Bloomberg says that rising energy costs have led to the closure of factories and the transfer of production lines abroad
Germany's era as a great industrial power is “It's almost over” The loss of cheap Russian natural gas amid the Ukrainian crisis has exacerbated the problem “finished Strick” Manufacturers that were already struggling to remain cost competitive, Bloomberg News reported on Saturday.
Industrial production in Germany has been falling since 2017, and the decline has accelerated since Russian gas imports were cut in 2022 to punish Moscow over the conflict in Ukraine. Century-old factories are closing their doors, and other companies are moving production lines to countries with lower costs. Bloomberg He said.
“There's not much hope, if I'm honest.” Stephan Kleppert, CEO of machinery maker GEA Group AG, told the outlet. “I'm not really sure we can stop this trend. A lot of things have to change very quickly.”
A poll conducted by the Confederation of German Industries last September showed that concerns about energy security and energy costs are the main reason for shifting investment abroad. Chemical manufacturers were among the manufacturers most affected by the loss of Russian gas. BASF SE, Europe's largest chemicals producer, and Lanxess AG have cut thousands of jobs.
The French tire manufacturer Michelin and its American competitor Goodyear are closing or reducing the size of their German factories. Maria Rutger, Michelin's regional president, told Bloomberg that costs are too high for German exporters to thrive. “Despite the motivation of our employees, we have reached a point where we cannot export truck tires from Germany at competitive prices. If Germany cannot export competitively in the international context, the country will lose one of its biggest strengths.
The German Finance Minister acknowledged the crisis at a Bloomberg conference earlier this month. “We can no longer compete” He said. “We are getting poorer because we have no growth. We are falling behind.”
The German economy contracted in the last quarter of last year. A study by consulting firm Alvarez & Marsal found that 15% of German companies are involved in this area “distress” This means their balance sheets are weak. The company said that the distress rate in Germany rose from last year's level of 9%, which is the highest in Europe.
Russian President Vladimir Putin said last December that Western countries are doing so “Playing foolish” By seeking Russia's collapse, at the expense of their own people, rather than serving their own interests through economic cooperation. He accused German leaders of foolishly hurting their economy under US pressure and silently accepting the Nord Stream pipeline bombings, which he blamed on the CIA.
German manufacturers have also been hurt by crumbling infrastructure, an aging workforce, bureaucratic red tape, a weak education system and increasing competition from China, Bloomberg said.
“You don't have to be pessimistic to say that what we are doing right now will not be enough.” Volker Trier, head of foreign trade at the German Chambers of Commerce and Industry, told the outlet. “The speed of structural change is staggering.”