8 ms·

The deindustrialization of Germany

100 points by flashfaffe2 3y ago

whinvik 3y ago
> Nearly 20 years ago, Germany overcame its reputation as the “sick man of Europe” with a package of ambitious labor market reforms Does anyone know what those were?
- Dunedan 3y ago
  That's a reference to the so-called "Agenda 2010": https://en.wikipedia.org/wiki/Agenda_2010 https://en.wikipedia.org/wiki/Agenda_2010
- nieksand 3y ago
  https://www.imf.org/external/pubs/ft/wp/2015/wp15162.pdf https://www.imf.org/external/pubs/ft/wp/2015/wp15162.pdf "In 2003–05, Germany undertook extensive labor market reforms which were followed by a large and persistent decline in unemployment. Key elements of the reforms were a drastic cut in benefits for the long-term unemployed and tighter job search and acceptance obligations."
  - ahartmetz 3y ago
    Also working poor.
- WastingMyTime89 3y ago
  The Hartz reforms are fairly famous, yes. It’s mostly social dumping. Forced contraction of actual wages through reform of the benefits plans. It’s important to note that they are overall poor reforms and should have been nullified by the German money value shifting due to the knock off effect on the saving rate. This didn’t happen because they were put in place at the same time as the Euro and the overall imbalance in the union allowed Germany to keep an undervalued currency. In effect, Germany robbed all the poorer members of the union to prop up its own economy something it has kept doing since.
  - lo_zamoyski 3y ago
    > In effect, Germany robbed all the poorer members of the union to prop up its own economy something it has kept doing since. Those who like to bully the poorer members of the Union on the grounds that they're being bankrolled by the the wealthier states would be wise to take note of this, and take a more intelligent and informed view of EU "subsidies". The idea that the wealthier member states are showering these countries with funds out of the disinterested goodness of their hearts is not only ignorant of how these cash flows actually work in the grander scheme of the movement of money, but also preposterously naive. The power balance is shifting in Europe against this crypto-germanocentrism, however.
    - imtringued 3y ago
      This sentiment is so common in Germany. Everyone blames the European "south" for Germany's problems as if Germany was some sort of hero doing all the work. The Greek economic crisis is a classic example. German banks mess up when they lend too much money to Greece, Germany does a bailout for "Greece", the money actually goes back to German banks. Then people have this perception as if they somehow paid for all the social services bought with the borrowed money. No, Greece is still in debt. You might complain about forgone interest but that is on the lender, who is not doing his job properly.
      - adasdasdas 3y ago
        Why are you only talking about the lender's fault when it comes to bad loans.
        rfrey 3y ago
        Because assessing and assuming risk is literally their entire reason to exist.
        adasdasdas 3y ago
        Why doesn't the borrower assume responsibility for taking risky loans?
- imtringued 3y ago
  The strategy Germany is following is to cut unit labor costs below Greece aka Germany is competing on price with Eastern European countries. This may get you the "Exportweltmeister" trophy but is is just that, a trophy. It doesn't actually benefit you that much.
fwungy 3y ago
It's all so tiresome.
WastingMyTime89 3y ago
And obviously the reason is the lack of labour reform and not the billions in handouts currently given by the US and China which the EU refuses to match because of its brain dead insistence on undistorted markets and fiscal rigour. Ah Politico, such well researched and reasonable journalism, it warms my heart…
- sauercrowd 3y ago
  what are you referring to with "billions of handouts"?
  - WastingMyTime89 3y ago
    The Inflation Reduction Act in the USA and the equivalent measures which have been taken in China but don’t have a catchy name. Both countries are currently giving subsidies to companies at an unprecedented rate.
    - api 3y ago
      There used to be a lot of opposition to these kinds of subsidies in the US until China started absolutely kicking America's ass because they subsidize their industries. Private enterprise really can't compete with governments, and even less so against governments with their own sovereign currencies and the ability to subsidize forever.
- amadeuspagel 3y ago
  Why aren't other EU countries facing the same problems? Also, from the article: > BASF opened a plant near Dresden that makes cathode materials for electric-car batteries just two weeks ago and has pledged to keep investing in its home market. To secure such commitments, however, local and federal governments have been forced to offer generous incentives. BASF will receive €175 million in government support for its new battery operation, for example. > Similarly, in June, the U.S. chipmaker Intel secured an eye-watering €10 billion subsidy for a massive new factory in the eastern city of Magdeburg. That translates into €3.3 million for each of the 3,000 jobs the company has pledged to create.
deleted 3y ago
[deleted]
huijzer 3y ago
I have tried to go against some of the arguments because some are wrong, some are okayish, and some are just plain wrong, but I gave up. The article moves all over the place pulling random facts from all kinds of places in support of the idea that Germany is declining. Maybe that's true, maybe not. This article appears not rigorous enough to come to a right conclusion.
