL-44 that it acquired from

Icelandic airline, Loftleidir Icelandic. Only 39 of these Cana-

dian aircraft were ever built, four of which were extended by

4.5 meters immediately following delivery. The extended

versions could transport greater volumes at the same load.

Of the 39 models built, Cargolux operated the four extended

models and two standard models. Cargolux’s first CL-44 was

registered in Iceland as TF-LLJ.

Cargolux fitted out the CL-44s with internal car-

go equipment that was highly advanced at the

time, including special equipment for transporting

all kinds of animals. In 1973, Cargolux ascended into the

jet age with the introduction of its first DC-8 (type DC-8-61).

The DC-8-61 was joined by a DC-8-55 in 1974, soon to be fol-

lowed by the DC-8-63 aircraft. Whereas the extended version

of the CL-44 had a maximum vehicle payload of 27 metric

tons, the DC-8 could now transport loads of up to 47 metric

tons.

18

The key success factorsThe reasons for Luxembourg’s attractiveness to U.S. investors

are manifold. They include Luxembourg’s strategic geographi-

cal location, its business-friendly legal and regulatory frame-

work, easy access to decision makers as well as the stable

social environment and the state-of the-art infrastructure.

Beyond doubt, Luxembourg’s fiscal environment is also key to

its attractiveness for U.S. investors. This includes in particular

stable tax legislation, the ability to benefit from EU Directives

and Luxembourg’s extensive and constantly expanding tax

treaty network. Effective as from 2009, Luxembourg intro-

duced a full withholding tax exemption for dividends distrib-

uted by a Luxembourg company to its corporate shareholders

in treaty countries, which is particularly interesting for U.S.

shareholders.

Recent and upcoming challengesIn 2009, the OECD (backed by the Obama Administration)

put pressure on countries which provide for an attractive tax

framework (including Luxembourg), having potential influ-

ence on the decision of U.S. companies to invest in Luxem-

bourg. After having been classified as a financial center not

having substantially implemented the internationally agreed

standard on information exchange, Luxembourg has taken ac-

tion. It has renegotiated a substantial number of its tax trea-

ties (including its treaty with the U.S.) and was, as a result,

the first country to be removed from the so-called “grey list”

and moved to the so-called “white list”.

However, in the U.S. various lists of offshore secrecy jurisdic-

tions are still circulating. The “Stop Tax Haven Abuse Act”

provides an initial list which also includes Luxembourg. In

practice, the list of tax havens produced by the Government

Accountability Office (GAO) is perhaps even more important.

Luxembourg is on this list. The list, included in a Decem-

ber 2008 GAO report, was created by combining three lists

prepared by others, never mind that even the GAO acknowl-

edged that these three lists were outdated (one of the lists is

Tax competitiveness for U.S. Investors

What will the future bring for Luxembourg?

by Frank Muntendam and Daniela Hockelmann*

As one of the world’s leading financial

centers, Luxembourg is not only home to

almost 150 banks and the second largest

investment fund sector in the world after the

U.S., it is also a key location for the

establishment of operations, headquarters

and holding companies of U.S. based

multinationals (e.g. Guardian, DuPont de

Nemours, Goodyear and eBay). In 2009,

Luxembourg was involved in the discussion

about clamping down on so-called “tax

havens”. Moreover, major changes of the

European VAT rules may affect certain U.S.

investors into Luxembourg. Which effect may

these developments have on Luxembourg’s

attractiveness for U.S. investors?

based on 1982 information!). The U.S. Treasury Department

criticized the GAO list and specifically warned that such list

is likely to be regarded as a blacklist and may be used as the

basis for the imposition of sanctions and other negative mea-

sures. Although none of these lists has been used in the U.S.

legislation enacted in 2010, legislators may be tempted to use

them for future legislation. In addition, the inclusion of Lux-

embourg in the GAO list may influence U.S. investors in their

decision to invest in Luxembourg. Luxembourg would be well

advised to monitor potential ramifications which arise from

Luxembourg’s inclusion in such lists and to lobby for its ex-

clusion from the lists given the positive 2009 developments.

Another factor potentially impacting Luxembourg’s attractive-

ness is the so-called 2008 EU “VAT package”. This package

includes significant changes to the place of supply rules.

