12 ms·

Germany's days as an industrial superpower are coming to an end

112 points by rustoo 3y ago

nf3 3y ago
https://archive.ph/lsQ3Q https://archive.ph/lsQ3Q
jsmcgd 3y ago
I feel I've seen this movie before.
- dlahoda 3y ago
  what?
  - jeff_carr 3y ago
    You know, the one where Germany is falling in stature on the international stage so it pulls itself up from it's bootstraps so it can once again rise up to an international superpower. I forget the title. I think they made a sequel.
    - peteradio 3y ago
      "The Grand Foray" I believe is what you are thinking.
- spqrr 3y ago
  My grandparents lived through this and were fine. It'll be ok I'm sure.
  - lagrange77 3y ago
    ? Would you elaborate, just to be sure we're talking about the same movie?
    - spqrr 3y ago
      If you are offended or amused you are interpreting it correctly. EDIT: Maybe I got it wrong but as as I understand grandparent is referring to the increasingly Weimar-like conditions politically and economically.
Biologist123 3y ago
Anecdata: investment in robot and 3D builders is ramping up in Germany in response to labour shortages and increasing costs. Source: a German friend in the sector. I guess it’s good this issue is being openly discussed. Having a good problem statement is always a good start. By contrast in the UK, deindustrialisation of the 80s/90s/00s was not a massive political topic. And the ensuing enshittification of the economy caught many by surprise.
- orwin 3y ago
  Automation in the works since at least 2016 in western Europe, it was a leg of the Boost4.0 project (an other leg was better repairability and part manufacturing, which might have pushed 3d printing but I haven't worked on that part so do not believe me on this, it's an unfounded guess). The leftist in me is sad to acknowledge that (not really, I'm more on the autogestion side), but EU institutions dropped the ball on this subjects, the main drivers were auto companies and universities/engineering schools.
- skippyboxedhero 3y ago
  UK economy isn't shit, still a very wealthy country. The problem is that the ratio of productive to unproductive has shifted significantly. Look at how many lawyers, civil servants, other government workers, management consultants the UK can afford to support. Housing hundreds of thousands of economic migrants for free. That is a rich economy. The problem is that the productive section of the economy isn't growing (and a lot of the unproductive activities, for example paying lawyers hundreds of thousands per year to block industrial development, are blocking growth). The same is true of Germany. Of almost every economy in Western Europe bar NL. There is no "labour shortage"...I don't even understand how that is supposed to work. There is a price for labour, if you can't pay it then you will go out of business. Companies: refuse to train staff, complain that no-one is trained, rely on mass importation of migrant labour, and then also complain that they can't afford to pay more (when they refuse to hire any higher-skill staff who can actually improve productivity)...these aren't real problems. Economic inactivity rates are sky-high across Western Europe WHILST companies say there is a labour shortage. Who believes this? Deindutrailisation was an absolutely huge political topic in the 80/90/00s. It was probably the biggest economic topic throughout the 80s. The "enshittificaton" caught no-one by surprise apart from politicians who believed that the 2000s (specifically) were a time of massive prosperity (you still see this, Starmer goes on continuously about how wonderful the 2000s were, great time for laywers/bankers/landlords, people like him). Throughout the 90/00s, they pumped government jobs into these areas...and are now surprised that everyone else has run out of money to support these people doing nothing? (Same thing has happened in Germany with the East btw, same thing in France, Italy, Spain). I agree that identifying the problem is the issue but it is far deeper than deindustrialization (the discussion of which got us here because the "solution" was: mass government intervention into certain areas to try and boost the vote for whatever party thought they could win...it should be no coincide that elections in the UK are now won and lost in the areas of "deindustrialization" AND nothing happens to fix these areas beyond politicians promising a mystery box full of cash). That this is happening simultaneously in many Western European countries and other developed countries should be the clue that it is cultural. Economic growth has never been easier, costs have never been lower, potential has never been higher. People should ask why we are circling the drain even more rapidly whilst other countries are smashing it.
FrustratedMonky 3y ago
The article lists a lot of things going bad for Germany. But was there some underlying reason? Like demographics, shrinking population? Or is it just the obvious , Russian gas, rising Energy costs, now their prices are too high, so exports are down.
- treprinum 3y ago
  I'd say the main problem is "leadersh*t", incompetent captains of industry. It's so pervasive and prevalent that I really don't see any hope for them. People are also getting more and more unprofessional and expect high pay for subpar results. Devs on the other hand are hugely underpaid and the country operates in a two caste system of managers vs everybody else though not as badly as the UK. There is also a high aversion to risk; a friend of mine who built a successful company told me that in order to get 1M from a bank they essentially had to pay them 1M upfront.