- Michelangelo11 3y ago
  Right, I have the same impression -- it's really all over the place. Anyway, the absolute key issue seems to be energy costs. If they hadn't skyrocketed, this wouldn't be happening.
  - nradov 3y ago
    Not just energy but specifically access to natural gas. Even when not burned for power and heat it acts as an essential feedstock for much of the German chemicals industry. With flows from Russia being reduced or eliminated there is no choice but to relocate production.
    - Archelaos 3y ago
      The German government is subsidising gas consumption by industry very heavily at the moment to prevent this. A press release on the relevant legislation can be found here (in German): https://www.bundesregierung.de/breg-de/aktuelles/energiepreisbremsen-2145728 https://www.bundesregierung.de/breg-de/aktuelles/energieprei... The most important section in this matter reads in English translation as follows: "From January 2023, industrial customers will receive 70% of their natural gas consumption in 2021 from their suppliers at a guaranteed 7 cents per kilowatt hour. For heat consumption, the price will be capped at 7.5 cents per kilowatt hour, also for 70% of consumption in 2021. For the remaining consumption, industry will pay the regular market price."
      - nradov 3y ago
        Right but that level of subsidization is unsustainable. What is the end game? Cheap Russian natural gas is unlikely to return soon enough to save the German chemicals industry.
ehvatum 3y ago
I feel embarrassed for Germany. So much pride, built on dishonesty and exploitation of customers and other EU nations. Getting to the point of implementing meaningful reform will be tremendously ugly, in a country that derives such gratification from exporting carbon-intensive industry to China. Sad.
photochemsyn 3y ago
The article mentions 'high energy prices' and 'energy costs' and alludes to 'Kremlin cutting off natural gas supplies' but otherwise provides zero discussion of the overall energy picture in Europe. A couple of major issues they could have addressed: 1. In retrospect, was the German decision to eliminate nuclear power wise? Could they have squeezed another decade of power out of their existing plants, even if they didn't see that as a viable long-term energy source (having to import uranium fuel is not all that better from having to import natural gas, economically speaking)? Granted, nuclear only provides electricty, while BASF needs methane. 2. Russian gas exports to Germany have been replaced by US LNG gas exports, but the cost differential is pretty huge. Looking around, I see this site has discussed it before (Nov 2022): https://www.politico.eu/article/cheap-us-gas-cost-fortune-europe-russia-ukraine-energy/ https://www.politico.eu/article/cheap-us-gas-cost-fortune-eu... That's an interesting article, pointing to tight markets being taken advantage of by European energy traders (though Exxon and Chevron shares are up 50% since the price boom, Permian Basin development, booming LNG exports, etc.). It also might explain why some European interests see a finacial benefit in prolonging the Ukraine war (i.e. keeping Russian gas sanctions in place). 3. Somewhat amusingly, if BASF moves a lot of production China, then their natural gas feedstocks will be coming from... Russia's massive Sakahalin 1 & 2 projects (built with extensive help from Exxon and Shell respectively, and ironically)? https://www.reuters.com/business/energy/russias-sakhalin-invites-india-china-tap-energy-resources-2023-06-06/ https://www.reuters.com/business/energy/russias-sakhalin-inv... Maybe blowing up the Nordstream pipeline wasn't such a smart move, after all.
- CamperBob2 3y ago
  Maybe blowing up the Nordstream pipeline wasn't such a smart move, after all. Do we know with any degree of certainty who was actually responsible for sabotaging the pipeline?
  - oezi 3y ago
    It seems all evidence points to a Ukrainian op performed by a small team and minimal amounts of explosives. Ukraine is also the only country which had clear motive and no real repercussions if found out (because already at war with Russia).
choeger 3y ago
Germany is extremely well positioned to rise again economically in the next five years or so. It's attracting migrants from all over Europe, it's located quite nicely in the middle of the continent and it's currently building a massive capacity of renewable energy. The only real problem right now is efficiency of spending. Nearly all public sectors (defense, housing, transportation, education, healthcare) bemoan significant lack of financing and workers. Yet, Germany spends enormous amounts of money and employs record levels of workers there. It's like all the money and workers just vanish. This leads to the situation that it's currently difficult to hire in Germany. This process leads to the attraction of skilled workers especially from eastern Europe. I don't know where this ends, but I doubt the spending and employment will get significantly more efficient. Instead, Germany might very well attract additional millions of well-educated Poles, Ukrainians, Romanians, etc. I wouldn't be surprised if by 2030 we see a Germany with a population of 90M people absolutely dominating the European market.
- eldaisfish 3y ago