Under the old rules, it was favorable for businesses provid-

ing services to private individuals to be established in an EU

Member State with a low VAT rate. Considering that Luxem-

bourg has the lowest VAT rate within the EU (i.e., 15%), vari-

ous U.S. e-commerce and ICT companies have chosen Luxem-

bourg to establish their business (e.g. Amazon, iTunes, eBay

and Skype). As from 2015, VAT on e-commerce services will

be due (and at the rate of) where the customer (rather than

the supplier) is located. Consequently, Luxembourg based

suppliers will not have the above-mentioned competitive ad-

vantage anymore. However, it is much to be hoped that the

existing infrastructure and stable environment in Luxembourg

are compelling arguments for U.S. investors to continue their

activities out of Luxembourg.

In our view, Luxembourg is still an excellent location for U.S.

multinationals to invest in. There are indeed some clouds on

the horizon (like the GAO list and the VAT package), but we

hope that Luxembourg can continue to be a first choice loca-

tion for U.S. investors.

* Frank Muntendam is Partner and Daniela Hockelmann Manager at Ernst

& Young Luxembourg – International Tax Services

Living the Dream – Luxembourg a Safe Haven!by Brigitte Goergen*

Among the common phrases quoted by

Americans travelling to Europe is the

unawareness of the proximity of Luxembourg

to other European cities. Luxembourg is not

necessarily located on their bucket list,

though once you have triggered their curiosity

they are eager to learn more what

Luxembourg has to offer.

Than again, you have Americans who have had many re-

turns to Luxembourg due to our shared history during

World War II.

Over the past years, American Tour Operators have shown a

strong interest in promoting Luxembourg’s unique features,

its rich history and culture by adding Luxembourg to their

European travel itinerary.

After a busy and exhausting visit to a European city, an easy

ride will land them in Luxembourg.

The size of Rhode Island, the population tops the 500.000

inhabitants. Luxembourg is a country of history and culture,

it’s a Gourmet Delight, it’s rich in colors and flavors and the

people are friendly and inviting, Luxembourg is a safe heaven

to visit and live.

As a country and city, Luxembourg has more to offer than any

other European destination. It holds big surprises for Ameri-

cans with a wide selection of prestigious concerts, theater

shows and art exhibitions, offered within a small scale on an

international level. The old town in

the city of Luxembourg is classi-

fied as a UNESCO World Heritage

site and art at public space is influ-

enced by some of America’s most

prominent contemporary artists

and architects.

Americans have long history with

Luxembourg, new businesses be-

tween the countries have flour-

ished over the years and many

Americans have made Luxem-

bourg their permanent home.

Being small is a of a great advan-

tage, it allows easy access to any

European City, it’s manageable and

safe. After all, size matters!

* Brigitte Goergen is Director of the Lux-

embourg National Tourist Office in New

York

20 21

In the late nineties, the government sensed

that Luxembourg had the potential to become

a preferred location for e-commerce. With the

arrival of American multinational

corporations, the country is now world-

renowned in the field of e-commerce. Let’s

take a closer look at this success story that

shows no signs of slowing down.

iTunes, Amazon, PayPal or Skype, the online telephone ser-

vice. Within a few years, the Grand Duchy has become the

new Eldorado for American e-commerce giants. It all began

in 1999 when AOL Europe Services settled in Luxembourg. A

few years later, AOL added a Network Operation Center to its

European headquarters. The center manages and monitors

the communication flow between Europe and the head office

in the United States. Around the same time, Microsoft decid-

ed to reinforce its presence in Luxembourg by converting its

branch, which opened there in 2002, into a fully independent

subsidiary for online services.

In July 2003, Amazon ( the book, CD, DVD and video distribu-

tor) opened a branch in the Grand Duchy. Moreover, the US

online commerce leader decided, in December of 2004, to

open its European headquarters in Luxembourg. In his speech

at the official opening of the branch, Diego Piacentinit, Ama-

zon Senior Vice-President, emphasized the many assets of-

fered by the Grand Duchy for “a company like ours”: location,

social climate, and multilingualism.

In 2005, Apple opened iTunes Music Store in Luxembourg, its

European platform for online music commerce.

In May 2007, a new victory for the Luxembourg economy: the

Ministers in charge of negotiations - Luc Frieden, Finance, and

Jean-Louis Schiltz, Communication Technologies - announced

that PayPal will settle in Luxembourg. The American company

intends to operate all its European activities from Luxem-

bourg. It has been granted a Luxembourg bank license to this

effect. PayPal is the world leader for online payment services.