  - JPLeRouzic 3y ago
    > People are also getting more and more unprofessional > the country operates in a two-caste system I don't know for today but I remember in the 1980' some German engineers playing games on their computers during work at Deutsch Telecom.
    - treprinum 3y ago
      An accounting professor of Turkish origin in my MBA program in the US was making fun of Germany after the Wirecard scandal that he could have imagined such crime in Turkey but never in Germany and then shrugged his shoulders.
      - pgeorgi 3y ago
        Just look where Marsalek comes from: We import our criminals from Austria.
  - iforgotpassword 3y ago
konschubert 3y ago
People are blaming energy prices but I don’t understand: As far as I can tell, wholesale prices for both gas and electricity are lower than before the start of the war.
- mamonster 3y ago
  Supply curve shifts left, demand curve shifts left -> price is the same.
  - konschubert 3y ago
    That’s not how demand curves work. If you hold the price fixed or your decrease it, demand will increase, not decrease. If you reduce supply, price finds a new equilibrium at lower demand, but that price is always HIGER than before. The fact that prices are equal or lower prices they this cannot be it.
    - mamonster 3y ago
      That is exactly how they work if both demand and supply shift. Example: P_d=100-Q P_s=Q Solve P_d = P_s to get Q=50, P=50 Take a left shift like 80 - Q in demand, and take a left shift in supply like P=1.66Q. Solving now you get Q=30, P=50
- throwaway4good 3y ago
  I think the problem is that German energy is expensive compared to other countries. On top of that you have regulation and lack of subsidies making other places more attractive to produce in ie. the US, Eastern Europe or China.
  - skippyboxedhero 3y ago
    Correct. BASF is investing heavily in China. Nothing tells you more about this problem than the most German of companies moving to China. BASF's largest plant in Germany was hooked up directly to Russian gas. Russian gas is now going to China. So are BASF. I don't think regulation or subsidies are to blame either. Eastern Europe is receiving heavy investment because they have costs for workers under control and can provide a more stable political environment. The problem with Germany specifically is that they papered over a lot of bad fundamentals in the early 2000s with cheap energy and very close relations with Russia.
whearyou 3y ago
The West will be the poorer for it
- Sabinus 3y ago
  The cheap energy (LNG) is in America now. The manufacturing will just move there.
sschueller 3y ago
IMO the cheap Russian gas was keeping Germany afloat while it was already crumbling. Germany has been too slow in adapting for the modern age, building out their infrastructure such as fiber[1] or even finishing their part of the NRLA[2] which is still not even close to being finished. They added too much red tape for every little crap[3] making it incredibly difficult for any business to get anywhere (small German you-tubers are dragged to court because they forgot to place a small disclaimer on their website which could have been handled with a small fine or warning). In recent times trying to compete with other countries a lot has been privatized making the whole thing even worse. You have private infrastructure resulting in the same road being ripped up multiple times every-time another fiber provider wants to add service. You also have the once 80%+ on time rail network being so late that trains are stopped at the Swiss border to prevent time shifts in the tight Swiss schedule. While Switzerland implemented Clock-face scheduling a long time ago Germany moved the date to 2070[4]! You also now have private low budget trains running on the network. These companies cut corners to the maximum and if one of these trains breaks down it blocks the track. Unlike a bus, you can't just drive around it. There are also still large parts of the German rail network that aren't electrified. The trip from Zürich to München only recently has been electrified not requiring a locomotive switch. IMO, infrastructure needs to be public, roads, rail and fiber. Companies need to make money for their shareholders and with infrastructure the profit comes from long term economic growth of a region. This does not translate to direct company profit. [1] https://netzpolitik.org/2018/danke-helmut-kohl-kabelfernsehen-statt-glasfaserausbau/ https://netzpolitik.org/2018/danke-helmut-kohl-kabelfernsehe... [DE] [2] https://en.wikipedia.org/wiki/NRLA https://en.wikipedia.org/wiki/NRLA [3] https://www.politico.eu/article/spam-email-gdpr-lawsuits/ https://www.politico.eu/article/spam-email-gdpr-lawsuits/ [4] https://www.tagesschau.de/wirtschaft/unternehmen/bahn-deutschlandtakt-101.html https://www.tagesschau.de/wirtschaft/unternehmen/bahn-deutsc... [DE]
jackcosgrove 3y ago
