The German energy policy is increasingly becoming a location risk for local manufacturers, with more and more considering cutting production and moving overseas. A recent survey conducted by the German Chamber of Industry and Commerce (DIHK) among around 3,300 member companies confirms this trend line.
This year’s “Energy Turnaround Barometer” also shows just how dramatic the loss of confidence is in the ruling left-liberal government.
“The German economy’s trust in energy policy has been severely damaged,” said Achim Dercks, deputy managing director of the DIHK, summarizing the results of the survey. “While many companies also saw opportunities in the energy transition for their own business in the years before 2023, the risks now clearly outweigh the opportunities from their perspective.”
Germany is famed for its heavy industry, but much of the sector requires cheap energy to remain competitive on the global market, including the production of steel, vehicles, and chemicals. These are also the companies most likely to consider relocation or cutting back on production, according to German newspaper Welt.
That data shows that 45 percent of all companies with high electricity costs are “planning or implementing” measures to cut or relocate — 7 percent more than last year. In the survey, electricity costs are considered “high” if they account for more than 14 percent of revenue.
Germany’s industrial behemoths are those with the most power to relocate, due to their already strong international footprint. Among industrial companies with more than 500 employees, 51 percent are already planning to cut production or move away versus last year when this figure stood at 43 percent.
As Remix News reported earlier this week, Germany is facing record debt levels and a steep drop in industrial output, which could have political consequences for the ruling government.
The German government is racing to counter these trends and has recently published a “growth initiative” plan.
However, Dercks is not buying it, saying it “completely omitted sustainable solutions to the energy supply and energy price issues.” The DIHK vice president warns that the situation may only grow worse.
“Anyone who does not have this on their radar will be watching the deindustrialization of our country at some point,” he warned.
During a presentation delivering the survey results, he noted that the concerns of SMEs are not being taken seriously, with the vice president directly referring to Chancellor Olaf Scholz, who has been dismissive.
In fact, Scholz has said more than once that the “complaint is the song of the perchance,” an old saying on the Hanseatic coast.
Business leaders have taken note of his stance.
