Bitter turn of the times? How deindustrialisation must be prevented in Germany

By Ingeborg Neumann, President of the German Textile and Fashion Industry Association, Vice President BDI

We have so many great medium-sized industrial companies in Germany that keep the shop running every day. Whether foundries, ceramics or plastics manufacturers, steel and metal processing companies, hot-dip galvanisers or manufacturers of special textiles. Without them, every construction site comes to a standstill, there are no new trains, no new electric cars, no wind turbines, no environmental filters, no medical textiles, no workwear; the list could be continued indefinitely. All these companies need energy to keep their machines running.

The cost explosion in energy prices has reached a point that is no longer bearable for large parts of medium-sized industry. Those who had to pay 500,000 euros for their energy bill last year are now paying five million euros for the same amount of energy. That's as if we now had to pay 20 euros for a stick of butter. Price increases for gas and electricity of 1000 percent and more have exceeded the limit of what can be tolerated. We cannot even begin to pass on such exorbitant costs to our customers, with the result that Made in Germany is no longer competitive, either in Germany or in exports. Yes, other countries in the EU are also struggling with superinflation and skyrocketing energy prices, but none is being hit as hard as Germany. Gas, half of it from Russia before the war, was supposed to be our bridging technology on the way out of coal and nuclear power and into renewable energies from the sun, wind, water and green hydrogen.

The Russian war of aggression against Ukraine has brutally slowed us down on this path. There is no question in my mind that with the sanctions we are taking a clear stand against President Putin and on the side of the Ukrainians. However, this cannot and must not mean that energy is no longer affordable in our country and that industrial companies have to close down as a result.

It is no exaggeration that the current energy price situation will force countless companies to close down, with irreversible consequences for supply chains, value creation and jobs in our country. Even now, healthy companies with full order books are having to shut down their production because the astronomical energy costs are leading to massive losses. Yet our industry is in demand right now! We need an efficient industry to make Germany climate neutral. We want to show what we can do and what is possible.

25 years ago, I bought several textile companies in Saxony from the Treuhand, developed them further and expanded the business to several locations in Europe. In the process, climate protection and sustainability are an incentive for me to create new products and new business models. The goal of climate neutrality drives me because I am convinced that we as a medium-sized industry with innovative processes and products will be winners and not losers in the industrial transformation.

But this requires fundamental reforms, an agenda that provides clear answers to the most important questions about the climate and energy transition. The German government can start with very simple changes that will speed up the energy transition. We need to pick up the pace so that we are not left behind.

We need to streamline the approval procedures so that the energy transition in our country can finally move forward in big steps. We need new solar and wind power plants, new grids, new routes and green hydrogen on a large scale. We need all of this now, and we need it fast. We need exactly what the federal government has set out to achieve in its coalition agreement: Progress! And not progress that is a snail's pace.

For companies that want to switch to other energy sources such as liquefied gas, the federal government has held out the prospect of simplifying bureaucracy. We say: yes, that's good, more of that and now!

Pragmatism is called for! Also with regard to the conversion of coal into electricity and the extension of the operating lives of the three nuclear power plants still on the grid. This is about nothing more and nothing less than pragmatic transitional solutions in a severe crisis. And it is about the question of whether we should not also promote our own gas in the country. The discussions on this must be free of ideology.

A decoupling of the electricity price from the gas price would also bring about a defusing of the electricity price, or right away an industrial electricity price in view of the crisis situation, such as Olaf Scholz proposed as a candidate for chancellor in June 2021 at the Day of German Industry.

Yes, I know, these are all difficult proposals because they are not so easy to implement. But what is easy these days. We are in the middle of a turning point, as Chancellor Scholz aptly described it.

New times demand new answers. We need them now at a point where thousands of small and medium-sized industrial companies have to draw the sober conclusion that they can no longer produce in Germany at these energy prices.

Chancellor, Vice-Chancellor, Finance Minister: get your act together now and present an Agenda 2030 for climate change under new auspices. Tear down everything that is complicated and time-consuming. There is one thing we all no longer have: time! But we do have a lot of innovations made in Germany. This is your chance, this is our chance! If the current absurd energy prices and surcharges and additional burdens, which only we in Germany as small and medium-sized industry have to shoulder, continue, we will see one small and medium-sized industrial company after another having to give up in the coming weeks. This will tear irreversible gaps in our supply chains, and permanently. Bit by bit, deindustrialisation in Germany will then become reality. That would be a bitter turning point that must be prevented at all costs!

Source: textil+mode