Economy: industry feels the effects of addictions – economy

Germany is still dependent on Russian gas, but also on other commodities. Russia had cut off gas supplies via the Nord Stream pipeline to the Baltic Sea. Finance Minister Robert Habeck (Greens) spoke of an “economic attack” by Russian President Vladimir Putin on Industry Day.

The strangulation shows once again the vulnerability of the German economy. “From today’s perspective, accepting huge dependencies as a price for cost advantages and economies of scale was as wrong as giving our country enough investment in its own defense capabilities,” Russwurm said. “We left the fire department because we thought the risk of fire was negligible. It is now on fire.”

It is now important to avoid unilateral dependencies. Russwurm made it clear that this also applies to China. In the case of raw materials, there must be a much wider diversification of supply sources – that is, wider supply chains. And: Development and production skills, such as semiconductor technology in Europe, need to be expanded.

But are the prospects really bleak?

There is no reason for “financial pessimism” in time for the start of the round of collective bargaining, said Jörg Hofmann, first president of the IG Metall union, the German Press Agency. “Companies are doing well and looking positively at the future in terms of order and profits. Unlike their employees, companies can pass on higher prices.” Should anything really change for the worse, IG Metall will remain a “credible and responsible” collective bargaining partner.

Just Monday, IG Metall’s board decided to demand 7 to 8 percent more money for the approximately 3.9 million workers in the German metals and electricity industry in view of record inflation.

“With their purchasing policy in recent years, companies have risked fragile supply chains for every last cent saved,” Hofmann said. “He’s taking revenge and now he’s making many CEOs think: Geopolitical risks must also be taken into account in the supplier network.” For years, IG Metall has been demanding that future technologies be maintained in Europe.

At Industry Day, there was a lot of talk about innovation – as a prerequisite for growth. Russwurm called on politicians to activate the “turbo of innovation” and improve the framework conditions. However, investments have stuck to a “tail pattern” due to the uncertain economic outlook and the increased uncertainty caused by the war.

“Stopping the gas would have catastrophic consequences”

The BDI does not expect the economy to recover in terms of a return to pre-pandemonium levels by the end of the year at the earliest – provided Russian gas continues to reach Western Europe. “A shutdown would have a devastating effect on the manufacturing industry and would inevitably send our economy into recession,” Russwurm said.

Hubeck had presented a package of measures to reduce gas consumption in industry. This also includes converting more harmful to the carbon climate back into electricity. This is “very bad news,” Habeck said. However, the measure is necessary to fill the gas storage tanks. Germany can not spend the winter with half full storage facilities. If Russia then shuts off the gas tap, there will be talk of a serious economic crisis that will hit Germany.

In his speech to the industry, Chancellor Olaf Soltz (SPD) spoke of great challenges and promoted his announced “coordinated action” with representatives of employers and employees. A “permanent inflation spiral” in Germany must be prevented.

Otherwise, Scholz praised himself. The new federal government had “rolled up its sleeves.” He recalled promises he made a year ago on Industry Day – when he was still the SPD’s candidate for chancellor. They were observed. Scholz mentioned a decisive expansion of renewable energy sources or the abolition of the EEG levy on the electricity bill. But Scholz did not mention one thing: a year ago he stated that his goal was to reduce the price of industrial electricity.

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