The number of industrial companies considering moving away from Germany is constantly increasing, as a new survey shows. The situation is particularly dramatic among large companies. The anger is directed at the traffic light coalition, which has failed to provide solutions to the crucial question of location.
German energy policy is increasingly becoming a risk for the location. The number of industrial companies considering production cuts or moving abroad is continuously increasing. This is the result of a recent survey by the German Chamber of Industry and Commerce (DIHK) among around 3,300 member companies.
The results of this year’s “Energy Transition Barometer” also show dramatic developments in other areas. “The German economy’s confidence in energy policy has been severely damaged,” said DIHK Deputy Managing Director Achim Dercks, summarizing the results of the survey. “While in the years before 2023 many companies also saw opportunities in the energy transition for their own operations, in their view the risks have recently clearly outweighed the benefits.”
Energy-intensive companies in particular are being driven to move away or to limit production . 45 percent of all companies with high electricity costs are now “planning or implementing” such steps – seven percent more than last year. Electricity costs are considered “high” in the survey if they account for more than 14 percent of sales.
The situation is even more dramatic for large manufacturing companies. Among industrial companies with more than 500 employees, 51 percent are already planning production cuts or relocation. Last year, the figure was 43 percent. What is worrying is that these large companies in particular are usually well positioned internationally anyway, which makes it easy for them to implement relocation plans.
“The deindustrialization of Germany has begun and it feels like no one is doing anything to stop it,” the DIHK quoted a West German industrial company as saying in the survey.
Habeck and Scholz under criticism
In view of the weakest economic forecasts compared to Europe, the German government recently presented a plan for a “growth initiative”. Unfortunately, the German government “completely ignored sustainable solutions for the energy supply and energy price issue,” criticized Dercks. For many industrial companies, however, this is currently the decisive location issue, said the DIHK vice president: “Anyone who doesn’t have this on their radar will at some point just be able to watch the deindustrialization of our country.”
Politicians are not taking the concerns of small and medium-sized businesses seriously, explained Dercks when presenting the survey results. He referred to Chancellor Olaf Scholz (SPD), who has repeatedly expressed the old Hanseatic saying that “complaints are the merchant’s song” to the dismay of entrepreneurs.
This also includes the fact that Federal Minister of Economics Robert Habeck (Greens), like Scholz, often points out that energy prices have fallen significantly again after the record highs during the Ukraine war. Individual spot market prices or new customer tariffs are then mentioned. However, both have little significance for the long-term cost burden and investment security of companies.
On the futures market, electricity prices are still twice as high as they were before the crisis, Dercks noted. Gas prices are four to five times higher than in the USA, for example. Against this background, it is unacceptable for government representatives to conceal the true situation with selected spot market prices, said the DIHK vice president: “Such tricks drive companies crazy.”
In the survey, more than a third of industrial companies stated that they are currently able to invest less in core operational processes due to high energy prices. A quarter said they can engage in climate protection with fewer resources. And a fifth of companies have to postpone investments in research and development. Overall, two thirds of industrial companies see their own competitiveness at risk.
“In addition to the planned relocation of production, this represents another acute threat to Germany as an industrial location,” commented Dercks: “If companies themselves no longer invest in their core processes, this will amount to a gradual dismantling.”
How many companies have already actually implemented their plans regarding production relocation could be the subject of the next annual survey, announced Dercks.
DIHK presents list of ten proposals
When it comes to concrete energy policy obstacles, most companies cite too much bureaucracy and a lack of planning. For example, it is still unclear where the hydrogen that is supposed to replace natural gas in the economy will come from. There are also doubts about the so-called power plant strategy of the Minister of Economic Affairs. “Getting rid of coal-fired power generation by 2030 – no one believes in that anymore, not even the people involved,” said Dercks.
“The growth brakes caused by energy policy can only be solved by rethinking,” said the DIHK vice president: “Companies now need a sustainable perspective for a reliable energy supply with competitive prices.” For around 80 percent of companies, “further reduction of taxes and duties on electricity prices is a key demand.”
In addition, the DIHK presented a list of ten suggestions that could be implemented in the short term to improve the situation. This includes accelerating the expansion of the grid in order to be able to use renewable energies more efficiently. At the same time, grid fees should be reduced with subsidies from the federal budget.
The expansion of renewable energies should no longer be supported by subsidies on the energy produced, but rather by investment grants. The federal government must also “make the import strategy for hydrogen credible,” says the DIHK paper.
The survey, conducted between June 10 and 30, reflects the “entire breadth” of the German economy, explained the DIHK. 3,283 companies took part, including 56 from the service sector, followed by industrial companies with 23 percent, trade with 14 and construction with six percent.
36 percent of the responses came from the west of the country, 28 percent from the south, 19 percent from the east and 16 percent from the north. “Aggregation at the federal level is carried out using regional and industry-related weighting based on the number of employees in the regions,” the DIHK said of the process.
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