Germany's strategy has been to offer higher quality products at a huge markup. Just using the auto industry as an example, in the past twenty years the difference in quality between a mass market vehicle and a luxury vehicle has compressed. Competing on quality seems to be getting harder. The Anglophone economies, whose shift to services away from manufacturing has been ballyhooed and decried in many quarters, embraced competing on novelty. By being the first mover in many industries. The Anglophone strategy led to greater internal inequality but seems to be better from an aggregate standpoint. I'd like to see Germany's manufacturing strategy work since it preserves mid-skill jobs, but this is casting doubt.
- juanani 3y ago
  [dead]
- JKCalhoun 3y ago
  I agree that we need to keep what you call here mid-skill jobs. Too often I see people say to the disappearance of manual labor jobs: good, retrain people to use computers. I have slowly come to the belief that there are some people for whom working with their hands is the only kind of sane work they can do. You can call them blue-collar, or working class (these are the people incidentally that raised me, the people in my neighborhood growing up). Why would anyone not want to work in a clean office with only a compiler as your boss and a big paycheck waiting for you every two weeks? When I was younger I assumed that anyone not in the tech field were people not smart enough to pass Algebra in high school. It had not occurred to me then that it might go beyond aptitude and instead be due to something more fundamental about a person's nature or character. I know I'm getting hand-wavy with nature, character but I'm not sure what other words to use. I came to believe that though many people who are like me find some satisfaction from having solved a difficult problem, or having created a functional framework that can now do work to solve problems there are many others where satisfaction primarily comes from having changed something with their hands. I don't know if all of that makes sense or resonates with anyone. I'll add this though, the older I get, the more I recognize even in myself the satisfaction that comes from doing something physical (even mowing the lawn as an example). I seem to take some pleasure from taking something unordered or in a raw state, and ending up with a thing in an ordered or "finished" state. It's no doubt why I have pursued woodworking as a hobby, print making, creating PCBs. (And that fresh mown lawn looks so much nicer than the ragged lawn that was there before.) In any event, following that line of reasoning has made me realize we should keep a large number of manufacturing, construction, repair and other manual labor jobs so that we can serve the whole of society. Just expecting everyone to learn to code is misguided and will fail so many people. It is sad to me that Germany appears to have tried this model, tried to keep manufacturing in their country, and yet it is purportedly failing. I'm not too optimistic about our future when we apparently measure progress by "cost of living standards".
verticalscaler 3y ago
Patience. This is just a minor setback of demographics and energy supplies - Angela Merkel (a supremely skilled stateswoman who was in power for 17 years) saw this coming from a mile away and very competently bet the farm on Russian gas and importing millions of unskilled people from the far corners of the earth to solve these problems. They will start turning it around any moment now. As Germans are famous for their rationality it is literally impossible for things to not go according to plan.
bamboozled 3y ago
Which developed nation isn't in this position? America is an Industrial super power? Japan? England? Korea?
- amadeuspagel 3y ago
  Yes. Yes. No. Yes.
  - abrichr 3y ago
    To add to this, from https://en.wikipedia.org/wiki/List_of_countries_by_motor_vehicle_production https://en.wikipedia.org/wiki/List_of_countries_by_motor_veh...: # Country 2022 ---------------------------- 1 China 27,020,615 2 United States 10,060,339 3 Japan 7,835,519 4 India 5,456,857 5 South Korea 3,757,049 6 Germany 3,677,820 ... 18 United Kingdom 876,614
    - z7 3y ago
      South Korea produces more cars than Germany with 32 million fewer people? Impressive.
    - bamboozled 3y ago
      I'm talking about going backwards. Japan, how is that sustainable with a collapsing population? Robots, perhaps, but not yet.
  - fsloth 3y ago
    When you first learn that the industrial revolution started in England, you imagine it must be still amazing given 200 years at it. Then you grow up, and learn what they actually did was 100 years of manufacturing with the same infrastructure since they could just funnel their product to the colonies, and when their empire collapsed, they were finally forced to compete in the open market, at which point they chose to close down manufacturing and focus on finance.
MrDresden 3y ago
One of the myriad issues mentioned in that article is that Germany's workforce is not going to be able to sustain the economy after some years. What is the cause of that? There is plenty of immigration and with cost of living having been fairly low in many places in Germany for the last two decades, plus the economy booming in that time, why is there a lack of workers now (+-5-10 years)?
- intalentive 3y ago
  German workers are famously productive. Non-German substitutes are unlikely to be so industrious.
  - polotics 3y ago
    Can you substantiate this statement?
    - latency-guy2 3y ago