In 2007, Paypal had, according to its own release, 143 million

user accounts and 11 billion dollars payment volume for the

first quarter of 2007 alone. These figures illustrate the extent

of online payment activities.

Finally, Skype, a company created in 2003, offers free calls be-

tween users and low-cost calls to third parties. In September

2005, the company was purchased by the giant eBay. Then, in

September 2009, the group sold 65 % of its Skype subsidiary

to a consortium of investors led by the Silver Lake Partners

Fund for 1.9 billion dollars.

With these American multinational corporations, the Grand

Duchy of Luxembourg has earned a valuable place on the e-

commerce world map. It should be mentioned that, for the

last decade, the government has implemented a consistent

strategy favoring the growth of e-commerce. “By combining

an appropriate infrastructure, a qualified workforce, an at-

tractive tax system, and specific measures in favor of e-com-

merce, Luxembourg has succeeded in becoming a center for

the development of e-commerce in Europe,” indicated a re-

port to Greenwich Consulting commissioned by Jean Arthuis,

President of the Finance commission of the French Senate.

It is important to note that over a hundred small or mid-size

companies gravitate around the American “major players”

and offer numerous services to corporations and individuals.

The assets of LuxembourgSo, what is the recipe for success in Luxembourg? “This

enthusiasm can be explained in part by an attractive fiscal

environment, a business environment paving the way for

the emergence of start-ups, and the existence of excellent

technological infrastructures such as a reinforced high band-

width connectivity, as well as the legal acknowledgement of

electronic signature along with the creation of a certification

authority who issues and manages certificates with a very

high level of security”, explains the government on its web-

site.

According to the Greenwich Consulting report, the main as-

set of Luxembourg is its high quality high bandwidth Internet

network. All households have access to ADSL: according to

Eurostat, 61% of the households had high bandwidth access

in 2008.

In 2005, the Luxembourg State and several important play-

ers in the private and public sectors created LuxTrust, a Lux-

embourg corporation intended to meet the growing needs in

security and confidentiality in e-commerce, including in the

electronic communications between citizens, administra-

tions, and corporations.

According to Greenwich Consulting, Luxembourg also has a

significant advantage in terms of workforce and skills. Lux-

embourg is the OECD country with the largest activity share

in NICTs, with 31%. Ultimately, Luxembourg ranks 7th in the

world for Internet and telecommunication technology devel-

opment, according to ITU’s IDI (ICT development Index).

Another significant asset is Luxembourg’s fiscal competitive-

ness, a “significant factor contributing to the country’s attrac-

tiveness”, according to the Greenwich report. Luxembourg

has the lowest normal VAT rate in the European Union, with

15% compared to 19.6% in France.

In addition, several sectors of the Luxembourg economy

benefit from the super low rate of 3%: food products, books

and newspapers, pay TV, medical and dental care, etc. The

personal income tax and corporate income tax are also “very

attractive”.

But this is not all. The tax system on brands, patents, soft-

ware, design, and models enables Luxembourg to be the

country of choice for all suppliers of immaterial products.

For instance, according to the report, “the 80% exemption

for income generated by downloads was a deciding factor for

Apple’s decision to locate iTunes Europe in Luxembourg”.

New regulations after 2015In 2015, new EC regulations will apply to VAT. The Ecofin

Council has ratified the end of the system in 2019 (with an

interim period from 2015 to 2019): from that date on, VAT will

be paid to the consumer’s State.

This change will result in a progressive decline in budgetary

revenues generated by this activity in Luxembourg. It is im-

portant to note that the Luxembourg State reaps over 300

million Euros per year in VAT for this sector.

The Minister of Finance Luc Frieden, had confirmed this fact

in an interview to the newspaper “La Tribune”. “Of course,

this will affect our fiscal income, but it should not change

the settlement location of these companies. These American

corporations settled in our country for fiscal reasons, but not

only for that. They know they will enjoy a stable economic,

social, and political environment. Therefore, they will con-

tinue to operate from Luxembourg”, he said.

Richard G. Minor, former CEO of AOL Europe Services, agrees

with this analysis. Even though the company permanently

closed its Luxembourg branch this year, Richard Minor is

confident in the future of Luxembourg as a location for cor-

porations. In an interview to LW in April, he said that “the

government still has plenty of time to be ready for the new

regulatory environment and to continue to attract new cor-

porations to Luxembourg”. The “success story” does not end

here...