  i would not be so hopeful. A big problem is that germany does not operate in the global lingua franca - English. This really shows when countries like Australia and Canada - combined, both have a population less than germany’s - are able to attract the best and brightest from around the world. Another problem is one that plagues all old world countries - societies are based around ethnicity. These combine to mean that Germany and the EU in general are not attracting the best from abroad. The region is often the second or third choice of the educated migrant. Don’t believe me - look at the EU’s own internal migration numbers and the stats for immigrants from outside the EU. Internal EU migration is pretty low relative to countries like US (states vs countries, sure) and the immigrations from outside are largely poorly educated. This shows in Germany’s immigration policy - they have been reducing barriers to entry for over a decade now and are yet struggling to hire foreign talent. This begs the question - why?
  - holoduke 3y ago
    Eastern European people are very much german orientated. Most speak better German than English. So no you are not right. Germany is immensively popular by tech migrants from Russia. Poland, Hungary, Czech etc.
sparrc 3y ago
Opposite lots of commenters here deriding the article as "all over the place", I thought it was very well-written and comprehensive. Seems like there are concerns across a wide swath of companies and industries in Germany. Reading between the lines, the proposed solution seems something like lower corporate taxes (currently making decamping to Dublin more attractive) and lower energy prices. The risk brought up is that if things continue it will likely lead to increasing blaming of immigrants and a rise in the far-right AfD party, which has already started.
- lyu07282 3y ago
  Also gutting labor rights, but I suppose that's always suggested by liberals no matter what
  - tasubotadas 3y ago
    What about employer rights? Right to fire poorly performing schmucks?
    - dermesser 3y ago
      Once you're the schmuck, or your company starts laying off, you'll start appreciating it. (As has recently happened in my family)
- tasubotadas 3y ago
  Yes. The worst is yet to come. - Germany is heavily reliant on industry (like Autos) - Cheap energy has ended due to war in Ukraine - The available replacements are going to be even more expensive (and they are still closing more nuclear plants) - The production costs will increase reducing their competitiveness even further - The competitives was bad even before this (VW vs Tesla anyone?) - Once the huge layoffs and closures will begin, the entire economy will enter recession. Industry-focuses businesses are now low-margin and high-competition (competition mostly coming from Asia). The same is happening here what happened during the shift of Agriculture economy into Industrial economy. And the shift to services (tech/software specifically) was pretty much non-existent. Also, it's unlikely to become any better due to alienation of investors (who wants to invest in a country where everybody is taxed and red-taped into oblivion?). So... who nows. Germany is probably going to pull a "Greece" on us :).
javajosh 3y ago
In addition to this general malaise, the EU Cyber Resilience Act (CRA) is going to have a big, negative impact on all of the EU, especially Germany, and especially the software industry. The CRA itself is insane, requiring, for example, that conforming software phone-home. Which is, of course, the opposite of what we should be pushing for. Note that something similar is probably coming to the US in the next few years. I learned about this today from Eclipse Foundation executive director Mike Milinkovich's excellent video/tutorial/warning on the subject: https://www.youtube.com/watch?v=AmsM5_5QO5A https://www.youtube.com/watch?v=AmsM5_5QO5A
- Vuizur 3y ago
  When you look at open source AI, for example, EU laws are a huge problem: Not only the act you mentioned, but also GDPR, where it is not clear so far how the "right to be informed" or the "right to deletion" can/must conceivably be implemented. (From my interpretation I also don't see how OpenAI can conform to the "right to be informed" without publishing its training data). And of course the AI act, which might make it possible for the publishers of open models to be sued if a third party misuses it: https://techcrunch.com/2022/09/06/the-eus-ai-act-could-have-a-chilling-effect-on-open-source-efforts-experts-warn/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAFTbXXqVyQoivLXDbQ3ajaaN4VxOxNM6_rbEdhHd2WZPER7kpczVovbvBC_WPEj0pONpLby8t2M3oEc4-_3RaduXGxUz3ZO2lzJyR8yUrIKGBGde0LHunpJSZIdslvU94wSzkBZ5gyPan0JeVKdlVgyfqSClUP1nhDfQ1UCAjpXo https://techcrunch.com/2022/09/06/the-eus-ai-act-could-have-...
HackOfAllTrades 3y ago
I'm terribly suspicious when an article quotes a CEO saying "profits aren't where they should be". God only knows what he thinks his corporate profits "should be", but I'd bet it's a lot higher that you or I would guess.
novaRom 3y ago
quote: Germany ranks only eighth in the Global Innovation Index Is it so bad? For 83 millions people economy.
- nicbou 3y ago
  According to law only mailed or faxed responses are allowed
- woobar 3y ago
  Considering that Switzerland is No. 1, Sweden, Netherlands or Singapore are all above Germany, I'd guess population is not a big factor in computing this index.
  - morelisp 3y ago
    > Switzerland is No. 1 Time to rename the region CHAD I guess.
tdrz 3y ago
I found the article quite good but has missed a couple of points that need to be mentioned: 1. The attitude of the average German consumer It seems to me that one of the national sports in Germany is to find cheaper deals for pretty much anything (and then brag about it). Even if it's fractions of a euro! After trimming down on everything that they could, the manufacturers and service providers had to finally reduce quality. This happened to such an extent that the famous "Made in Germany" is now meaningless, if not worse. 2. The attitude of the average German manager "I am your boss, you are the employee, now shut up and do as I say" attitude does not work well in knowledge-based industries like Software. And I believe this is one of the reasons why Germany is behind in digitalization, let alone in digital innovation.
