Holy Roman Empire - Chapter 444

Chapter 444: Chapter 17: The Battle of Ideas

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News of the establishment of a heavy industry power province in the Bosnia and Herzegovina Province immediately caused a sensation in capital circles.

Laymen watch the bustle; experts watch the doorway.

Heavy industry has always involved major investment and sustained it long-term. It’s normal for it to take several years, even decades, to recoup costs.

Similarly, once this industry grows, the profits gained are also much higher. This threshold alone eliminates most competitors; heavy industry companies face far fewer rivals compared to other industries.

Currently, Austria’s economy has just emerged from a crisis and is in a phase of rapid development, with a substantial increase in demand for steel and copper, resulting in a supply not meeting demand.

In theory, as long as these two products are produced, there is no worry about not being able to sell them. However, this is the modern era; entering this industry doesn’t yield results in just a day or two.

Based on past experience, from finding suitable factories to product launch, it would take at least two to three years.

In fact, the required time is longer. Not to mention the preliminary internal preparations, such a large investment must organize professionals for mining exploration and also include a comprehensive cost assessment. Consideration for transportation logistics and market analyses are indispensable too.

In this era, there are not many professional agencies to handle the tasks; investors themselves must organize and judge everything. Even that’s not enough. Even if one were to take out loans from banks, the initial cost investment would amount to at least hundreds of thousands of Divine Shield.

It can be said that from the beginning, most people are eliminated from the competition. Those without money, stay away; this industry is the arena of capital giants, and small workshops no longer have room to survive.

Snatching something out of thin air is impossible; banks are privately owned, each one stricter than the last with their vetting procedures. Without collateral, nobody should even think of borrowing huge sums of money.

And in this era, heavy industry investment has climbed into the millions of Divine Shield; spending tens of millions is not out of the question.

The most valuable are not the machinery and equipment but the mines that produce raw materials. Austria is not short of cheap mines, however, being cheap also means that the difficulty in mining significantly increases, or in other words, these are poor mines with certain mining value.

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Experienced practitioners know that this bargain cannot be taken. If production costs cannot be controlled, an economic crisis would spell disaster.

As for operating mines and smelting plants separately, that’s not an option; now the trend is groupization and industrial chaining, generally offering services ranging from upstream raw material production to downstream product sales.

Industry segmentation only occurs when local raw materials are depleted, necessitating external purchases. This significantly increases costs, which capitalists dislike.

The biggest problem with France’s industry is that it needs to import coal from the outside, increasing industrial costs. This is also why Napoleon III has his eyes on the Rhineland region.

Vienna Starbucks Club — from the name alone you know it’s the result of Franz’s quirky taste, preempting the establishment of well-known companies from his memory.

Of course, many might have undergone changes; time has passed too long, and memories can become mistaken. Sometimes, through hazy memories, businesses with the same name may have entirely different scopes of work.

Michelin could become an ice cream brand, Bigui Garden could turn into a certain park; there are many playfully misused brand names, which would surely confuse any other transmigrators that might emerge.

These changes are destined to be unknown. Inside the private rooms, several middle-aged men are playing bowling while chatting on the side.

A middle-aged man throws his ball and, laughing, asks, “Thor, are you really going to invest in heavy industry in the Bosnia and Herzegovina Province?”

Thor smiles slightly and says, “Strike, Wells, your skills have improved again.”

He steps forward and throws his own ball; after sighing, he adds,

“That’s right, I do have such plans. The majority of industries at home are already saturated, and while emerging industries seem lucrative, we’re not cut out for it.

The Austrian New Energy Power Company has too great an advantage; if we join now, we can only scrounge a living following them.

Sticking to the financial sector isn’t reliable either, as overly concentrated investments have too low a capacity to withstand risks. Though heavy industry requires large initial investment, it also has great developmental potential.

Compared to emerging industries, these technologies are already mature. As you know, I still hold a steel factory that’s half-dead; entering this industry isn’t without some foundation.”

The men present are all shareholders of the Austrian Savings Bank and also behind-the-scenes bosses of several securities companies; some have even completed a transition in status, obtaining noble titles.

Yet, these influential figures also sense crisis. As financial order becomes more regulated, the risks of manipulating the stock market are increasing.

As part of the newly elevated nobility, they too are mindful of their reputation. No one wants to have laboriously entered high society only to immediately suffer disgrace.

It’s important to note that their lifetime nobility titles also have other names: quasi-nobility or probationary nobility.

Typically during this stage, the old nobility scrutinizes them. Any slip-up can quickly lead to their downfall.

A noble title in Austria doesn’t come cheap; buying a noble title with money could cost a few tens of thousands of Divine Shield on a good day, or it might result in a few million Divine Shield down the drain on a bad day.

The Military Merit Ennoblement System, for these money-spending players, is full of discrimination. Going in groups to colonies to farm military merits won’t place all the credit on the behind-the-scenes bosses, as subordinates will also share in the spoils.

If one seeks a noble title domestically, the difficulty is even greater. Only by making a significant contribution to society and gaining Franz’s recognition is it possible to obtain a title of nobility.

In the many years since Franz ascended the throne, only two capitalists have accomplished this feat. In contrast, more than twenty scientists have obtained noble titles due to their technological inventions.