      What is the profile of the average migrant coming into Germany compared to the average German? The standard need only be more/less educated or qualified, unless Germany wants to remove regulations. I of course think Germans are not really "productive" in the first place, from what I've seen they only work about 80% as much as Americans do, and output is not necessarily exemplary for time spent (or saved if you will). Americans put in more, and you get out more, and their pay also exceeds top XX percentile for overseas counterparts.
vmchale 3y ago
Shutting down nuclear plants surely couldn't have helped.
- pgeorgi 3y ago
  The last new nuclear plant to go online in Germany was Greifswald 5 in November 1989. For 23 days. Given the massive failure of AVR Jülich, whose design was supposed to be "fail safe" while it's now the most 90Sr-contaminated nuclear facility world-wide, and the corruption around it, there's little trust that even if the technology is safe, operations would be. That accident in Jülich was 1979, rumors that something happened were struck down with political support, and so the acknowledgement by the operator was 21 years later in 2000 and the government confirmed it only in 2010. The plan for decommissioning is to get it done by the end of this century, after we "develop some procedure during the next 60 years." (that is, we have no f'ing clue what to do with that thing right now). By that time, the incident has been 120 years ago... https://en.wikipedia.org/wiki/AVR_reactor https://en.wikipedia.org/wiki/AVR_reactor (and even more so its German equivalent page) has the gory details of that mess. Germany likes to do things at industrial scale, and so it also messes up at industrial scale. As a result (and while Chornobyl didn't help the nuclear-power cause, the German anti-nuclear-power movement predates that incident by ~10 years), Germany moving away from nuclear power has been a long time coming.
  - ulfw 3y ago
    Germany getting rid of nuclear power will not make Germany any safer at all. Cattenom and Fessenheim to name just two examples are French power plants within viewing distance of the German border. The latter even having a German name due to history.
    - pgeorgi 3y ago
      It's fewer operators that are full of shit and might mess up things. Cattenom, Fessenheim, Tihange etc are already getting their share of criticism and protest, but that's all German citizens can do about foreign reactors that happen to be built right across the border.
neovialogistics 3y ago
The reliance of the German industry on the prolific use of petroleum and gas products isn't just an energy/heat generation story. Their economy sits on a foundation of cheap downstream intermediate products produced domestically with very few middlemen compared to other national industrial complexes: cheap propylene oxide, cheap monoethylene glycol, cheap acetaldehyde, cheap acrylonitrile, cheap cumene, cheap C4 aromatics, etc, etc, Each of these chemicals, plus more that I haven't mentioned, sit at the base of their own value chains. All of those have recently lost their comparative savings versus product refined elsewhere which means an end to German manufacturers enjoying cheap rubbers, resins, coatings, greases, fuels, paints, plastics, etc
jillesvangurp 3y ago
I've lived in Berlin for fifteen years now. My view is very different from what this article is portraying. Germany definitely has issues. Some of them are short term issues. Some of them self inflicted. And others have been issues for a long time. But all of these are fixable. All it takes is change. Change is hard for Germans but if you look at their history, you see that that wasn't always the case. They are hard workers and they have a culture of just getting shit done and being very proud of their ability to do so. This is part of their culture and value system. The wave of conservatism that has crippled the country for decades is being challenged by a younger generation that is starting to take over from the baby boom generation that is the root of this problem. They inherited a booming economy and have been reluctant to change because they never had to. And now they are old and incapable of change, like most old people. But that generation is on the way out. Most people that were employed before the cold war ended are now closing in on retirement age. Another ten years and the working force will consist exclusively of people that are used to using computers, never knew a Germany that wasn't united, and have modern ideas about how to run a company. Or indeed the country. Germany has three challenges: 1) Infrastructure is a disgraceful mess and it needs fixing. Roads, rails, and energy sector. All of it. 2) There's an energy crisis that was caused by the Russians. Which is accelerating the trends that are causing the next challenge. 