Politicians and economists have been warning for a year that if the economic downturn continues, Germany is threatened with an industrial exodus.
Industrial flight, or deindustrialization, means that companies vote with their feet against high energy prices and cumbersome bureaucracy and move their production abroad.
The fear of the decision-makers is that tens of thousands of jobs will disappear from Germany in the aftermath of the industrial flight.
More than a third are thinking about moving or cutting production
The talk of industrial flight is not just a windfall. The world’s largest chemical group, German Basf opened a synthesis gas plant costing 10 billion euros at the beginning of the year in Zhanjiang, China, instead of Germany. Basf already has 30 production facilities in China, which, according to the company, is due to Europe’s high energy prices and stricter environmental legislation.
In September, change negotiations began for Europe’s largest car manufacturer Volkswagen regarding. According to media reports, VW is considering closing at least two of its factories in Germany and cutting up to 30,000 jobs.
In a survey by the German Chamber of Industry and Commerce DIHK, as many as 37 percent of German companies are considering cutting or moving their production out of Germany. In 2022, the corresponding figure was 21 percent. In particular, industrial companies with more than 500 employees are now carefully weighing the profitability of their production: up to 51 percent are considering cuts or moving abroad, according to DIHK.
Instead of fears and scenarios, you can – and should – follow concrete industry figures.
However, instead of fears and scenarios, you can – and should – follow concrete industry figures. With the exception of VW, no major German companies have announced plans for massive layoffs or factory closures. Some industrial jobs are replaced by others: even if thousands were laid off from car production lines, more are constantly being created in data transmission and electronics.
Production will peak in 2017
Of course, Germany’s industrial production was last at its peak at the end of 2017. Since then, the production volumes of cars and machines have been going down a steady curve, accelerated by the effects of the corona pandemic and the war in Ukraine.
At the same time, however, the value of the country’s industry has remained fairly flat. The World Bank calculates that Germany is still the third largest industrialized country in the world after China and the United States.
In Germany, the talk of industrial flight is above all the opposition, which wants the current government’s economic policy to appear toothless. Europe’s economic locomotive still has a long way to go before the industrial figures ring a true state of emergency.