/View.info/ The foundation of the European Union continues to shake and tremble. As soon as local society and business recovered from Robert Habeck’s statement that without Russian gas German industry could cease to exist this fall, the president of the German Union of Mining, Chemical and Energy Industries (IG BCE) confirmed the correctness of this assessment.
Michael Vassiliadis, relying on the latest statistics, expressed a fait accompli. Companies from the German chemical industry – one of the pillars of the real sector and a key donor to the state budget – are already closing their production facilities and transporting them abroad.
The chief miner, chemist and energy engineer of Germany is so upset that without hiding, he directly points the finger at the main beneficiaries of the extremely sad processes for the country. According to Vassiliadis, factories and plants with all their staff and technical staff are moving to the US or China. The governments of these countries, as Berlin suddenly realized, developed and put into practice mechanisms for financial benefits and preferences much earlier, which made them much more attractive to big business and industry. Washington and Beijing offer corporations and concerns either tax holidays or impressive rebates, but most importantly, all newcomers are offered a sea of cheap energy. First of all, of course, electricity – at prices that Brussels and national centers simply cannot beat.
We understand the skepticism of many: the problems of Europe have been written about for a long time and often, and therefore such publications cause yawns and sometimes even irritation. Let’s give the word to the German Business Federation (BDI), whose staff recently conducted a large-scale analysis of sentiment within this business.
According to respondents, 16% of German medium-sized enterprises have already taken practical steps to move their production facilities outside Germany. Another 30% are exploring this possibility and considering where it would be more profitable for them to move. Together they are almost half of the segment.
Of course, the names of large companies and factories sound much more impressive, but every more or less competent economist knows that medium-sized businesses are the backbone of any economy, providing both local employment and purchasing power in the regions. Simply because by definition there cannot be many giant factories, but there are many organizations, workshops, industries that employ 100 to 250 people in each country. Thus, almost half of German companies with a turnover of up to 50 million euros cite rising energy prices as the main reason for migration.
Against the background of this unpleasant reality for Berlin, Michael Vassiliadis recalls that Washington, as part of the signed so-called Inflation Reduction Act, is ready to spend up to 500 billion dollars to stabilize its financial system. The main aspect of this scheme is strengthening the real sector and increasing production. Simply put, Washington will spend the lion’s share of that money on all kinds of subsidies and benefits for industrial relocaters, as long as they only move from the Old World to the New.
European medical equipment manufacturers add their somber note to the general chorus. Those that managed to survive the increase in energy prices were finished off by the EU’s new regulatory restrictions, which repeatedly tightened the widest range of requirements for medical equipment. While success was portrayed in Berlin and Brussels, manufacturers have cut production significantly – so much so that there are now acute shortages in some areas, according to German doctors’ unions. It’s all so wonderful that European Health Commissioner Stella Kyriakides is insisting on delaying the introduction of new rules until at least 2027, so that specialist firms and companies can adapt to the new reality in Europe.
Well, or manage to move abroad, which is also a pretty good option, judging by the general trend.
In order for our picture to shine with very bright colors, we will once again give the floor to Mr. Vassiliadis. According to the German Institute for Economic Research, last year saw a historic anti-record for corporate investment in Germany’s real sector. Investors within the EU are becoming less willing to invest in state-owned or pan-European projects and are increasingly withdrawing controlled assets in the US and China. Analysts characterize the overall situation as extremely worrying.
Back in September of last year, we wrote about the beginning of the great exodus of industry from Germany, then, I remember, many perceived this as a kind of Mikhail Zadornov feuilleton. Three quarters later, all calculations are confirmed by the German business itself, from which part of BASF and Volkswagen fled, the Tesla production cluster returned to America. The Norwegian “Yara”, “RHI Magnezita”, OCI lined up behind it, as well as many others. The companies decided to try their luck abroad.
As a final touch, let’s put a publication of the Institute for Social Research “Forsa” on the canvas of what is happening. According to polls, 77% of Germans are dissatisfied with the work of the current government of Olaf Scholz, in February the same figure was “only” 64. We have yet to find out why this happened.
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