Wells shakes his head and says, “Thor, you’re too optimistic. I think mining for salt in the Bosnia and Herzegovina Province may be more lucrative than heavy industry, at least it pays back faster.

The leader in heavy industry is the Austrian Steel Group, and this state-owned enterprise’s advantage is too great, monopolizing nearly half of the country’s steel production.

It’s too difficult to topple them, unlike other industries. Even the newly rising Austrian New Energy Power Company doesn’t have such an overwhelming advantage.”

Thor once again threw the bowling ball in his hand and said, “It seems that it is very difficult for us to persuade the other party.

The Austrian New Energy Power Company relies on a win-win cooperation model, conquering lands across the European Continent, even in the United Kingdom and France they have a significant market share.

Although this share is all potential, they have already established a system, and most power companies have become their strategic partners, which will become reality as long as no accidents happen.

Once copper production increases and the cost of electric equipment decreases, most of Europe’s power supply will be monopolized by this alliance, and I don’t think the power company you are tinkering with will be able to break through.

On the contrary, the Austrian Steel Group is easier to deal with, they are state-owned, and apart from normal commercial competition, they will not exterminate us completely.

Before the supply and demand relationship changes, there will not be direct conflicts. That much time will be enough for us to grow and strengthen.”

This is a fact. The monopoly established by the Austrian New Energy Power Company is mainly in the standard system, and they incidentally promote their equipment.

In the subsidiaries established everywhere, the Austrian New Energy Power Company does not hold the dominance, most of the shares have been distributed, and in some regions, it is purely technical equity participation.

This is the advantage of holding core technology, even if one is not the majority shareholder, the influence in the company is still not low, there is no need to worry about being squeezed out.

For latecomers, it is very difficult to break this monopoly. The biggest problem is that they lack core technology and cannot breakthrough patent barriers.

No one knows when they will be able to develop another system. The market waits for no one, once standards are popularized, it will be difficult to get involved.

It’s not a question of feasibility to dismantle an already installed power network and replace it with their new technology standards. The question is why everyone would make the switch.

Without sufficient benefit, who would abandon the mature equipment and switch to new electric power equipment that has not been tested.

Unless they can come up with a new technology system before the technological popularization and have achieved success in practice, only then do they have the capability to compete.

Wells waved his hand and displayed an innocent expression, saying, “Alright, I give up on persuading you. But my friend, who told you that I was going to compete with them?

It’s true that I have invested in an electric power company, but the gap in strength between us is too large. To jump into the pitfall of the power supply system would only make us cannon fodder.

According to what the engineers say, not to mention bypassing patent barriers, even without patent constraints, it would take three to five years to even imitate their technology.

It’s a complete technological system, not merely a single technology. Any missing link would make it unworkable. Otherwise, the British and French would not have bought patent licenses but started all over again.

The power company I have invested in is researching the application of electric power in industry, using electric machinery equipment to replace the steam engines currently on the market. We are not competitors at all.”

Theoretically, these technologies have unlimited potential. However, the investment required is not a small sum. Wells’s attempt to convince Thor is actually also a matter of financing.

It’s not that he doesn’t have the money, but mainly that new technology development is full of uncertainties, and he needs to find someone to share the risk.

From the current market situation, these new technology enterprises have the shortest lifespan and are the main force in reducing the average lifespan of Austrian enterprises.

In comparison, traditional enterprises have much stronger vitality, and surviving for twenty to thirty years is normal, with numerous centennial legacy companies.

After all, traditional industries involve tangible assets that can be sold on. Many companies have changed hands multiple times and still survive.

In contrast, high-tech innovation industries are different. If the enterprise is lucky and develops a new technology, then the business still has value; if not, a company without results is worthless.

Companies without results do not survive long. Investors’ patience is limited, and no one waits for them to take ten years to sharpen their sword.

The shortest-lived tech companies only have a few months of existence. If they are working on developing a certain technology and a competitor comes out with the results first, they will be abandoned by investors as devoid of potential.

The capital market is so cruel — survival of the fittest.

It’s not surprising that capitalists are reluctant to invest in new high-tech industries. Not only is the risk big, but even the results developed might not necessarily have commercial value.

As a result, the technological inventions and innovations of the 19th century were mostly driven by individuals. Only when there were results did capital rush in to promote the technological revolution.

If it weren’t for the Austrian New Energy Power Company’s sudden emergence and the creation of the City that Never Sleeps in Vienna, showing the importance of electricity, the power industry would not have received such fervent capital enthusiasm.

Even so, capitalists are still finding ways to reduce risk. This is also why the strategic expansion of the Austrian New Energy Power Company has been so smooth.

The dispute between the two is a clash of investment philosophies; there is no right or wrong, only what is suitable or not.

The fact that they did not enter the light industry fray speaks volumes about their foresight. Of course, the economic crisis that just ended should also be an important factor.

Capital does not avoid risk, but capitalists have an instinct to do so. In industries where overcapacity has occurred, everyone knows that those are sunset industries.

Sunset industries struggle to survive, and it’s obviously impossible for them to earn huge profits.

Seeing the situation turning somewhat awkward, their colleague Laurence Lovsky changed the subject, “It’s almost 12 o’clock, we should have lunch. I think the beef at the restaurant next door is not bad, how about we try that?”

Thor laughed and said, “I prefer their roast goose. What about you all?”

…