3) There's a lot of old industry that is becoming less relevant. Coal, steel, ICE cars, etc. The fix for each of these challenges is addressing the first challenge. Doing so will fix all their issues and create a lot of jobs and economic opportunities. And unlike the US and China, Germany is not crippled by debt. They've been frugal and reluctant to spend. That's actually the main reason the infrastructure is a mess. But their credit rating is awesome. They are a bit slow and indecisive right now but with the right leadership, they can make a lot of changes in a short amount of time. My prediction is that they will have largely cleaned up the energy sector by 2035-2040 at great cost. This is a good thing. All of that spending will flow directly into their economy. Spending lots of money is a great way to jump start an economy. As a result, they will no longer be dependent on fossil fuel. This will really suck for economies whose main business is exporting that stuff. Related industries will have largely adapted or died off by then. Steel production will move to places where renewable energy is cheap and plentiful (i.e. not Germany). Part of the car industry will be sold off to the Chinese and the rest will have transitioned to battery electrical. This will be very tough for Germany but there's very little they can do to stop this at this point. The same conservatism that cripples their country is also in charge of these industries. However, once the new energy sector start booming, there will be a lot of re-shoring of manufacturing that is currently happening in China. Formerly labor intensive production processes will transition to high tech and largely automated processes. Germany does high tech stuff extremely well. Both the Americans and the Chinese build EVs using equipment that is made in Germany. You look around in a Tesla factory and they have all the best stuff. Made in Germany. The key insight here is that Germany already makes all the things that they need for re-shoring manufacturing. Chips, machines that make chips, tools, machines, etc. In short, they have the means and the money to do what needs doing, which is fixing their infrastructure. All they need to do is start doing that. The key blocker for that is their bureaucracy. They are hopeless paper and process fetishists and stuck in their old ways. I often make fun of my German friends over this and they all are a bit ashamed and embarrassed about this. They are well aware and the next generation of politicians is going to have to do things differently in order to get the confidence of voters. Which is why they are all trying to outdo each other with plans on just how to do this.
teleforce 3y ago
It's interesting to note that a GWM Tank 300 that cost 1/5 or 1/10 of Mercedes G-Wagon price (depending on the countries) is as good if not better in term of interior luxury, moving from A to B and off-road capability [1]. It now has reached its 300K milestone production recently, and fast becoming Corolla of 4WD world. [1]Cybertank 300 Is A Batshit Crazy $47K Chinese SUV With 227 HP: https://carnewschina.com/2021/08/17/cybertank-300-crazy-47-000-chinese-suv-with-227-hp/ https://carnewschina.com/2021/08/17/cybertank-300-crazy-47-0...
- nothercastle 3y ago
  Zero safety features?
  - teleforce 3y ago
    5-star NCAP
b212 3y ago
Im Polish. 20 years ago my parents were taking 1-2 months of PTO every year to work on German farms. 2 months * 2 people and you could’ve renovated a whole mid-sized flat or get a decent 3 years old car. Now I’m making 2-3x more after taxes than my German friends. Yes, I’m self employed and yes I’ll need to take care of my own retirement but I’ll be better off after 1-2 years of putting $100k in ETFs than they could ever be with their state pensions. The taxes will kill the old Europe. On the other hand juniors at FAANG in California make more than I do ($160k before taxes, $135k after, how much do you need to earn in Berlin to be left with 135k?).
- brnt 3y ago
  Here in Western Europe (West) Germany has always been known for its bad wages. Was it Mitterrand who likened German workers to the Chinese, or was it even before that?
- eklitzke 3y ago
  You think someone earning $160k before taxes in California takes home $135k?
  - triceratops 3y ago
    Eh...it's sort of right. If they max out their 401k contributions and count it as take-home (not entirely unreasonable, people save their take-home pay after all) it's about $132k. More if the employer matches 401k contributions.
- zrn900 3y ago
  What do taxes have to do with German industry going bankrupt because their cheap oil and gas have been cut due to the sanctions against Russia... Those taxes made all that infrastructure that Europe uses possible. From fast trains to ports. Also, those taxes help you avoid paying $1000 per head for healthcare and then up to $18,000 out of pocket every year labeled as 'copay' until the medical insurance picks up... then tries everything it can to reject paying. Then up to $3000/month for a small room in a shared flat for housing, and then a few thousand on food and other costs. And like they said - if you think that juniors in California take home $135k after taxes, you are living in a very different universe.
effnorwood 3y ago
[dead]
aiisdoomed 3y ago
[flagged]
fxtentacle 3y ago
"political paralysis in Berlin is intensifying long-standing domestic issues such as creaking infrastructure" That is exactly the opposite of my impression. I'm seeing lots of useful initiatives finally gaining momentum after the previous (conservative) party had delayed/suppressed them for years. That said, it seems that some German companies refuse to pay high salaries on principle. And that's very dangerous, in my opinion, because it forces the most experienced employees to work for US companies instead.
- pasabagi 3y ago
  Calling German infrastructure 'creaking' is also completely ridiculous. What would you call infrastructure in the UK, then? The US?

