Will the green energy transition lead to the deindustrialization of Germany?
The German economy and industrial system are losing their primary characteristics and therefore foreign investors are starting to stay away from it.
Toralf Haag, chairman and CEO of the global technology company Voith Group, discussed Germany's problems with the newspaper Die Wel t.
He explained that Voith Group, which mainly operates in the energy, automotive and paper sectors, has so far been able to protect itself from the technical recession Germany entered in the last quarter, but also expressed its concern about the country's direction in terms of competitiveness, energy policy and attractiveness for foreign investment.
Haag described Germany's aggressive energy transition from traditional power generation such as coal and nuclear to renewables as "problematic".
“ There are ambitious goals, but just insufficient incentives and support to be able to achieve these goals. What we need is less bureaucracy, faster approval procedures and faster implementation. The way it works currently, it won't work in the long run ,” in his own words.
“ Investment decisions in Germany are becoming increasingly difficult ,” he said when asked how comfortable he feels operating from his company's German headquarters in Heidenheim.
“To be honest, at the moment we tend to choose Eastern Europe, Asia or the United States when it comes to new production plants because energy and personnel costs are particularly high in Germany while at the same time bureaucracy and regulation are increasing ”.
He explained that his company had to hire 30 new administrative employees in the past two years alone just to deal with new regulatory obligations introduced due to increased red tape.
“ I would like to invite ministry employees to check what effect their specifications have directly within a company, if they are workable and sensible. In order for Voith to be able to make significant investments in Germany again, the framework conditions have to change radically. Unfortunately, I don't see it at the moment ,” he added.
Haag described the danger of deindustrialization and German production relocation as very great. If the head of the project can remain in Germany, production will go abroad, between Eastern Europe and the Far East. A process that in Italy we know very well. But the process is very dangerous for the economy of a country which loses its basic technical skills and knowledge.
“As a result, the German economy is not only losing its DNA, but also any potential for the future. With its well-paying jobs, industry is the guarantor of prosperity. The prosperity achieved so far cannot be maintained with administrative jobs and the service sector alone,” he added.
Haag's concerns are supported by troubling data and reports on the state of German industry, generally revered as the backbone of the country's economy.
Last week, a survey by the Federal Association of Medium-Sized Businesses (BVMW) revealed that 26% of all midsize company directors have considered closing their business, while 22% have expressed interest in moving their businesses overseas. So 48% of the average German entrepreneurs, almost one in two, are considering whether to close or leave. Things don't work out
The directors cited excessive bureaucracy and tax burden as reasons for their dissatisfaction. It really feels like being in Italy, doesn't it? But this situation is precisely the result of the current traffic light government, concentrated against "Climate change" and a misunderstood social justice.
Similarly, factory orders and industrial production fell significantly in the first quarter of 2023, including a 10.7% month-on-month decline in March , the largest month-on-month drop since 2020. Manufacturing PMI is at its lowest since Covid
The German government no longer retains companies and does not control inflation. These are the results when the helm is left in the hands of demagoguery, and changing course will be very difficult.
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The article Will the green energy transition lead to the deindustrialization of Germany? comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-transizione-energetica-green-portera-alla-deindustrializzazione-della-germania/ on Tue, 25 Jul 2023 09:00:43 +0000.