As of: April 6, 2024, 9:45 a.m
By: Amy Walker
Comments
Press
Split
These are difficult times for the German economy. There has been talk of creeping deindustrialization for some time now. How many companies are really leaving right now?
Berlin – The economic mood in Germany could hardly be worse: after a decade of boom and a growing economy, the tide is beginning to turn. Germany is becoming less attractive as a location with its high taxes, high energy prices and excessive bureaucracy. In addition, countries like the USA are attracting numerous companies to the country with investment programs such as the Inflation Reduction Act, and many German companies are now also involved.
In view of this, we are reading more and more about “de-industrialization” in the country and about companies turning their backs on this country. According to experts, this will only increase in the next few years.
Miele, Stihl, Volkswagen & Co: Companies are cutting jobs and relocating production
“The de-industrialization of Germany is in full swing,” said Harald Müller, managing director of the Bonn Business Academy (BWA), to the trade magazine
produktion.de
a few weeks ago. “It’s no longer a question of
whether
, but rather just a question
of how
and
how quickly
,” he adds. Many companies have long recognized the challenges that the energy transition will pose to the country - and are protecting themselves from them by moving abroad. He assumes that entire sectors of the economy will disappear completely from the country.
This development can already be seen. In recent weeks and months there have been numerous reports of job cuts in the automotive industry, particularly among suppliers. These include Continental (7,000 jobs cut, location closures), tire giant Michelin (1,500 jobs), ZF Friedrichshafen (closure of a location) and Volkswagen (cost reduction by 20 percent by 2026).
But other industries are also affected: the traditional German companies Miele and Stihl both want to focus more on foreign locations in the future. However, both companies reiterated their fundamental loyalty to the location and do not want to close any plants in Germany - at least for the time being. The closure of the German factory of the solar manufacturer Meyer Burger, which decided to move to the USA due to competition from China, also caused waves.
Foreign investments are plummeting
In addition, foreign companies are investing less and less in this country. According to a study by the German Economic Institute in Cologne (IW), the amount of direct investment from abroad was around 22 billion euros in 2023, the last time it was less ten years ago. For comparison: in 2018 and 2020, around 140 billion euros flowed into Germany through investments by foreign companies.
“Politics make it anything but attractive for companies to invest in Germany,” said IW economist Christian Rusche. One reason for this is that funding programs - such as those for electric cars or energy-efficient construction - would be stopped at short notice. Politicians must drastically improve investment conditions, otherwise “de-industrialization could accelerate significantly.”
The sun shines behind a column for phenol production at Domo Chemicals GmbH. © Jan Woitas/dpa
My news
Long imprisonment threatens: proceedings against Scheuer regarding the toll disaster probably shortly before the decision is read
Many pensioners are entitled to more pension points - but these are only available upon application
Satellite images reveal: Russia is arming Black Sea ports against drone surveillance
Putin spokesman threatens NATO: “At the level of direct confrontation” read
600 million scandal in Italy: Fraudsters buy villas, jewels and luxury cars with EU funds
“To knock into the bin” – outrage over strict Rewe rules for employees
For the third year in a row, foreign companies in this country have invested significantly less than German companies abroad. Although the situation with energy costs has eased somewhat after the turbulence of recent years, net outflows from Germany remain high at 94 billion euros. Since 1971, more money has only flowed out in 2021 and 2022. The accumulation in recent years shows that these were not just isolated cases or catch-up effects, but that a deeper development could be suspected, said Rusche. This is “a warning signal”.
Traffic light saves on digital budgets and start-ups
The federal government has also heard the signals. But the traffic light coalition always finds it difficult to take the right measures. This became particularly clear with the Growth Opportunities Act, which could only be passed six months late after a tough struggle. The volume of relief provided by the law shrank noticeably in mediation proceedings. Federal Economics Minister Robert Habeck (Greens) announced: “The law was just a beginning. Further growth impulses are necessary, and we are working on that in the government.”
In addition, there is little discussion about how Germany could attract new economic sectors; it is often about retaining old industries. The fact that energy prices will most likely always be higher here than elsewhere should actually lead to acceptance: energy-intensive industries will (have to) go. Promoting a lively start-up culture and investing in digitalization would be important levers to attract a new generation of companies.
Instead, the traffic light government has made cuts in exactly these areas: subsidies for start-ups are being cut from 25 to 15 percent and the digital budget has been cut from 377 to 3.3 million euros. Future coalition? None.
With material from dpa