German industrialists fear wild deindustrialization
In Germany, as FT reports , bad weather is blowing for entrepreneurs.
Gunnar Groebler, CEO of the Salzgitter steelworks, which two years ago became part of Germany's second largest steel producer, told the Financial Times that if producers of materials necessary for industry, such as steel or chemicals, were to leave the region due to the high costs of energy, "there would be the risk of losing the entire value chain" of production. This would mean a rapid deindustrialization of Germany, as happened in Italy.
His comments come as 32% of industrial companies surveyed in August told the German Chamber of Commerce and Industry (DIHK) that they preferred investment abroad to domestic expansion – double the 16% identified in the survey from the previous year – amid concerns about a future without cheap Russian gas.
“If I were to follow this example, then we will deindustrialize the country,” Groebler said, adding that “from a social point of view, I think we as an industry also have a responsibility.”
The comments come in a difficult month for German industry, as several large climate-related projects, such as long-overdue rail infrastructure investments, have been thrown into doubt after the government froze payments from a climate fund. climate and energy transformation. The freeze followed a ruling by Germany's Supreme Court that the 60 billion euros set aside for the fund, designed to help decarbonise the industry, was illegal.
Groebler confirmed that €1 billion in grants promised by local authorities to help Salzgitter build plants capable of running on both gas and cleaner hydrogen had been secured, despite problems with the climate fund. However, the problem will arise for the subsequent investments of this group and other energy-intensive companies.
The German steel industry is betting big on future European demand for so-called green steel, investing billions of euros in a transition that will lead it to replace gas furnaces with technologies based on clean hydrogen and electricity.
Salzgitter, which is based on the outskirts of the city of the same name where it employs 5,500 people, has banked on the future of carbon-reduced steel and has promised to no longer use coal in its production by 2033, when it expects to have reduced its carbon footprint of 95%.
However, this conversion towards green steel requires enormous investments and the results are uncertain: in fact "Green" steel could also be produced outside the EU with lower costs, for example where there has been intensive investment in nuclear energy. Furthermore, the cost-effectiveness of these investments on international, non-European markets remains to be demonstrated. This steel may simply be too expensive, however,
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The article German industrialists fear wild deindustrialization comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/gli-industriali-tedeschi-temono-la-deindustrializzazione-selvaggia/ on Mon, 27 Nov 2023 08:00:07 +0000.