Germany “in critical phase” as industry location, associations warn

Citing high energy costs, too much bureaucracy and a lack of skilled workers, the heads of industry associations have warned of a bleak future for Germany if conditions did not improve, reports Welt Online. Speaking at the world-renowned industrial trade fair Hannover Messe, the head of the Federation of German Industries (BDI), Siegfried Russwurm, said that “Germany as an industrial location is in a critical phase.” Large and medium-sized enterprises are making considerable investments abroad and companies hesitate before investing anywhere, Russwurm said and called for “a more realistic assessment of the current situation” from the government. “We need less bureaucracy, noticeable tax cuts and a reliable and affordable energy supply,” he said. Gunther Kegel, head of the electrical and digital manufacturers’ association ZVEI, said excessive bureaucracy is “hung around companies' necks like lead,” reported WirtschaftsWoche. Mechanical and plant engineering association VDMA head Karl Haeusgen added that “labour shortage is the biggest risk to our business activities in the coming year.”

The German government is working on proposals for industry electricity prices in order to shield companies from rising costs and to help them stay competitive internationally, for example by way of subsidising offshore electricity for industrial customers through an auction scheme. Amid the energy crisis fuelled by Russia’s war against Ukraine, both private and commercial consumers have faced drastically rising prices. The government has introduced support schemes to help the industry, but these are temporary. Moreover, generous investment support in other regions of the world – especially in China and the U.S. – has led to calls from European industry representatives to introduce similar measures in the region to avoid large-scale relocation of production facilities. The European Commission has proposed a set of measures to boost net-zero industries and the competitiveness of European companies.