In 2005, Apple opened in Luxembourg iTunes

Music Store for online music commerce.

The Grand Duchy of Luxembourg is host

to the US leaders of global e-commerce

An Eldorado for Internet giants

by Nadia Di Pillo

Why did SES set its sights on acquiring Americom in 2001?In those days, SES was covering only one market, albeit a very

large one, i.e. Europe, with one product, satellite television.

That was where SES had enjoyed most of its success, but we

needed to broaden our strategic approach. To this end, we set

about expanding our product line and our range of activity.

The acquisition of Americom enabled us not only to conquer

the crucial North American market, but at the same time to

lay the foundations for today’s global SES group.

What was the economic significance of the transaction?At 4.3 billion dollars, the acquisition of Americom is the single

largest transaction in SES’s 25-year history. Moreover, within

the framework of the transaction, the company brought in a

new strategic shareholder, GE Capital, which actively support-

ed the company’s further development into a global player up

until 2007.

What difficulties did you encounter in this transatlantic acquisition?The required approval process was quite protracted, going on

for months, but there were no serious difficulties to speak of.

Eight full months passed from announcement to final comple-

tion of the transaction, which is nothing out of the ordinary.

After all, if nothing else this acquisition gives us access to US

orbital positions and frequency ranges. And in our sector, that

is what you might call raw material for future growth.

Was it easier as a ‘Luxembourgian’ company to purchase a company that is also strategically critical to the US?At the least, it was certainly not a disadvantage that we are

from one of the smallest countries in the world. In addition to

this, relations between the US and Luxembourg have tradi-

tionally been tension-free, unlike many other countries.

Was there any political support for the “2001 Deal of the Year”?

Acquisition of Americom Turned SES Group into Major

Global Player

Transatlantic Mergerby Andreas Holpert

Acquisition of the satellite division of

American conglomerate GE in 2001 turned

Luxembourg’s SES into a global heavyweight

‘overnight’ on the world market for satellite-

supported telecom services. In terms of

turnover, gross operating results, and number

of satellites in their fleet, SES, an exchange-

listed company, has become the largest

satellite operator in the world. In the

meantime, its geographic diversification has

become so advanced that SES, with Astra in

Europe and SES World Skies, bundling non-

European operations, is the only satellite

operator aside from Intelsat with global

coverage.

Of course. The government of Luxembourg is not in any way

involved, either directly or indirectly (via the SNCI or BCCE)

in the SES, nor does it actively intervene in the Board of Di-

rectors. Having said that, I would like to stress that we have

always been able to count on the support of the government

of Luxembourg in matters concerning SES’s strategic direction

and further development.

Did you experience any difficulties integrating their employees?From the very beginning of the transaction, we treated it

more like a merger of two successful companies, rather than

an acquisition. Americom was the market leader in the US,

as was Astra in Europe. What’s more, we were vocal from the

outset about retaining most of the Americom sites in the US,

and we put together a management team for the umbrella

group consisting of both Americans and Europeans.

Has the deal paid off, in retrospect? What is Americom’s share today?Americom was merged into New Skies Satellites, acquired

in 2006, and is now part of SES World Skies, which bundles

our non-European activities. That is why we no longer pub-

lish separate figures for Americom. However, we can say that

SES is now generating 44% of its approximately €1.6 billion

turnover outside of Europe. Just like the European market, the

North American market is currently exhibiting limited growth

in comparison to the ‘emerging markets’, or even no growth

at all. Nevertheless, the North American market is vital to us

and is an integral part of our global coverage: a worldwide

presence, something which only SES and our competitor,

Intelsat, can boast out of all of the satellite providers. Thus,

for instance, SES is sending TV program feeds to all US cable

networks, is active in the area of business applications, and

regularly collaborates with US government agencies on satel-

lite capacity planning.

In your opinion, what does the US mean for Luxembourg?The US has traditionally been a reliable partner to Luxem-

bourg, and since World War II it is been a friend above all.

“This acquisition gives us access to US orbital positions and

frequency ranges, which in our sector is what you might

call raw material for future growth,” explains SES President

Romain Bausch.

22

Luxembourg is a very attractive location for

North American companies, but it has not

always been easy for these companies to find

training and education opportunities for their

expatriates. However, that has changed.

Lifelong learning opportunities in Luxembourg

no longer have language barriers.

