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11 Feb, 2024 13:59

German industry ‘moving abroad’ – Bild

A growing number of manufacturers are relocating operations outside the country, an industry lobby warns
German industry ‘moving abroad’ – Bild

One in three German manufacturers is considering moving production to other countries amid economic troubles, double the number recorded in 2022, Bild news outlet reported on Saturday, citing Siegfried Russwurm, the head of the Federation of German Industries (BDI).

According to the report, among the latest firms planning to relocate is household appliance manufacturer Miele, which plans to cut 2,000 jobs in Germany and move 700 positions to its site in Poland. Heating manufacturer Viessmann had already moved 3,000 jobs to Poland.

Volkswagen said last year that it would build a new battery factory in the US, and BASF announced plans to invest €10 billion in a petrochemicals plant in China amid job cuts at its headquarters in Germany. French steel pipe manufacturer Vallourec shut down production in Germany in September last year, while tiremaker Michelin and its US rival Goodyear said they would also close their German plants by the end of 2025.

Russwurm says that a growing number of companies have reported that their “patience with Germany is at an end.” According to him, the slowdown in economic growth and high rates of inflation, especially with regard to energy, have resulted in less investment, and Berlin lacks a strategy to turn the situation around. This in turn leads to a gradual decline in manufacturing, he said, and while existing production lines may continue to operate for a while, “new ones are no longer being built in Germany.”

Many companies point to the high energy prices, which soared after Germany lost access to Russian natural gas in 2022, as one of the major causes of their problems. This was exacerbated by Berlin’s decision to phase out nuclear energy and coal and switch to renewables, which, according to Russwurm, put manufacturers working in Germany at a significant disadvantage compared to other industrialized nations.

“Nobody can say with any certainty today what our energy supply will look like in seven years’ time, and that’s why no one can say how high energy prices will be in Germany then. For companies that have to make investment decisions, that is absolutely toxic,” he said in an interview with the Financial Times earlier this week, adding that the government is making mistakes regarding its energy policy with its ambitious climate agenda, which aims to achieve carbon neutrality by 2045 and switch 80% of power output to wind and solar energy by 2030.

“Companies are saying they are finding it increasingly difficult to do any long-term planning. They have great doubts about continuing to invest in Germany under these conditions. The conditions are better elsewhere. And they’re going abroad,” Russwurm said.

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