Top politicians such as Economics Minister Robert Habeck and German Chancellor Olaf Scholz play down the issue of deindustrialization. Habeck describes it as a mere buzzword that does not do justice to reality. Scholz sees the warnings about deindustrialisation as nothing more than scaremongering. But the politicians’ assessments are at odds with what is actually happening in many industrial companies.

The automotive supply industry in Germany is facing challenges that are increasingly prompting it to think about investing abroad. According to a survey by the German Association of the Automotive Industry (VDA), one in three automotive suppliers is considering relocating planned investments from Germany to other countries, reports the Blackout News.

This development is worrying and is seen by experts as a warning signal for Germany as a business location. The reasons for this are manifold and range from bureaucratic hurdles to high energy costs (Welt: 02.11.23).

Automotive suppliers consider foreign investment due to bureaucracy and high energy costs

One of the main reasons why automotive suppliers are considering relocating investments abroad is the bureaucratic hurdles they face in Germany. The high administrative burden and regulatory requirements make it difficult for many companies to invest in Germany. This leads them to look for other locations that offer less bureaucratic obstacles.

Another important factor is the high cost of energy in Germany. Rising electricity prices are putting a strain on companies and reducing their competitiveness. To remain competitive, some automotive suppliers are considering investing in countries with lower energy costs.

Investment Goals Abroad and the VDA’s Appeal

The survey shows that the main destinations for investment abroad are mainly other EU countries, followed by Asia and the US. However, for some companies, shifting investments is not the only option. Around 14 percent of those surveyed said they would cancel planned investments altogether.

In view of this development, the German Association of the Automotive Industry (VDA) appeals to the German government and politicians to take measures to make Germany more attractive as a business location. In particular, the focus is on reducing energy costs for industry and strengthening competitiveness abroad.

Automotive suppliers in Germany fear further deterioration of the situation

The survey also shows that around a quarter of SMEs expect the current economic situation to deteriorate further in the coming year. These concerns reflect the uncertainty and challenges facing the automotive supply industry in Germany. It remains to be seen what measures politicians will take to keep Germany attractive as a business location for companies and to promote domestic investment.