112 points by rustoo 3y ago

nf3 3y ago

https://archive.ph/lsQ3Q https://archive.ph/lsQ3Q

jsmcgd 3y ago

I feel I've seen this movie before.

dlahoda 3y ago
what?
- jeff_carr 3y ago
  You know, the one where Germany is falling in stature on the international stage so it pulls itself up from it's bootstraps so it can once again rise up to an international superpower. I forget the title. I think they made a sequel.
  - peteradio 3y ago
    "The Grand Foray" I believe is what you are thinking.
spqrr 3y ago
My grandparents lived through this and were fine. It'll be ok I'm sure.
- lagrange77 3y ago
  ? Would you elaborate, just to be sure we're talking about the same movie?
  - spqrr 3y ago
    If you are offended or amused you are interpreting it correctly. EDIT: Maybe I got it wrong but as as I understand grandparent is referring to the increasingly Weimar-like conditions politically and economically.

Biologist123 3y ago

Anecdata: investment in robot and 3D builders is ramping up in Germany in response to labour shortages and increasing costs. Source: a German friend in the sector. I guess it’s good this issue is being openly discussed. Having a good problem statement is always a good start. By contrast in the UK, deindustrialisation of the 80s/90s/00s was not a massive political topic. And the ensuing enshittification of the economy caught many by surprise.

orwin 3y ago
Automation in the works since at least 2016 in western Europe, it was a leg of the Boost4.0 project (an other leg was better repairability and part manufacturing, which might have pushed 3d printing but I haven't worked on that part so do not believe me on this, it's an unfounded guess). The leftist in me is sad to acknowledge that (not really, I'm more on the autogestion side), but EU institutions dropped the ball on this subjects, the main drivers were auto companies and universities/engineering schools.
skippyboxedhero 3y ago
UK economy isn't shit, still a very wealthy country. The problem is that the ratio of productive to unproductive has shifted significantly. Look at how many lawyers, civil servants, other government workers, management consultants the UK can afford to support. Housing hundreds of thousands of economic migrants for free. That is a rich economy. The problem is that the productive section of the economy isn't growing (and a lot of the unproductive activities, for example paying lawyers hundreds of thousands per year to block industrial development, are blocking growth). The same is true of Germany. Of almost every economy in Western Europe bar NL. There is no "labour shortage"...I don't even understand how that is supposed to work. There is a price for labour, if you can't pay it then you will go out of business. Companies: refuse to train staff, complain that no-one is trained, rely on mass importation of migrant labour, and then also complain that they can't afford to pay more (when they refuse to hire any higher-skill staff who can actually improve productivity)...these aren't real problems. Economic inactivity rates are sky-high across Western Europe WHILST companies say there is a labour shortage. Who believes this? Deindutrailisation was an absolutely huge political topic in the 80/90/00s. It was probably the biggest economic topic throughout the 80s. The "enshittificaton" caught no-one by surprise apart from politicians who believed that the 2000s (specifically) were a time of massive prosperity (you still see this, Starmer goes on continuously about how wonderful the 2000s were, great time for laywers/bankers/landlords, people like him). Throughout the 90/00s, they pumped government jobs into these areas...and are now surprised that everyone else has run out of money to support these people doing nothing? (Same thing has happened in Germany with the East btw, same thing in France, Italy, Spain). I agree that identifying the problem is the issue but it is far deeper than deindustrialization (the discussion of which got us here because the "solution" was: mass government intervention into certain areas to try and boost the vote for whatever party thought they could win...it should be no coincide that elections in the UK are now won and lost in the areas of "deindustrialization" AND nothing happens to fix these areas beyond politicians promising a mystery box full of cash). That this is happening simultaneously in many Western European countries and other developed countries should be the clue that it is cultural. Economic growth has never been easier, costs have never been lower, potential has never been higher. People should ask why we are circling the drain even more rapidly whilst other countries are smashing it.