- croisillon 3y ago
  haha number 1! 20 years later i'm still traumatized about my boss who would spend the whole lunchtime speaking about gas prices
- patall 3y ago
  > I am your boss, you are the employee, now shut up and do as I say This would also not work in engineering and never did. In fact, it's likely one of reasons why german engineering was so good: because people would (and still do) tell their boss bluntly what is wrong.
  - tetris11 3y ago
    Can confirm this in science too. German masters/PhD students are much more willing to correct the professor on a topic, then I. England. N=1, of course.
    - rurban 3y ago
      Well, I'm just reading the Oppenheimer biography, who studied in the US, UK and Germany, and he came to the very same observations. And tried to encourage his students in Berkeley successfully to be more critical and interrupt the professors.
kachurovskiy 3y ago
We're definitely huge fans of paperwork here and it hurts a lot. Want to sell something? Company registration takes months, just getting a business tax ID was 6 weeks for me. To sell electronics, register with Stiftung EAR, then find an intermediary to get you a WEEE-Nummer and report monthly (!) sales figures of all your device types. Just that registration costs 1k and 8 weeks. And don't forget your battery and packaging license! By comparison, similar WEEE fees in UK are 30 pounds and in Estonia are 12 euros, no wait. But the real fun starts if you hire someone :) The paperwork there is a magnitude more. I don't think we're doomed though. The schools are packed with kids, education is free and good, health services are not a concern (looking at you, US), society is healthy. I think we'll manage :) Hopefully no more self-inflicted energy crises in the works.
- jareklupinski 3y ago
  > We're definitely huge fans of paperwork here and it hurts a lot. > society is healthy no pain, no gain :) there's probably a terry prachett quote attributing bureaucracy to the stability of a large-scale civilization
  - tetris11 3y ago
    It has a nice, horrifically frustrating, but nice way of slowing things right down. Its inefficiency is one of it's perks in my opinion. It buys people time to think before a piece of legislation is enacted, and when it finally is, people are already over it.
- fxtentacle 3y ago
  "But the real fun starts if you hire someone :) The paperwork there is a magnitude more." I've been very happy with Sage, an online SaaS to manage employees and their payments, taxes, and related paperwork.
aktenlage 3y ago
Keep in mind that politico is a subsidiary of Axel Springer, which is largely controlled by a man that has recently been exposed to have actively ordered chief editors write in support of the party of economic liberalism (FDP) before the last election in Germany. I.e. it is entirely possible that this article is also politically motivated.
- alephnerd 3y ago
  I keep seeing people saying this about Politico and it's total FUD. I have friends who work there and it's pretty firewalled from Axel Springer. This conspiracy theory for the Politico portion seems to have started in r/Europe and r/WorldNews a couple months ago and kept getting repeated since.
  - kataklasm 3y ago
    And you are plastering this exact message all over these threads here. Makes it seem like you have an agenda? Do you have an affiliation with Politico/Axel Springer? The political corruption and and election meddling done by Axel Springer is a known fact. [0] Excerpt from [0] translated with DeepL: "Our last hope is the FDP. Only if it becomes very strong - and that may be - the green-red disaster will be avoided. Can we do any more for them. The only ones who are consistently positioned against the Corona Measures madness. It's a patriotic duty." [0] https://archive.is/g8RMu https://archive.is/g8RMu
- SV_BubbleTime 3y ago
  If you are reading any news site about it - it’s political to someone.
deleted 3y ago
[deleted]
dontupvoteme 3y ago
It took them over 100 years but finally the treaty of versailles will be implemented, for all the wrong reasons.
MichaelMoser123 3y ago
There is a similar recent article in German from the "Berliner Zeitung" https://www.berliner-zeitung.de/wirtschaft-verantwortung/deindustrialisierung-wirtschaft-abwanderung-der-deutschen-industrie-das-ist-ein-neuer-schlag-in-die-magengrube-li.368676 https://www.berliner-zeitung.de/wirtschaft-verantwortung/dei... The linked article is mentioning additional factors: - tax incentives and favorable legislation offered in the US and China. - drawn out planning and approval procedures in Germany - no more cheap natural gas from Russia (i guess that was a big hit for the chemical industry) - cheaper energy (also cheaper green energy) in the US and China. However just last year Tesla opened a big plant in Brandenburg, near Berlin, go figure... https://en.wikipedia.org/wiki/Gigafactory_Berlin-Brandenburg https://en.wikipedia.org/wiki/Gigafactory_Berlin-Brandenburg ... and Intel is building one big fab in Magdeburg - that one is costing 17 billion euro: https://www.intel.com/content/www/us/en/corporate-responsibility/intel-in-germany.html https://www.intel.com/content/www/us/en/corporate-responsibi... So maybe not all of industry is leaving.
- deleted 3y ago
  [deleted]

