More and more German companies are thinking about leaving
Economic associations have long complained about high energy prices in Germany compared to international levels. A survey shows the potential consequences. The de-industrialization is advancing, warns the German Chamber of Industry and Commerce (DIHK).
More industrial companies than ever are considering relocating their production abroad. Among larger companies, this is even more than half, as the DIHK warned, citing a large-scale survey. The main reason is the high energy prices compared to international levels. Alternatives to investing in Germany are the USA and China, but also France. Current data shows the industry's current difficult situation.
"The clock is ticking," said Achim Dercks, deputy head of the DIHK. The de-industrialization is advancing. Typically, relocations abroad would occur gradually. 37 percent of the around 3,300 companies surveyed by the DIHK said they were considering production cuts or relocation abroad. In 2023, it was only 31 percent, and in 2022, it was as low as 16 percent. Notably high values were seen among industrial companies with high electricity costs (45 percent) and those with at least 500 employees (51 percent).
Dercks called it a warning sign. The problem would become even more apparent in the coming years. He pointed to lower energy costs in the USA, France, or China. The key question for more planning security for companies is where affordable and reliable energy will come from after 2030. "There's no perspective here." For example, the rising CO2 price in Germany will lead to higher energy costs, unlike in the USA. "Companies still see more risks than opportunities for their own competitiveness."
After the Russian attack on Ukraine in early 2022, energy costs temporarily skyrocketed. While prices have since decreased, they remain high compared to other states. The federal government is also pushing ahead with the transition to green energies. Critics complain about excessive bureaucracy and restricted available resources.
"No clear concept"
In the DIHK survey, companies were asked to evaluate the impact of the energy transition on their competitiveness on a scale of -100 to +100 points. Currently, the situation is rated at -20 points, the second-worst score since the survey began in 2012. Only in 2023 was the situation rated worse, at -27 points. "While many companies saw opportunities in the energy transition for their own business in the years before 2023, risks clearly outweigh them now," said the DIHK. Companies are increasingly focusing on self-sufficiency, for example, through direct supply contracts for wind energy. Access to hydrogen is also gaining importance.
So far, politics has failed to show companies a perspective for reliable and affordable energy supply, said Dercks. High energy prices are increasingly becoming a production and investment barrier. The increasing plans for production cuts and relocations, and the actual relocations, show that the energy political location conditions for all companies in Germany are now a clear competitive disadvantage, said the DIHK. This applies particularly to the industry, industrial companies with high electricity costs, and large companies, for example, in mechanical engineering and the production of industrial goods.
Derks said that electricity prices have significantly increased since the start of Russia's invasion of Ukraine, with gas prices also notably higher than in the U.S., for instance. Looking ahead is even more crucial. There's a lack of perspective. Businesses can't see a clear concept that would instill trust and optimism, leading to investments. The message to companies is clear: more bureaucracy, more reporting requirements, and complex approval processes.
The high energy prices in Germany, compared to international levels, are causing significant concern for industrial companies. According to the DIHK's survey, over 45% of industrial companies with high electricity costs are considering production cuts or relocation abroad.
The lack of a clear concept for reliable and affordable energy supply after 2030 is a major concern for businesses, as highlighted by Dercks. Companies see more risks than opportunities for their competitiveness due to the rising CO2 price in Germany, which leads to higher energy costs.
