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German Deindustrialization Accelerating with Emigration of Companies

April 4, 2024 (EIRNS)—"The deindustrialization of Germany is in full swing,” Harald Müller, Managing Director of the Bonn Business Academy (BWA), told the trade magazine Production on Feb. 23, 2024. “It’s no longer a question of whether, but only of how and how quickly,” he added. Many companies have long recognized the costly, in many cases ruinous, challenges that the energy transition will bring to the country—and are protecting themselves by moving abroad. He assumes that entire sectors of the economy will disappear from the country altogether.

This development can already be seen. In recent weeks and months, there have been numerous reports of job cuts in the automotive industry, particularly among suppliers. These include Continental (7,000 jobs cut, site closures), tire giant Michelin (1,500 jobs), ZF Friedrichshafen (closure of a site), and Volkswagen (cost reduction of 20% by 2026).

But other industries are also affected: the traditional companies Miele and Stihl both want to focus more on foreign locations in the future. However, both companies reaffirmed their fundamental loyalty to the location and do not want to close any plants in Germany—at least for the time being. The closing of German maker of solar modules and panels Meyer Burger, which has decided to move to the United States to fight competition from China, also caused a stir.

The other aspect of deindustrialization is that foreign companies are also investing less in Germany. According to a study by the Cologne Institute for Economic Research (IW), the amount of direct investment from abroad in 2023 was around €22 billion, which was less than ten years ago. In comparison: in 2018 and 2020, around €140 billion flowed into Germany from investments by foreign companies.

“The policy makes it anything but attractive for companies to invest in Germany,” said IW economist Christian Rusche. One reason for this is that funding programs—such as for electric cars or energy-efficient construction—are being stopped on short notice. Politicians must drastically improve investment conditions, otherwise “deindustrialization could accelerate significantly.