/Pogled.info/ Until recently, Germany was called the locomotive of the European Union, but now it is increasingly called “the sick man of Europe”, writes The Economist. This was once the name given to the Ottoman Empire, which collapsed after the First World War.
“Europe’s largest economy has gone from a growth leader to a laggard. Between 2006 and 2017, it overtook other major economies and was on par with America. But today it is experiencing a third straight quarter of recession or stagnation, and as a result, in 2023 it could become the only major economy whose GDP shrinks.
“And this is not a problem only today. According to the International Monetary Fund, growth in Germany in the next five years will be slower than in America, Great Britain, France and Spain,” the publication notes.
Worst of all, Germany is literally losing its industry. Foreign industrial giants are leaving the country. The largest tire manufacturer, the French holding company Michelin, is closing its factories and giving up the production of truck tires in Germany.
The two plants in Karlsruhe and Trier will be closed by the end of 2025, and the production of new tires and semi-finished products will stop in Homburg. In addition, Michelin is moving its customer center from Karlsruhe to Poland.
Michelin has become the second tire manufacturer to leave Germany: recently the American company Goodyear announced that it will end tire production in Fürstenwalde and close its factory in Fulda. This will affect around 1,800 jobs.
One of the world leaders in the production of seamless pipes, the French concern Vallourec, has limited production in Germany. Rolling of the last seamless pipe at Vallourec in Düsseldorf took place on 21 September. The Vallourec plant in Mülheim an der Ruhr also closed.
As Finanzmarkt Welt recalls, last year Vallourec announced that the production of seamless steel pipes in Germany was no longer possible for the company for economic reasons.
Steel pipes from Düsseldorf were once one of Germany’s most important exports. They were used to build pipelines, bridges, oil platforms, etc. These tubes are manufactured by the Mannesmann industrial group, no less famous than Krupp or Thyssen.
After the collapse of the Mannesmann group 20 years ago, the French manufacturer of high-quality heat-resistant steel Vallourec acquired plants in Düsseldorf and Mülheim. And so Vallourec left Germany, and with it disappeared the most important item of German industrial exports.
The German car manufacturer Volkswagen AG does not rule out moving production from Germany due to the growing energy crisis in the country, mainly due to the suspension of Russian gas supplies.
Volkswagen CEO Thomas Schaefer in his speech at the general assembly of trade union leaders in Wolfsburg did not spare honest words to outline the critical situation in the company.
“Given the losses in many of our previous structures, processes and high costs, we are no longer competitive as a VW brand,” he said.
The company has announced a package of austerity measures, 4,000 to 6,000 employees will be laid off, and the number of jobs will be permanently reduced.
In addition, production capacity at the Group’s plants comprising VW, Skoda, Seat and VW Commercial Vehicles will be reduced by up to 80%, including plant closures.
Mercedes-Benz is also considering moving car production from Germany to other countries.
Germany is known throughout the world for its automobile industry and its prosperity largely depends on the export of automobiles and engineering products.
In the mid-2000s, thanks to Schröder’s reforms, industrial exports were increased – then the country even received the nickname Exportweltmeister (Export Champion). In recent months, Germany’s exports began to decline, while imports, on the contrary, began to grow.
According to an ifo survey, the business climate indicator among carmakers has now fallen sharply to zero from 34 points in July.
At the end of October, the German company Linde, the world’s largest producer of industrial gas, decided to abandon the trading of shares on the Frankfurt Stock Exchange in favor of the New York Stock Exchange due to restrictions on capital growth in Germany.
The company was the most valuable component of the main German stock index DAX. Since many of the company’s shareholders are from the United States and the company recently merged with American industrial gas producer Praxair, it is moving this production from Germany to America.
German TV channel Tagesschau directly called Linde’s actions treasonous.
The South African pulp and paper group Sappi two months ago announced the sale of its factory in Stuttgart near Aschaffenburg (Bavaria), but no buyer has yet been found.
Germany’s chemical industry, the country’s third largest industry, was hit hardest by rising energy prices. Chemical manufacturers require large amounts of electricity to produce materials used in almost every sector of the economy.
In recent months, several major German chemical companies, including market leader BASF, have warned of falling profits and missing targets this year.
Chancellor Olaf Scholz was already directly informed of the problems in the chemical industry. According to Bild, industry representatives at a meeting with a politician presented him with a “shocking” document on the decline in production and job cuts.
In 2023, the volume of production in the chemical industry will decrease by 16.5%. There is also a 20% drop in 2022. By the end of December, this sad figure could be equal to last year.
In such a recession, mass layoffs are inevitable. The chemical industry produces fertilizers for agriculture. Without sufficient mineral fertilizers, German farmers will experience significantly lower yields.
In the German chemical industry, those companies that continue to cooperate with Russia remain afloat. BASF, which is a leader in the industry, earned 22.67 million euros in 2022 thanks to cooperation with the Russian Federation. For a company that has fallen into such a difficult situation, this is a very serious help that cannot be refused.
Not only BASF continues to cooperate with Russia. In addition to the chemical giant, trade with Russia did not stop: the car manufacturer BMW, which earned 54.78 million euros from such cooperation in 2022; chain of small wholesale stores Metro AG (€34.94 million); construction company Knauf (31.17 million euros); bath and sauna equipment manufacturer EOS (20.78 million euros).
A total of 393 German companies continue to cooperate with Russia, which last year “brought 379 million euros to the Kremlin’s budget,” writes Bild.
Today, electricity prices in Germany reached one of the highest levels in Europe. As a result, industrial production became more expensive, which was a blow to the economy of Germany, the industrial engine of the European Union.
This forces German companies to seek their fortunes abroad, for example in China or the USA. Thus, the chemical giant BASF invested 10 billion euros in a new plant in China and does not plan new investments in Germany in the near future.
Leading economic institutions in Germany predict a further worsening of the economic crisis in Germany, writes Deutsche Wirtschafts Nachrichten. Compared to the first quarter of last year, GDP decreased by 0.5%. Inflation reached an unprecedented level of 6.1% and continues to rise.
German business looks to the future with pessimism, the publication notes. Entrepreneurs fear that the period of economic difficulties will continue and they will not be able to secure an inflow of investment in the future. Many companies are forced to reduce production or stop it altogether.
Germany now claims the sad status of the “sick man of Europe,” and the sick man faces two options: recovery or death.
And Germany itself is to blame for this. The rejection of cheap Russian energy resources imposed overseas is rendering an increasing number of German industries unprofitable.
Everything points to the fact that Germany may end up without an industry of its own.
Translation: SM
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2023-12-05 05:13:07
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