Loss of Russian Gas Speeding Germany’s Deindustrialization: Media
TEHRAN (Tasnim) - Germany’s reign as an industrial superpower is “coming to an end” as the loss of cheap Russian natural gas amid the Ukraine crisis has dealt a “final blow” to manufacturers that were already struggling to remain cost-competitive, Bloomberg News reported.
Industrial output in Germany has been dropping since 2017, and the downward spiral has accelerated since imports of Russian gas were cut off in 2022 to punish Moscow over the Ukraine conflict, RT reported.
Century-old factories are closing, and other companies are moving production lines to countries with lower costs, Bloomberg said.
“There’s not a lot of hope, if I’m honest,” Stefan Klebert, CEO at machinery maker GEA Group AG, told the outlet. “I am really uncertain that we can halt this trend. Many things would have to change very quickly.”
A survey last September by the Federation of German Industries showed that concerns over energy security and costs are the top reason for shifting investment abroad. Chemical makers were among the manufacturers hit hardest by the loss of Russian gas. BASF SE, Europe’s biggest chemical producer, and Lanxess AG are cutting thousands of jobs.
French tire maker Michelin and US rival Goodyear are closing or downsizing their German plants. Maria Rottger, regional chief for Michelin, told Bloomberg that costs are too high for German exporters to thrive.
The German economy contracted in last year’s fourth quarter. A study by consulting firm Alvarez & Marsal found that 15% of German companies are in distress, meaning they have weak balance sheets. Germany’s distress rate increased from last year’s level of 9% and is the highest in Europe, the firm said.
