German companies are looking to 2024 with concern. Germany is becoming less attractive as a business location. While some companies are forced to lay off their employees, others are turning their backs on Germany.
High taxes, growing energy costs and slowing bureaucracy. The German economy is facing some difficulties. In addition, the USA in particular is offering hefty subsidies. The managing director of the Bonn Business Academy (BWA), Harald Müller, has therefore named 2024 the year of deindustrialization. “The de-industrialization of Germany is in full swing,” the industry portal produktion.de quoted him as saying. From conversations with board members, managing directors and works councils, he knows that there is great uncertainty in large parts of the economy. A number of companies have long been preparing to relocate production abroad on a large scale. “It’s no longer a question of whether, but only a question of how and how quickly,” says Müller. He expects that entire sectors of the economy will soon migrate abroad.
In his opinion, “wrong decisions in energy policy” are the main reason for the development. Some industries are particularly affected by the migration trend. This includes Müller the chemical and metal processing factories and the automobile production with its suppliers. The latter in particular has already made a name for itself with numerous announcements about job cuts. An overview:
Auto supplier
· Bosch
The automotive supplier is offering around 1,200 jobs worldwide in the car software business by 2026, including around 950 in Germany. The drive division at the Baden-Württemberg locations in Stuttgart-Feuerbach and Schwieberdingen is also expected to have up to 1500 jobs fall away. In the control unit division, the group is cutting up to 500 positions at its German locations in administration and development, also until the end of 2025.
· Continental
The auto supplier is restructuring its ailing car division and cutting thousands of jobs worldwide, especially in administration. This will affect 1,750 jobs in research and development as part of an efficiency program. Continental also estimated the staff cuts announced in the fall, which primarily affected administration, at 5,400 jobs. Whether a total of 7,150 of the 203,000 employees leave the company depends on alternative employment opportunities within the group. 40 percent of jobs lost in Germany settled. Two factories in Hesse also fell victim to the austerity measures. The Schwalbach and Wetzlar locations are scheduled to be closed by the end of 2025.
· Webasto
After a slump in profits, the Bavarian auto supplier wants at least every tenth place cancel. “A double-digit percentage job cut is probably unavoidable,” said CEO Holger Engelmann. At the end of December, Webasto had 16,000 employees.
· ZF Friedrichshafen
The general works council of the automotive supplier ZF fears major job cuts in Germany in the coming years. At least those affected are 12,000 jobs, explained the works council. 10,000 of these could be eliminated by 2028. The ZF board presented the figures before Christmas. The company from Friedrichshafen on Lake Constance did not want to comment on the number. Human resources manager Lea Corzilius said they would not comment on speculation and warned against scaremongering.
Chemical industry
· BASF
The chemical giant is tightening austerity measures at its headquarters in Ludwigshafen. BASF has not yet announced how many jobs will be cut. One thing is already certain: BASF’s headquarters in Ludwigshafen will become smaller, but in the long term it will remain the group’s largest production site. A year ago, the outgoing CEO Brudermüller had already announced tough cuts to make the company weatherproof. you should 2,600 jobs worldwide fall victim, barely two thirds of them in Germany. At the end of the year, the group had around 112,000 employees worldwide. In Germany 51,400, including 38,700 in Ludwigshafen.
· Evonik
The specialty chemicals company is responding to the industry crisis by forcing job cuts. Evonik wants to cut up to 2,000 of the current 33,000 jobs by 2026 1,500 of them in Germany.
· Lanxess
In view of weak business, the Cologne-based specialty chemicals group wants to cut 870 jobs worldwide as part of its austerity program 460 jobs in Germany.
family business
· Karcher
The cleaning equipment manufacturer Kärcher wants to relocate its Kärcher Municipal division from Reutlingen to Latvia. Around a quarter of the special vehicle manufacturer’s jobs are affected.
· Miele
The household appliance manufacturer wants up to 2700 of 23,000 Place cancel. At the Gütersloh site alone, 700 employees are affected because the production of washing machines there is almost entirely relocated to Poland. The reason for the measure at Miele is the “global collapse in demand for household appliances as well as the drastic price increases on the cost side,” according to the company. “I have been with the company since 1999 and we have experienced several very challenging phases since then. But not even the financial crisis of 2008/09 had such a serious impact on us,” is how Miele CEO Markus Miele describes the current situation in an interview with “Zeit”. Every division of the household appliance manufacturer is affected. “In terms of the number of units sold, we lost all of the growth of more than five years last year.”
· Stihl
The traditional company Stihl from Baden-Württemberg is known for its chainsaws. It has already put its new building project in Ludwigsburg on hold and is now considering setting up in Switzerland. “Employees in Switzerland earn more money, but the overall costs, which consist of duties, taxes, energy costs and so on, mean that production in Switzerland is now actually cheaper than in Germany,” says Chairman of the Supervisory Board Nikolas Stihl the ARD. In a recent press release, the company announced that it plans to produce batteries for Stihl devices in Romania in the future. The plant will employ 700 people. With the decision, the company is strengthening another location outside of Germany. Stihl currently has around 6,000 employees throughout Germany.
· Viessmann
At the beginning of the year, the family-owned company Viessmann completed the sale of its air conditioning division, including the promising heat pumps, to the US group Carrier Global. For what is by far the largest division of the company with around 12,000 employees, the North Hessians received 20 percent of the purchase price of twelve billion euros in the form of a share package. The sale of the German heat pump market leader in the middle of the planned heating transition caused a political stir in April last year. With the deal, the core business of the heating engineer Viessmann, which was founded in 1917, will be absorbed into the Carrier Group, which is around five times larger.
According to the German Chamber of Commerce and Industry, companies are increasingly choosing to invest abroad for cost reasons. “This is an alarming signal and shows that Germany needs to become more attractive again as a production location,” the association recently announced, referring to a survey of around 1,900 companies. 35 percent of companies with investment plans abroad cited cost savings as their main motivation. “The last time such a high value was in 2008,” said Ilja Nothnagel, member of the DIHK executive board. Foreign investments have actually always benefited Germany as a location, says Nothnagel. “But the tide is turning: more and more companies are now investing abroad because Germany is too expensive and complicated for them. They are migrating at the expense of Germany.”
Both Economics Minister Robert Habeck and Finance Minister Christian Lindner recently described Germany as no longer competitive. However, the traffic light parties SPD, Greens and FDP have different ideas about how best to respond to the misery.