Training opportunities North American banks and financial institutions can find a

broad selection of seminars, trainings, and conferences in

English tailored for Luxembourg’s finance community. IFBL,

for example, is one of the largest providers of these training

opportunities, offering some certificates (e.g. Private Bank-

ing, Islamic Finance) entirely in English (www.ifbl.lu). Open

courses covering similar content can also be found at PWC

Academy (http://www.pwcacademy.lu). Training providers

primarily addressing the service and industry sectors, such

as Luxembourg School for Commerce (LSC) and Chambre de

Salaries, do not offer the same diversity and variety when it

comes to technical skills and management competencies.

However, it is worth reviewing their programs and that of

other management training institutions to see what is avail-

able (www.lifelong-learning.lu).

Higher Education in ManagementThe gap in management training is closed through certifi-

cate and degree programs offered from different Universi-

Luxembourg offers a wide range of training and

education opportunities for expatriates

From Pre-School to MBAby Petra Garnjost*

ties. The John F. Welch College of Business at Sacred Heart

University (SHU), is AACSB accredited and has been present

in Luxembourg for nearly 20 years. SHU cooperates with

Luxembourg-based North American companies providing

MBA and Certificate programs for working professionals. This

year, SHU has launched its post-crisis designed WelchMBA,

an 18-month part-time program. Current management

challenges are analyzed with a project-oriented, interdis-

ciplinary approach. In addition, 4 certificate programs are

offered in the areas of Leadership, Business Management,

Corporate Finance and Global Investments (www.shu.lu).

The Open University, one of the largest provid-

ers of blended learning programs, offers various

certificates, bachelor’s and master’s programs ex-

c lus ive ly in Eng l ish , on l ine (www.open.ac .uk) .

The University of Luxembourg offers a full-time “Master in En-

trepreneurship and Innovation” program, and a part-time MSc

Banking and Finance program (www.uni.lu).

Education for childrenAll families living in Luxembourg can enroll their children in

public schools. However, as Luxembourg is officially trilingual,

this can be quiet challenging for children advanced in their

schooling. There are three private schools in Luxembourg who

accommodate English speaking families, St George’s Interna-

tional School Luxembourg, the International School of Lux-

embourg (ISL) and the European School Luxembourg. These

schools offer curriculums, based on British/North American

educational systems for children aged 2.5 to 18 years.

* Petra Garnjost is director at Sacred Heart Universitiy in Luxembourg.

More pictures andbackground information:

24 Stunden am Tag, 7 Tage die Woche

This special edition about North American business

in Luxembourg is also available at the iTunes-Store

with the -app from October 20th onwards.

The first enduring agricultural colonization of New Neth-

erland began in the spring of the year 1623 under the

authority of the West India Company, as thirty families

emigrated from Amsterdam aboard the ship ‘New Niederland’

to the new world for that purpose. Cornelius Jakobsen May

led this expedition as the director of the new colony on Man-

hatas. The original intentions of the West India Company were

focused on trade purposes; however one had recognized the

need of establishing settlements for the promotion of the

same. The colonists who came over on the first ship accom-

panying director May were mostly Walloons, Luxemburgers

and inhabitants of other countries bordering on France, of

which eight families settled near Fort Orange, a few remained

on the island of Manhatas, others near Fort Nassau at the

South River and the remainder on the south side of the East

River, where Brooklyn lies today4.

Eickhoff did not give a source for his statement. The 1860

Gazetteer of New York states the following about the settle-

ment on the island of Manhattan:

A settlement was made upon Manhattan Island by a company

of Dutch traders, under the auspices of the West India Co., in

1612; but no permanent agricultural occupation began until

1623. During this year 30 families of Walloons from the Flem-

ish frontiers, and a number of domestic animals, were sent

The first immigrantby Fausto Gardini

For decades historians have speculated about

the identity of the first immigrant from

Luxembourg to the New World. Nicholas

Gonner1, Roger Krieps2, and others refer to a

statement found in a book by Anton Eickhoff3

published in 1884:

over to form the nucleus for the permanent occupation of the

country 5. Regrettably, some but not all the names of the 110

members of the thirty families who landed in the New World

aboard the New Niederland or Nieu Nederlandt are known.

