Media reports loss of Russian gas quickens Germany`s deindustrialization
Date
2/11/2024 7:37:28 AM
(MENAFN) Bloomberg News has reported that Germany's status as an industrial powerhouse is on the decline, facing a "final blow" as the loss of affordable Russian natural gas exacerbates existing challenges for manufacturers struggling to maintain cost competitiveness. The country's industrial output has been steadily declining since 2017, with the situation worsening after the cutoff of Russian gas imports in 2022 as a response to the Ukraine conflict. This has led to the closure of century-old factories, and companies are relocating production lines to countries with lower operating costs.
Stefan Klebert, CEO of machinery maker GEA Group AG, expressed uncertainty about reversing this trend, stating, "There's not a lot of hope, if I'm honest. Many things would have to change very quickly."
A survey by the Federation of German Industries in September highlighted energy security and costs as the primary reasons for German manufacturers shifting their investments abroad. The loss of Russian gas has particularly impacted chemical manufacturers, with industry giants such as BASF SE and Lanxess AG announcing significant job cuts.
The consequences extend beyond chemical manufacturing, as French tiremaker Michelin and United States rival Goodyear are either closing or downsizing their German plants. Maria Rottger, the regional chief for Michelin, emphasized the challenges faced by German exporters due to high costs, stating, "If Germany can't export competitively in the international context, the country loses one of its biggest strengths."
This article delves into the various factors contributing to Germany's deindustrialization, analyzing the impact of the loss of Russian gas, challenges faced by different sectors, and the broader implications for the country's economic landscape. The report also explores potential strategies and changes that could help address the current downturn in German industry.
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