There is a lot of talk on TV about a welcoming culture. But in the real life of German industry, a farewell culture is developing. There are many quiet farewells. No politicians or pastors appear at the requiem. There is no crying and no speaking. Most of those who walk walk silently.
After the mass extinction of the German textile industry, in which almost half a million jobs were lost, the relocation of the large shipyards and the bankruptcy of Bremer Vulkan and others, the colliery collapse in the Ruhr area and the shrinking process in the steel industry, the next big wave has gripped the country, which will lead to the destruction of wealth and jobs.
There are essentially three reasons that have triggered this renewed company death or the migration of production:
Holger Loclair is worried about his family business Orafol, based in Oranienburg in Brandenburg. Because it consumes around 32,000 cubic meters of gas per day – around 16 times as much as an average household in a year. Due to the enormous increase in costs, he wants to set up part of the production for high-quality foils in the USA, which he actually planned for Germany.
The man is the role model of the new wave of German emigration. According to a survey by the German Chamber of Industry and Commerce (DIHK), 17 percent of companies want to reduce their domestic production due to high energy prices, and eight percent want to relocate production. DIHK General Manager Martin Wansleben is not an apocalyptic, but he says: “The situation in our economy is dramatic.”
Siegfried Russwurm, President of the Federation of German Industries (BDI), also warns of creeping deindustrialization. The industrial share of gross value added in Germany has fallen from 25.9 to 23.4 percent since 2016 – “a worrying development”.
The European tendency towards political regulation – which is driven by the fear of risks – drives research-intensive companies in particular to go abroad. In the boardrooms there is no longer any nagging, it is being relocated. So the future of the drug business for Bayer AG lies in the US and China, rather than in Europe. Stefan Oelrich, head of the pharmaceutical business at Bayer, says: “We are shifting our commercial footprint and the resources for it significantly away from Europe.”
The vaccine developer BioNTech is also rethinking. The pharmaceutical company from Mainz is considered a German success story, within a year the founders Uğur Şahin and Özlem Türeci developed a corona vaccine – and were awarded the Federal Cross of Merit for their work.
But important parts of the company’s cancer research will soon be relocated to the UK, the BILD newspaper first reported yesterday. Türeci explains: “In research and development, BioNTech relies on the strengths of the respective countries.”
The USA is pushing and enticing more and more German companies to relocate production. In addition to being close to the market and minimizing currency risks, the low energy prices and the promised subsidies have become factors in the transatlantic shift.
RWE wind power plants will soon appear on the horizon off the west coast of California. At the end of last year, the Essen-based energy group secured the rights for a wind farm that is intended to supply 640,000 US households with renewable energy.
RWE has succumbed to American temptation. There are tax credits of up to 30 percent for offshore wind farms under the Inflation Reduction Act. A total of around 370 billion US dollars in subsidies are planned for the energy sector and climate protection. There isn’t an energy-intensive German company that doesn’t internally assess the chances of this attracting premium for itself.
Siemens Gamesa and the tube manufacturer EEW are also in the process of setting up plants in the USA. Because the tax advantages only apply if a certain proportion of the components are built in the USA. The US boss of Siemens Gamesa, Steve Dayney, explains: “In the next five to ten years the industry will invest 100 billion dollars and we will be part of it.”
Meanwhile, delegations from US states are traveling through Europe to advertise the terms of the Inflation Reduction Act. Justin Kocher, JobsOhio’s director of international operations, says, “I don’t think we’ve ever courted companies as hard as we do now.”
Gunter Erfurt, managing director of Meyer Burger, a Swiss-based manufacturer of solar panels, knows what’s going on: “If the EU doesn’t come up with something similar (like the IRA), we will grow outside of Europe.”
Conclusion: The federal cabinet – which lovingly takes care of orchid issues such as cannabis approval or the “Federal government’s concept for improving the representation of East Germans in management positions in the federal administration” – should deal with the new German farewell culture. You have to expect answers from the annual economic report that Robert Habeck wants to present today.
Gabor Steingart is one of the best-known journalists in the country. He publishes the newsletter The Pioneer Briefing. The podcast of the same name is Germany’s leading daily podcast for politics and business. Since May 2020, Steingart has been working with his editorial staff on the ship “The Pioneer One”. Before founding Media Pioneer, Steingart was, among other things, Chairman of the Management Board of the Handelsblatt Media Group. You can subscribe to his free newsletter here.