Researchers from Luxembourg like to associate Philippe de

Lannoy (1602-1681), a confirmed ancestor of President Frank-

lin Delano Roosevelt, with the de Lannoy family of Clervaux,

Luxembourg, as the first Luxembourger to immigrate to North

America. Philippe de Lannoy, also referred to as Philippe de la

Noye, was born in Leyden, Holland in 1602 of French parents,

who had him baptized in the Walloon Church in 16036. He was

among the thirty-five passengers aboard the ship Fortune ar-

riving at Plymouth in November of 1621. To this day, a connec-

tion between the presidential ancestor and Luxembourg‘s de

Lannoy family could not be positively confirmed.

Actually, Luxembourg City-born Dr. Claude-Auguste Neyen

(1809-1882), identified the first Luxembourger to emigrate

to the New World in his remarkable work entitled Biographie

Luxembourgeoise, wherein he writes 7:

Hotton…….. native of the village by the same name in the Ar-

dennes8 lived towards the end of the sixteenth and the first

quarter of the seventeenth century. Admitted to the priest-

hood, he was a priest for some time, probably in his place of

birth. Later, he entered the Jesuit order, and went to the West

Indies, becoming its missionary9. Various documents confirm

Guillaume Hotton (1577-1629) traveling to the New World al-

lowing to locate his whereabouts there.

It is thus in 1616, one hundred and twenty-four years after

Christopher Columbus (1451-1506) discovery of America in

1492 that we find the first confirmed Luxembourger in the

New World. Two surviving letters by the previously mentioned

Father Martin (de/from) Bruges (Martinus de Brugis) contain

references to Guillaume Hotton. The first letter is dated Mex-

ico, February 20, 1617, wherein he mentions Father Guillaume

Hotton from the Gallo-Belgica province who left Belgium with

him. The second letter is dated Mexico, April 21, 1617. It men-

tions that Father Hotton resides at Cinaloa (Sinaloa)10. Two

letters by Guillaume Hotton himself are on record. The first

one is dated Mexico, October 24, 1617 and the second letter is

dated Cynaloa (Sinaloa), January 9, 161811.

1 Die Luxemburger in der Neuen Welt, Dubuque, Iowa 1889.

2 Luxemburger in Amerika, Bourg-Bourger, Luxemburg, 1962.

3 Translation. Original German text in: In der Neuen Heimath: geschich-

tliche Mittheilungen über die deutschen Einwanderer in allen Theilen

der Union; Steiger & Co., New York City 1884.

4 Some publications infer that the New Niederland or Nieu Nederlandt

arrived in the New World in 1624.

5 Historical and Statistical Gazetteer of New York State, R.P. Smith Pub-

lisher, Syracuse, 1860.

6 Franklin D. Roosevelt’s Colonial Ancestors, Alvin Page Johnson, Lothrop,

Lee & Shepard Co., Boston, 1933.

7 Biographie Luxembourgeoise. Histoire des Hommes Distingués Origi-

naires de ce Pays considéré à l’époque de sa plus grande étendue,

Pierre Bruck, Luxembourg 1860-1861.

8 Hotton near Marche-en-Famenne came to Luxembourg under Countess

Ermesinde (1186-1247). In the third partition of Luxembourg in 1839 the

area devolved to Belgium as the Province du Luxembourg Belge.

9 Original Text: Hotton …… originaire du village de même nom dans les

Ardennes, vivait vers la fin du seizième et le premier quart du dix-sep-

tième siècles. Admis à la prêtrise, il fut pendant quelque temps curé,

vraisemblablement de son endroit natal. Plus tard, il embrassa l’ordre

des Jésuites et passa dans les Indes occidentals, dont il devint l’apôtre.

L’auteur du manuscrit des Viri illustres repète les mêmes faits dans les

termes suivants: ‘Hotton ex eodem pago in Arduenna Luxemburgica

et ex pastore animarum in Soc. Jesu missus in Indiam occidentalem

precibus multis impetratam illius apostolus.

California

Washington

Texas

Kansas

Florida

Rhode IslandNew Jersey

Delaware

New YorkMichigan

Ohio

PennsylvaniaVirginia

Minnesota

Ontario (Canada)

Préizerdaul

Differdange

Luxembourg

Kehlen

Windhof

RodangeFoetz

Esch/Alzette

Wormeldange

Colmar-Berg

Bascharage

Dudelange

Grevenmacher

Capellen

Hesperange

Munsbach

Contern

Bettembourg

AIRTECH EUROPE S.A. Manufacturing of vacuum bagging materials, composite tooling materials

68 AIRTECH ADVANCED MATERIALS GROUP

AMAZON Services Europe S.à r.l.