100 points by flashfaffe2 3y ago

> Nearly 20 years ago, Germany overcame its reputation as the “sick man of Europe” with a package of ambitious labor market reforms Does anyone know what those were?

Dunedan 3y ago
That's a reference to the so-called "Agenda 2010": https://en.wikipedia.org/wiki/Agenda_2010 https://en.wikipedia.org/wiki/Agenda_2010
nieksand 3y ago
https://www.imf.org/external/pubs/ft/wp/2015/wp15162.pdf https://www.imf.org/external/pubs/ft/wp/2015/wp15162.pdf "In 2003–05, Germany undertook extensive labor market reforms which were followed by a large and persistent decline in unemployment. Key elements of the reforms were a drastic cut in benefits for the long-term unemployed and tighter job search and acceptance obligations."
- ahartmetz 3y ago
  Also working poor.
WastingMyTime89 3y ago
The Hartz reforms are fairly famous, yes. It’s mostly social dumping. Forced contraction of actual wages through reform of the benefits plans. It’s important to note that they are overall poor reforms and should have been nullified by the German money value shifting due to the knock off effect on the saving rate. This didn’t happen because they were put in place at the same time as the Euro and the overall imbalance in the union allowed Germany to keep an undervalued currency. In effect, Germany robbed all the poorer members of the union to prop up its own economy something it has kept doing since.
- lo_zamoyski 3y ago
  > In effect, Germany robbed all the poorer members of the union to prop up its own economy something it has kept doing since. Those who like to bully the poorer members of the Union on the grounds that they're being bankrolled by the the wealthier states would be wise to take note of this, and take a more intelligent and informed view of EU "subsidies". The idea that the wealthier member states are showering these countries with funds out of the disinterested goodness of their hearts is not only ignorant of how these cash flows actually work in the grander scheme of the movement of money, but also preposterously naive. The power balance is shifting in Europe against this crypto-germanocentrism, however.
  - imtringued 3y ago
    This sentiment is so common in Germany. Everyone blames the European "south" for Germany's problems as if Germany was some sort of hero doing all the work. The Greek economic crisis is a classic example. German banks mess up when they lend too much money to Greece, Germany does a bailout for "Greece", the money actually goes back to German banks. Then people have this perception as if they somehow paid for all the social services bought with the borrowed money. No, Greece is still in debt. You might complain about forgone interest but that is on the lender, who is not doing his job properly.
    - adasdasdas 3y ago
      Why are you only talking about the lender's fault when it comes to bad loans.
      - rfrey 3y ago
        Because assessing and assuming risk is literally their entire reason to exist.
        adasdasdas 3y ago
        Why doesn't the borrower assume responsibility for taking risky loans?
imtringued 3y ago
The strategy Germany is following is to cut unit labor costs below Greece aka Germany is competing on price with Eastern European countries. This may get you the "Exportweltmeister" trophy but is is just that, a trophy. It doesn't actually benefit you that much.

fwungy 3y ago

It's all so tiresome.

WastingMyTime89 3y ago

And obviously the reason is the lack of labour reform and not the billions in handouts currently given by the US and China which the EU refuses to match because of its brain dead insistence on undistorted markets and fiscal rigour. Ah Politico, such well researched and reasonable journalism, it warms my heart…

sauercrowd 3y ago
what are you referring to with "billions of handouts"?
- WastingMyTime89 3y ago
  The Inflation Reduction Act in the USA and the equivalent measures which have been taken in China but don’t have a catchy name. Both countries are currently giving subsidies to companies at an unprecedented rate.
  - api 3y ago
    There used to be a lot of opposition to these kinds of subsidies in the US until China started absolutely kicking America's ass because they subsidize their industries. Private enterprise really can't compete with governments, and even less so against governments with their own sovereign currencies and the ability to subsidize forever.
amadeuspagel 3y ago
Why aren't other EU countries facing the same problems? Also, from the article: > BASF opened a plant near Dresden that makes cathode materials for electric-car batteries just two weeks ago and has pledged to keep investing in its home market. To secure such commitments, however, local and federal governments have been forced to offer generous incentives. BASF will receive €175 million in government support for its new battery operation, for example. > Similarly, in June, the U.S. chipmaker Intel secured an eye-watering €10 billion subsidy for a massive new factory in the eastern city of Magdeburg. That translates into €3.3 million for each of the 3,000 jobs the company has pledged to create.

deleted 3y ago

[deleted]

huijzer 3y ago

I have tried to go against some of the arguments because some are wrong, some are okayish, and some are just plain wrong, but I gave up. The article moves all over the place pulling random facts from all kinds of places in support of the idea that Germany is declining. Maybe that's true, maybe not. This article appears not rigorous enough to come to a right conclusion.