FrustratedMonky 3y ago

The article lists a lot of things going bad for Germany. But was there some underlying reason? Like demographics, shrinking population? Or is it just the obvious , Russian gas, rising Energy costs, now their prices are too high, so exports are down.

treprinum 3y ago
I'd say the main problem is "leadersh*t", incompetent captains of industry. It's so pervasive and prevalent that I really don't see any hope for them. People are also getting more and more unprofessional and expect high pay for subpar results. Devs on the other hand are hugely underpaid and the country operates in a two caste system of managers vs everybody else though not as badly as the UK. There is also a high aversion to risk; a friend of mine who built a successful company told me that in order to get 1M from a bank they essentially had to pay them 1M upfront.
- JPLeRouzic 3y ago
  > People are also getting more and more unprofessional > the country operates in a two-caste system I don't know for today but I remember in the 1980' some German engineers playing games on their computers during work at Deutsch Telecom.
  - treprinum 3y ago
    An accounting professor of Turkish origin in my MBA program in the US was making fun of Germany after the Wirecard scandal that he could have imagined such crime in Turkey but never in Germany and then shrugged his shoulders.
    - pgeorgi 3y ago
      Just look where Marsalek comes from: We import our criminals from Austria.
- iforgotpassword 3y ago

konschubert 3y ago

People are blaming energy prices but I don’t understand: As far as I can tell, wholesale prices for both gas and electricity are lower than before the start of the war.

mamonster 3y ago
Supply curve shifts left, demand curve shifts left -> price is the same.
- konschubert 3y ago
  That’s not how demand curves work. If you hold the price fixed or your decrease it, demand will increase, not decrease. If you reduce supply, price finds a new equilibrium at lower demand, but that price is always HIGER than before. The fact that prices are equal or lower prices they this cannot be it.
  - mamonster 3y ago
    That is exactly how they work if both demand and supply shift. Example: P_d=100-Q P_s=Q Solve P_d = P_s to get Q=50, P=50 Take a left shift like 80 - Q in demand, and take a left shift in supply like P=1.66Q. Solving now you get Q=30, P=50
throwaway4good 3y ago
I think the problem is that German energy is expensive compared to other countries. On top of that you have regulation and lack of subsidies making other places more attractive to produce in ie. the US, Eastern Europe or China.
- skippyboxedhero 3y ago
  Correct. BASF is investing heavily in China. Nothing tells you more about this problem than the most German of companies moving to China. BASF's largest plant in Germany was hooked up directly to Russian gas. Russian gas is now going to China. So are BASF. I don't think regulation or subsidies are to blame either. Eastern Europe is receiving heavy investment because they have costs for workers under control and can provide a more stable political environment. The problem with Germany specifically is that they papered over a lot of bad fundamentals in the early 2000s with cheap energy and very close relations with Russia.

whearyou 3y ago

The West will be the poorer for it

Sabinus 3y ago
The cheap energy (LNG) is in America now. The manufacturing will just move there.

sschueller 3y ago

IMO the cheap Russian gas was keeping Germany afloat while it was already crumbling. Germany has been too slow in adapting for the modern age, building out their infrastructure such as fiber[1] or even finishing their part of the NRLA[2] which is still not even close to being finished. They added too much red tape for every little crap[3] making it incredibly difficult for any business to get anywhere (small German you-tubers are dragged to court because they forgot to place a small disclaimer on their website which could have been handled with a small fine or warning). In recent times trying to compete with other countries a lot has been privatized making the whole thing even worse. You have private infrastructure resulting in the same road being ripped up multiple times every-time another fiber provider wants to add service. You also have the once 80%+ on time rail network being so late that trains are stopped at the Swiss border to prevent time shifts in the tight Swiss schedule. While Switzerland implemented Clock-face scheduling a long time ago Germany moved the date to 2070[4]! You also now have private low budget trains running on the network. These companies cut corners to the maximum and if one of these trains breaks down it blocks the track. Unlike a bus, you can't just drive around it. There are also still large parts of the German rail network that aren't electrified. The trip from Zürich to München only recently has been electrified not requiring a locomotive switch. IMO, infrastructure needs to be public, roads, rail and fiber. Companies need to make money for their shareholders and with infrastructure the profit comes from long term economic growth of a region. This does not translate to direct company profit. [1] https://netzpolitik.org/2018/danke-helmut-kohl-kabelfernsehen-statt-glasfaserausbau/ https://netzpolitik.org/2018/danke-helmut-kohl-kabelfernsehe... [DE] [2] https://en.wikipedia.org/wiki/NRLA https://en.wikipedia.org/wiki/NRLA [3] https://www.politico.eu/article/spam-email-gdpr-lawsuits/ https://www.politico.eu/article/spam-email-gdpr-lawsuits/ [4] https://www.tagesschau.de/wirtschaft/unternehmen/bahn-deutschlandtakt-101.html https://www.tagesschau.de/wirtschaft/unternehmen/bahn-deutsc... [DE]

