Germany as a location is better than its reputation

"The economic situation for many companies in Germany is difficult right now. Some are already thinking about emigration or relocation of plants. But despite all the lamentations, that would be a big mistake.

 

There's no question that the situation for companies is anything but easy right now. The economic situation is not rosy, Germany may be on the verge of a recession. Energy prices have skyrocketed. In addition, there is very high inflation, which can lead to consumer dissatisfaction.

 

As a result, many companies are already much more cautious, which is understandable given the bad mood. According to a recent study by the Ifo Institute on behalf of the Foundation for Family Businesses, 25 percent of companies are considering downsizing, some want to postpone planned investments, stop production or give up energy-intensive business areas entirely. This is bitter, but such decisions are often made out of prudent business management: If the prospects for sales are poor, the manufacturers react. Because hardly anything is more dangerous than simply continuing to produce at full steam when demand is expected to fall. Some are more cautious than too bold.

 

Political stability, infrastructure, education - that speaks for the location

 

So far so bad. Another result caused a stir: at least nine percent of the family businesses surveyed, i.e. almost every tenth, want to relocate business premises abroad, which is more than a year ago.

 

If such decisions are actually implemented and not just expressed as a threat to put pressure on politicians and get more out of it for companies, that would be quite dangerous and short-sighted. Because that would have a long-term effect and is often irreversible. Such steps should be examined all the more carefully, as emigration is often not the right answer to the crisis.

 

Despite all the lamentations and also in the face of all the current adversities, Germany as a business location has a whole range of qualities. The political stability is there, the infrastructure works, even if there is justified criticism, for example of the lack of nationwide coverage with fast mobile communications. The level of training of skilled workers in Germany is quite high. Research funding in this country also helps. So-called clusters have already emerged at some locations, in which research, small and large companies work closely together. An example of this is the semiconductor location Dresden.

 

In addition, where should production be relocated to? The problems are similar in almost all European countries, and energy has recently become significantly more expensive there too. On the other hand, the political situation is sometimes much more volatile, as is currently being shown in Italy and Great Britain. Relocating production to China is also problematic, as the German and European economy wants to reduce dependency. So where to go anyway? Many choose the USA. BMW, for example, is currently investing a lot of money in its Spartanburg plant and is building a new battery factory, but above all to better serve the local market.

 

Although energy is cheaper in the USA, employees are less well trained and the political situation is uncertain. What agenda will a possible successor to US President Joe Biden pursue?

 

The global economic turmoil and ongoing problems with supply chains tend to make Germany and Europe more attractive as a production location. Many companies want to stand on several pillars and not be dependent on one country, they diversify their locations, which is also a lesson of the past few years with pandemics, customs disputes and political upheavals. E-car maker Tesla or the chip company Intel are building factories in this country, Apple is investing in Munich - just a few of many.

 

However, it would be completely wrong if Germany were to rest on its laurels. A lot has to happen in order to remain attractive as a location. Reduce bureaucracy, speed up approval processes, invest in infrastructure, promote the energy transition - these are just a few points. But then Germany and Europe could definitely become leaders, for example in environmentally friendly technologies that are developed and produced here.”