Michelangelo11 3y ago
Right, I have the same impression -- it's really all over the place. Anyway, the absolute key issue seems to be energy costs. If they hadn't skyrocketed, this wouldn't be happening.
- nradov 3y ago
  Not just energy but specifically access to natural gas. Even when not burned for power and heat it acts as an essential feedstock for much of the German chemicals industry. With flows from Russia being reduced or eliminated there is no choice but to relocate production.
  - Archelaos 3y ago
    The German government is subsidising gas consumption by industry very heavily at the moment to prevent this. A press release on the relevant legislation can be found here (in German): https://www.bundesregierung.de/breg-de/aktuelles/energiepreisbremsen-2145728 https://www.bundesregierung.de/breg-de/aktuelles/energieprei... The most important section in this matter reads in English translation as follows: "From January 2023, industrial customers will receive 70% of their natural gas consumption in 2021 from their suppliers at a guaranteed 7 cents per kilowatt hour. For heat consumption, the price will be capped at 7.5 cents per kilowatt hour, also for 70% of consumption in 2021. For the remaining consumption, industry will pay the regular market price."
    - nradov 3y ago
      Right but that level of subsidization is unsustainable. What is the end game? Cheap Russian natural gas is unlikely to return soon enough to save the German chemicals industry.

ehvatum 3y ago

I feel embarrassed for Germany. So much pride, built on dishonesty and exploitation of customers and other EU nations. Getting to the point of implementing meaningful reform will be tremendously ugly, in a country that derives such gratification from exporting carbon-intensive industry to China. Sad.

photochemsyn 3y ago

The article mentions 'high energy prices' and 'energy costs' and alludes to 'Kremlin cutting off natural gas supplies' but otherwise provides zero discussion of the overall energy picture in Europe. A couple of major issues they could have addressed: 1. In retrospect, was the German decision to eliminate nuclear power wise? Could they have squeezed another decade of power out of their existing plants, even if they didn't see that as a viable long-term energy source (having to import uranium fuel is not all that better from having to import natural gas, economically speaking)? Granted, nuclear only provides electricty, while BASF needs methane. 2. Russian gas exports to Germany have been replaced by US LNG gas exports, but the cost differential is pretty huge. Looking around, I see this site has discussed it before (Nov 2022): https://www.politico.eu/article/cheap-us-gas-cost-fortune-europe-russia-ukraine-energy/ https://www.politico.eu/article/cheap-us-gas-cost-fortune-eu... That's an interesting article, pointing to tight markets being taken advantage of by European energy traders (though Exxon and Chevron shares are up 50% since the price boom, Permian Basin development, booming LNG exports, etc.). It also might explain why some European interests see a finacial benefit in prolonging the Ukraine war (i.e. keeping Russian gas sanctions in place). 3. Somewhat amusingly, if BASF moves a lot of production China, then their natural gas feedstocks will be coming from... Russia's massive Sakahalin 1 & 2 projects (built with extensive help from Exxon and Shell respectively, and ironically)? https://www.reuters.com/business/energy/russias-sakhalin-invites-india-china-tap-energy-resources-2023-06-06/ https://www.reuters.com/business/energy/russias-sakhalin-inv... Maybe blowing up the Nordstream pipeline wasn't such a smart move, after all.

CamperBob2 3y ago
Maybe blowing up the Nordstream pipeline wasn't such a smart move, after all. Do we know with any degree of certainty who was actually responsible for sabotaging the pipeline?
- oezi 3y ago
  It seems all evidence points to a Ukrainian op performed by a small team and minimal amounts of explosives. Ukraine is also the only country which had clear motive and no real repercussions if found out (because already at war with Russia).

choeger 3y ago

Germany is extremely well positioned to rise again economically in the next five years or so. It's attracting migrants from all over Europe, it's located quite nicely in the middle of the continent and it's currently building a massive capacity of renewable energy. The only real problem right now is efficiency of spending. Nearly all public sectors (defense, housing, transportation, education, healthcare) bemoan significant lack of financing and workers. Yet, Germany spends enormous amounts of money and employs record levels of workers there. It's like all the money and workers just vanish. This leads to the situation that it's currently difficult to hire in Germany. This process leads to the attraction of skilled workers especially from eastern Europe. I don't know where this ends, but I doubt the spending and employment will get significantly more efficient. Instead, Germany might very well attract additional millions of well-educated Poles, Ukrainians, Romanians, etc. I wouldn't be surprised if by 2030 we see a Germany with a population of 90M people absolutely dominating the European market.

eldaisfish 3y ago
i would not be so hopeful. A big problem is that germany does not operate in the global lingua franca - English. This really shows when countries like Australia and Canada - combined, both have a population less than germany’s - are able to attract the best and brightest from around the world. Another problem is one that plagues all old world countries - societies are based around ethnicity. These combine to mean that Germany and the EU in general are not attracting the best from abroad. The region is often the second or third choice of the educated migrant. Don’t believe me - look at the EU’s own internal migration numbers and the stats for immigrants from outside the EU. Internal EU migration is pretty low relative to countries like US (states vs countries, sure) and the immigrations from outside are largely poorly educated. This shows in Germany’s immigration policy - they have been reducing barriers to entry for over a decade now and are yet struggling to hire foreign talent. This begs the question - why?
- holoduke 3y ago
  Eastern European people are very much german orientated. Most speak better German than English. So no you are not right. Germany is immensively popular by tech migrants from Russia. Poland, Hungary, Czech etc.

