Germany Sinks Further into the Deindustrialization Quagmire

Not least because even CEOs of industrial companies avoid the “d word” (“d” for deindustrialization), Germany’s leading politicians and the mainstream media are still denying the reality of just that. Swiss media, on the contrary, have repeatedly voiced concern that the decline of industrial production in their northern neighbor is adversely affecting industrial sectors in Switzerland, a leading German trade partner.

The Sept. 2 issue of Neue Zuercher Zeitung devoted an entire page to “The Decline of an Industrial Power” (i.e. Germany), which “lives from industry. The manufacturing sector recently accounted for around 20% of the country’s total value added. That is significantly more than in neighboring France (16.8%) or the U.S. (18.4%)”. The Swiss daily then provides a forum for a German CEO to sound the type of alarm required: “We are already in the midst of deindustrialization in Germany”, states Sabine Nikolaus, the head of German operations of the pharmaceutical giant Boehringer Ingelheim. She points to a whole series of industrial groups that have announced in recent months their intention to relocate their production abroad – or have already done so.

One example highlighted by the NZZ is the chemical company BASF: Due to high energy costs, the long-established company has shut down several production plants at its Ludwigshafen site, such as an ammonia plant that produces fertilizer. Overall, the company plans to cut around 10% of its production capacity in Ludwigshafen—along with the corresponding highly skilled jobs.

According to a survey by the German Chambers of Industry and Commerce (DIHK), 43.4% of all industrial companies with more than 500 employees are currently considering relocating their capacities abroad. Sabine Nikolaus is not surprised by such figures. “While some in Germany have not recognized the value of industry, other countries very much have,” she says.

In Germany itself, the Hellmeyer Report is among the rare outlets to portray the deindustrialization reality in straightforward fashion: “We have been living in an energetic age for 300 years. The prosperity achieved is correlated with more intensive and optimized use of energy,” it writes. “Without energy, nothing, nothing works. Germany is the only country in the West that has dealt in an historically unparalleled unprofessional manner with this sensitive issue, since [Chancellor] Merkel’s energy transition.

Folker Hellmeyer, the publisher of the Report, which is a maverick in the German media landscape, is a former chief economist of the Bremer Landesbank, the bank of the city-state of Bremen.