Al Qahera, news TV in Cairo, asked me questions on Germany’s VW crisis. VW announced yesterday it will close at least two facilities and move to break the long-term agreement with its workers’ union for no layoffs till 2029. This is serious in that 1) VW, since its founding in 1937, has never shut any plants, and 2) it’s not just VW. and it’s not just the German auto sector.
I told Al Qahera that the same story can be told about Germany’s steel industry (i.e., Thyssen-Krupp), or its chemical industry (i.e., BASF).
German energy intensive industries are facing not merely the creeping uncompetitiveness long decried in the country, but outright deindustrialization.
I described to Al Qahera how this decline of German industry reminds me of USA deindustrialization (the “rust belt” collapse) during my years working in the USA auto industry in the mid-1970’s to early 1980’s (both at Chrysler and Ford, in Detroit) and USA Railways (I worked on the Michigan Central when it was consolidated with other railways, by the federal government, to form Conrail). I remarked how it took the USA some 15 or more years to restructure and again become a modern, digitalized manufacturer. There is no guarantee Germany could pull this restructuring off, and there was no guarantee the USA would either, but that was a special case of a mammoth economy,
one where the technical-scientific community was simultaneously giving birth to the Third Industrial Revolution (from ca. 1970), the so-called Information Revolution, which was to be the tech core of the next 50 years of growth of Globalization, with the USA, the home of the IT start-ups-to-tech-giants story, at its core. Germany obviously is unlikely right now to pull off such a transformation on its own considering the ideologically driven abandonment of public debt and lack of modernization of infrastructure and research institutions especially during the 19 years of Merkel’s embrace of the “big black zero” debt-brake panacea … which is still causing havoc to respond to the present deindustrialization crisis and re-arming in the face of Russian aggression in Ukraine.
But, my core message is that much of this is down to a botched, overly complex, and rushed energy transition, with arbitrary populist mandates and subsidies for electric autos and 100% renewable energy that has produced Europe’s highest electricity prices (among large Members). Germany’s energy intensive business is especially suffering under the renewables fundamentalist model, which included shutting 17 nuclear power plants and systematically ripping them apart, literally destroying what was 25% of the country’s electrical generation, needing no new grids nor new, grid-scale storage schemes.
Then there was the embrace of what was called “cheap, reliable Russian gas,” with which almost the entire German political and business elites put their hope in Mr. Putin as the fall back for an ever more expensive and populist energy transition, or Energiewende.
This is clearly not the way to fight climate change. Read more details at GlobalBarrel.com, my blog.
Dr. Tom O’Donnell, Berlin
PS, We should have the edited and polished videos of the 2nd Berlin Energy Forum of 02 September 2024 online by tomorrow. Check at https://BerlinEnergyForum.de and here at GlobalBarrel.com
The Global Barrel 