sparrc 3y ago

Opposite lots of commenters here deriding the article as "all over the place", I thought it was very well-written and comprehensive. Seems like there are concerns across a wide swath of companies and industries in Germany. Reading between the lines, the proposed solution seems something like lower corporate taxes (currently making decamping to Dublin more attractive) and lower energy prices. The risk brought up is that if things continue it will likely lead to increasing blaming of immigrants and a rise in the far-right AfD party, which has already started.

lyu07282 3y ago
Also gutting labor rights, but I suppose that's always suggested by liberals no matter what
- tasubotadas 3y ago
  What about employer rights? Right to fire poorly performing schmucks?
  - dermesser 3y ago
    Once you're the schmuck, or your company starts laying off, you'll start appreciating it. (As has recently happened in my family)
tasubotadas 3y ago
Yes. The worst is yet to come. - Germany is heavily reliant on industry (like Autos) - Cheap energy has ended due to war in Ukraine - The available replacements are going to be even more expensive (and they are still closing more nuclear plants) - The production costs will increase reducing their competitiveness even further - The competitives was bad even before this (VW vs Tesla anyone?) - Once the huge layoffs and closures will begin, the entire economy will enter recession. Industry-focuses businesses are now low-margin and high-competition (competition mostly coming from Asia). The same is happening here what happened during the shift of Agriculture economy into Industrial economy. And the shift to services (tech/software specifically) was pretty much non-existent. Also, it's unlikely to become any better due to alienation of investors (who wants to invest in a country where everybody is taxed and red-taped into oblivion?). So... who nows. Germany is probably going to pull a "Greece" on us :).

javajosh 3y ago

In addition to this general malaise, the EU Cyber Resilience Act (CRA) is going to have a big, negative impact on all of the EU, especially Germany, and especially the software industry. The CRA itself is insane, requiring, for example, that conforming software phone-home. Which is, of course, the opposite of what we should be pushing for. Note that something similar is probably coming to the US in the next few years. I learned about this today from Eclipse Foundation executive director Mike Milinkovich's excellent video/tutorial/warning on the subject: https://www.youtube.com/watch?v=AmsM5_5QO5A https://www.youtube.com/watch?v=AmsM5_5QO5A

Vuizur 3y ago
When you look at open source AI, for example, EU laws are a huge problem: Not only the act you mentioned, but also GDPR, where it is not clear so far how the "right to be informed" or the "right to deletion" can/must conceivably be implemented. (From my interpretation I also don't see how OpenAI can conform to the "right to be informed" without publishing its training data). And of course the AI act, which might make it possible for the publishers of open models to be sued if a third party misuses it: https://techcrunch.com/2022/09/06/the-eus-ai-act-could-have-a-chilling-effect-on-open-source-efforts-experts-warn/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAFTbXXqVyQoivLXDbQ3ajaaN4VxOxNM6_rbEdhHd2WZPER7kpczVovbvBC_WPEj0pONpLby8t2M3oEc4-_3RaduXGxUz3ZO2lzJyR8yUrIKGBGde0LHunpJSZIdslvU94wSzkBZ5gyPan0JeVKdlVgyfqSClUP1nhDfQ1UCAjpXo https://techcrunch.com/2022/09/06/the-eus-ai-act-could-have-...

HackOfAllTrades 3y ago

I'm terribly suspicious when an article quotes a CEO saying "profits aren't where they should be". God only knows what he thinks his corporate profits "should be", but I'd bet it's a lot higher that you or I would guess.

novaRom 3y ago

quote: Germany ranks only eighth in the Global Innovation Index Is it so bad? For 83 millions people economy.

nicbou 3y ago
According to law only mailed or faxed responses are allowed
woobar 3y ago
Considering that Switzerland is No. 1, Sweden, Netherlands or Singapore are all above Germany, I'd guess population is not a big factor in computing this index.
- morelisp 3y ago
  > Switzerland is No. 1 Time to rename the region CHAD I guess.

tdrz 3y ago

I found the article quite good but has missed a couple of points that need to be mentioned: 1. The attitude of the average German consumer It seems to me that one of the national sports in Germany is to find cheaper deals for pretty much anything (and then brag about it). Even if it's fractions of a euro! After trimming down on everything that they could, the manufacturers and service providers had to finally reduce quality. This happened to such an extent that the famous "Made in Germany" is now meaningless, if not worse. 2. The attitude of the average German manager "I am your boss, you are the employee, now shut up and do as I say" attitude does not work well in knowledge-based industries like Software. And I believe this is one of the reasons why Germany is behind in digitalization, let alone in digital innovation.