Sales of various products and services on the world wide web

72 Amazon.com Inc.

AMER-SIL S.A. Industrial battery separators and non-woven polyester gauntlets

74 THE MOORE COMPANY

AMPACET EUROPE s.a. European headquarters 80 AMPACET CORPORATION

AVERY DENNISON LUXEMBOURG s.à r.l.

Base materials for self- adhesive applications

390 AVERY DENNISON MILLER CORPORATE CENTER

CALUMITE s.a. Raw material for the glass industry

19 CALUMITE INTERNATIONAL Inc.

CISCO SYSTEMS Luxembourg Networking and Communication devices

10 CISCO SYSTEMS Inc.

DELPHI AUTOMOTIVE SYSTEMS LUXEMBOURG s.a.

Technical center: development of automotive systems and components

690 DELPHI CORPORATION

DIGITAL RIVER INTERNATIONAL s.à r.l.

Internet software and services

5 DIGITAL RIVER Inc.

DU PONT DE NEMOURS, (LUXEMBOURG) s.à r.l.

Typar® 1.207 E.I. DU PONT DE NEMOURS AND COMPANY

DU PONT TEIJIN FILMS LUXEMBOURG s.a.

MYLAR, MELINEX polyester films

E.I. DU PONT DE NEMOURS AND COMPANY

DYNABRADE EUROPE s.à r.l. Industrial tools 21 DYNABRADE Inc.

EXXONMOBIL CHEMICAL FILMS EUROPE, division de EXXON-MOBIL

European headquarters, films division

112 EXXONMOBIL Corp.

GOODYEAR S.A.GOODYEAR Luxembourg s.a.

Tire technical centermolds, steelcord

3.229 THE GOODYEAR TYRE AND RUBBER COMPANY

GUARDIAN LUXGUARD I s.a. Floatglass, coated and tem-pered glass

351 GUARDIAN INDUSTRIES CORPORATION

GUARDIAN LUXGUARD II s.a. Floatglass, tempered, mirror and laminated glass

284

GUARDIAN EUROPE s.à r.l Management of participa-tions, ancillary activities

30

CENTRE LUXEMBOURGEOIS DE RECHERCHE POUR LE VERRE ET LA CÉRAMIQUE (C.R.V.C.) s.a.

Engineering, research and development for the glass industry

39

GUARDIAN AUTOMOTIVE-EUROPE s.a.

Automotive glass 523

GUARDIAN LUXCOATING s.a. Coated glass 80

Hewlett-Packard Luxembourg s.c.a.

41 Hewlett-Packard Company

HUSKY INJECTION MOLDING SYSTEMS s.a.

Injection molding systems 816 HUSKY INJECTION MOLDING SYSTEMS LTD

IBM Belgium s.p.r.l. 91 International Business Machines Corp.

iTunes Store s.à r.l. Software applications, Digital media applications

6 APPLE Inc.

MULTISERV s.a. Services for the steel industry 169 HARSCO Corp.

JOHN ZINK INTERNATIONAL LUXEMBOURG s.à r.l.

Industrial burners, flares, thermal oxidizers

232 KOCH CHEMICAL TECHNOLOGY

LUXPET s.a. PET performs and injection moldings

83 PLASTIPAK HOLDINGS Inc.

MASCO EUROPE s.à r.l. Management of the group’s European activities

25 Masco Corp.

Verizon Business BelgiumLuxembourg s.a.

59 Verizon

MICROSOFT LUXEMBOURG s.à r.l.

Computer software and hardware products

12 MICROSOFT CORPORATION

MOOG HYDROLUX s.à r.l. Precision motion control components

92 MOOG Inc.

Paypal (Europe) s.à r.l. Paypal

CATALYST RECOVERY EUROPE s.a.

Regeneration and presul-furization of petrochemical catalysts

47 THE ALUCHEM GROUP LLC

Rovi International Solutions s.à r.l.

Digital entertainment services

n.i. Rovi International Solutions

VIKING s.a. Fire protection sprinkler products, security seals

46 THE VIKING CORPORATION

Calif

products, security seals

Source: Ministery of the economy and foreign trade, Luxembourg for Business. This list is not exhaustive.

Name Products Employment Parent Company

J.P. Morgan Bank 503

John Deere Bank 51

The Bank of New York Mellon 181

State Street Bank 558

Brown Brothers Harriman 391

Name Employment

Citibank 235