The traditional heating engineer Viessmann goes to the USA.
Prof. Jens Südekum from the University of Düsseldorf explains what role the traffic light energy transition plays in this.
Munich - With its heat pumps, the well-known German heating engineer Viessmann actually plays a central role in the energy transition of the traffic light.
But only a few days after the cabinet gave the green light for the heat transition by Economics Minister Robert Habeck (Greens), the Hessians approved a multi-billion takeover by the US giant Carrier.
In an interview, the economist and energy expert Prof. Jens Südekum from the University of Düsseldorf explains why Viessmann is up for sale, what role the energy transition plays in this and how great the risk is that Habeck will still cash in on the deal on the home stretch.
Prof. Südekum, the German heating system manufacturer Viessmann is going to the US group Carrier. A traditional German company that is more than 100 years old is changing hands. how sad are you
I'm already seeing the deal with tears in my eye, also because a large German medium-sized company obviously doesn't have the confidence to become the green champion on its own and to keep control of the company's fortunes.
But from the family's point of view, the sale is certainly understandable at this point in time.
Why?
The profits that can be achieved with heat pumps on the market are currently at their peak and will probably tend to decline in the coming years because the competitive pressure on the market is likely to increase sharply in the future and profit margins will come under pressure as a result.
In this respect, the sale now comes at the best possible time.
Especially since you now need capital for the expansion in order to be able to scale and keep up with the Asians who are pushing into the German market.
What role does the federal government’s heat transition play in the sale?
The heat transition is heating up the market for heat pumps extremely - whether it's the planned ban on oil and gas heating or the planned financial subsidies for heat pumps.
This now makes the German market very interesting for companies from Japan, China and South Korea.
However, the good news from a consumer perspective is that the price of heat pumps will probably fall significantly in the foreseeable future.
What scale are we talking about here?
You can hardly say that seriously.
But maybe this much: With the photovoltaic systems, there were price drops of 80 to 90 percent due to the scaling and the higher competitive pressure.
For heat pumps, scaling and competition will also put a lot of pressure on prices.
So should consumers just wait and see?
I'm not an energy consultant (laughs).
But if I don't have any pressure, I would actually wait another year or two, because the mechanisms should only kick in gradually.
In the very short term, prices could even rise because some homeowners want or have to order now and we still have ailing supply chains, longer waiting times and fully booked craftsmen.
In addition to Viessmann, other large manufacturers such as Buderus or Vaillant are also active in the market. Will they be able to hold their own against the onslaught of cheap competition from the Far East?
First of all: Viessmann heat pumps will not disappear from the market with the takeover.
The production should even be expanded.
In the case of jobs, too, an increase rather than a reduction is to be expected.
To this end, the company is currently setting up production in Poland.
And as far as the other two German manufacturers are concerned, I very much hope that they will not decide to sell, but to expand by raising capital and expanding production capacities.
How is that supposed to work given the looming cheap competition?
One way in the fight with cheaper suppliers from Asia could be that German manufacturers do not rely on run-of-the-mill standard products, but also occupy the quality segment, similar to other markets.
So: be better than the competition, but also a bit more expensive.
In other markets, Germany does not rely on the mass production of cheap goods, but on quality - whether it's cars or steel.
The situation with heat pumps is reminiscent of the German solar market after the turn of the millennium. After a state-sponsored boom, the German solar industry was finally squeezed out by heavily state-subsidized manufacturers from China. Is there a threat of a similar development in Germany?
I still don't see this trend.
After all, Viessmann is not going out of business with heat pumps.
But you have to keep a very close eye on this development.
Should domestic production one day be severely reduced and massive jobs disappear, alarm bells would ring for me.
At that time, the suppliers of solar panels were massively subsidized by the Chinese government.
We don't currently have that with heat pumps.
But if the production of heat pumps reaches the mass market in this country, we have a problem.
As a rule, we cannot produce such standard products at competitive prices in Germany.
We should therefore be careful not to make the same mistakes that we made in the solar industry,
which in the end then completely disappeared from Germany – not only the production and the jobs, but also the entire research and development in the area.
That's all in China now, including the know-how.
That shouldn't happen with heat pumps.
We would do well to keep at least research and development for heat pumps in Germany in the long term so that we can also develop the heat pumps of tomorrow here.
This is not possible without a certain level of production.
to keep at least the area of research and development for heat pumps in Germany in the long term, so that we can also develop the heat pumps of tomorrow here.
This is not possible without a certain level of production.
to keep at least the area of research and development for heat pumps in Germany in the long term, so that we can also develop the heat pumps of tomorrow here.
This is not possible without a certain level of production.
Federal Minister of Economics Robert Habeck wants to take a close look at the planned sale. Could the deal still tip over?
In the Viessmann case, the Federal Minister of Economics could use the Foreign Trade Act.
But I don't think he will and I wouldn't advise him to.
The case might be different for a Chinese investor, but for a US investor with a strong merger component, I see no reason to block the takeover.
In the long term, however, we should actually ensure that the value added in the R&D area for heat pumps is kept in Germany.
We also have the necessary instruments for this, for example through subsidies, just think of the Important Projects of Common European Interest.
There are EU subsidies for semiconductors or battery cells.
I could also imagine such a regulation for high-tech heat pumps.