croisillon 3y ago
haha number 1! 20 years later i'm still traumatized about my boss who would spend the whole lunchtime speaking about gas prices
patall 3y ago
> I am your boss, you are the employee, now shut up and do as I say This would also not work in engineering and never did. In fact, it's likely one of reasons why german engineering was so good: because people would (and still do) tell their boss bluntly what is wrong.
- tetris11 3y ago
  Can confirm this in science too. German masters/PhD students are much more willing to correct the professor on a topic, then I. England. N=1, of course.
  - rurban 3y ago
    Well, I'm just reading the Oppenheimer biography, who studied in the US, UK and Germany, and he came to the very same observations. And tried to encourage his students in Berkeley successfully to be more critical and interrupt the professors.

kachurovskiy 3y ago

We're definitely huge fans of paperwork here and it hurts a lot. Want to sell something? Company registration takes months, just getting a business tax ID was 6 weeks for me. To sell electronics, register with Stiftung EAR, then find an intermediary to get you a WEEE-Nummer and report monthly (!) sales figures of all your device types. Just that registration costs 1k and 8 weeks. And don't forget your battery and packaging license! By comparison, similar WEEE fees in UK are 30 pounds and in Estonia are 12 euros, no wait. But the real fun starts if you hire someone :) The paperwork there is a magnitude more. I don't think we're doomed though. The schools are packed with kids, education is free and good, health services are not a concern (looking at you, US), society is healthy. I think we'll manage :) Hopefully no more self-inflicted energy crises in the works.

jareklupinski 3y ago
> We're definitely huge fans of paperwork here and it hurts a lot. > society is healthy no pain, no gain :) there's probably a terry prachett quote attributing bureaucracy to the stability of a large-scale civilization
- tetris11 3y ago
  It has a nice, horrifically frustrating, but nice way of slowing things right down. Its inefficiency is one of it's perks in my opinion. It buys people time to think before a piece of legislation is enacted, and when it finally is, people are already over it.
fxtentacle 3y ago
"But the real fun starts if you hire someone :) The paperwork there is a magnitude more." I've been very happy with Sage, an online SaaS to manage employees and their payments, taxes, and related paperwork.

aktenlage 3y ago

Keep in mind that politico is a subsidiary of Axel Springer, which is largely controlled by a man that has recently been exposed to have actively ordered chief editors write in support of the party of economic liberalism (FDP) before the last election in Germany. I.e. it is entirely possible that this article is also politically motivated.

alephnerd 3y ago
I keep seeing people saying this about Politico and it's total FUD. I have friends who work there and it's pretty firewalled from Axel Springer. This conspiracy theory for the Politico portion seems to have started in r/Europe and r/WorldNews a couple months ago and kept getting repeated since.
- kataklasm 3y ago
  And you are plastering this exact message all over these threads here. Makes it seem like you have an agenda? Do you have an affiliation with Politico/Axel Springer? The political corruption and and election meddling done by Axel Springer is a known fact. [0] Excerpt from [0] translated with DeepL: "Our last hope is the FDP. Only if it becomes very strong - and that may be - the green-red disaster will be avoided. Can we do any more for them. The only ones who are consistently positioned against the Corona Measures madness. It's a patriotic duty." [0] https://archive.is/g8RMu https://archive.is/g8RMu
SV_BubbleTime 3y ago
If you are reading any news site about it - it’s political to someone.

deleted 3y ago

[deleted]

dontupvoteme 3y ago

It took them over 100 years but finally the treaty of versailles will be implemented, for all the wrong reasons.

MichaelMoser123 3y ago

There is a similar recent article in German from the "Berliner Zeitung" https://www.berliner-zeitung.de/wirtschaft-verantwortung/deindustrialisierung-wirtschaft-abwanderung-der-deutschen-industrie-das-ist-ein-neuer-schlag-in-die-magengrube-li.368676 https://www.berliner-zeitung.de/wirtschaft-verantwortung/dei... The linked article is mentioning additional factors: - tax incentives and favorable legislation offered in the US and China. - drawn out planning and approval procedures in Germany - no more cheap natural gas from Russia (i guess that was a big hit for the chemical industry) - cheaper energy (also cheaper green energy) in the US and China. However just last year Tesla opened a big plant in Brandenburg, near Berlin, go figure... https://en.wikipedia.org/wiki/Gigafactory_Berlin-Brandenburg https://en.wikipedia.org/wiki/Gigafactory_Berlin-Brandenburg ... and Intel is building one big fab in Magdeburg - that one is costing 17 billion euro: https://www.intel.com/content/www/us/en/corporate-responsibility/intel-in-germany.html https://www.intel.com/content/www/us/en/corporate-responsibi... So maybe not all of industry is leaving.

deleted 3y ago
[deleted]