jackcosgrove 3y ago

Germany's strategy has been to offer higher quality products at a huge markup. Just using the auto industry as an example, in the past twenty years the difference in quality between a mass market vehicle and a luxury vehicle has compressed. Competing on quality seems to be getting harder. The Anglophone economies, whose shift to services away from manufacturing has been ballyhooed and decried in many quarters, embraced competing on novelty. By being the first mover in many industries. The Anglophone strategy led to greater internal inequality but seems to be better from an aggregate standpoint. I'd like to see Germany's manufacturing strategy work since it preserves mid-skill jobs, but this is casting doubt.

juanani 3y ago
[dead]
JKCalhoun 3y ago
I agree that we need to keep what you call here mid-skill jobs. Too often I see people say to the disappearance of manual labor jobs: good, retrain people to use computers. I have slowly come to the belief that there are some people for whom working with their hands is the only kind of sane work they can do. You can call them blue-collar, or working class (these are the people incidentally that raised me, the people in my neighborhood growing up). Why would anyone not want to work in a clean office with only a compiler as your boss and a big paycheck waiting for you every two weeks? When I was younger I assumed that anyone not in the tech field were people not smart enough to pass Algebra in high school. It had not occurred to me then that it might go beyond aptitude and instead be due to something more fundamental about a person's nature or character. I know I'm getting hand-wavy with nature, character but I'm not sure what other words to use. I came to believe that though many people who are like me find some satisfaction from having solved a difficult problem, or having created a functional framework that can now do work to solve problems there are many others where satisfaction primarily comes from having changed something with their hands. I don't know if all of that makes sense or resonates with anyone. I'll add this though, the older I get, the more I recognize even in myself the satisfaction that comes from doing something physical (even mowing the lawn as an example). I seem to take some pleasure from taking something unordered or in a raw state, and ending up with a thing in an ordered or "finished" state. It's no doubt why I have pursued woodworking as a hobby, print making, creating PCBs. (And that fresh mown lawn looks so much nicer than the ragged lawn that was there before.) In any event, following that line of reasoning has made me realize we should keep a large number of manufacturing, construction, repair and other manual labor jobs so that we can serve the whole of society. Just expecting everyone to learn to code is misguided and will fail so many people. It is sad to me that Germany appears to have tried this model, tried to keep manufacturing in their country, and yet it is purportedly failing. I'm not too optimistic about our future when we apparently measure progress by "cost of living standards".

verticalscaler 3y ago

Patience. This is just a minor setback of demographics and energy supplies - Angela Merkel (a supremely skilled stateswoman who was in power for 17 years) saw this coming from a mile away and very competently bet the farm on Russian gas and importing millions of unskilled people from the far corners of the earth to solve these problems. They will start turning it around any moment now. As Germans are famous for their rationality it is literally impossible for things to not go according to plan.

bamboozled 3y ago

Which developed nation isn't in this position? America is an Industrial super power? Japan? England? Korea?

amadeuspagel 3y ago
Yes. Yes. No. Yes.
- abrichr 3y ago
  To add to this, from https://en.wikipedia.org/wiki/List_of_countries_by_motor_vehicle_production https://en.wikipedia.org/wiki/List_of_countries_by_motor_veh...: # Country 2022 ---------------------------- 1 China 27,020,615 2 United States 10,060,339 3 Japan 7,835,519 4 India 5,456,857 5 South Korea 3,757,049 6 Germany 3,677,820 ... 18 United Kingdom 876,614
  - z7 3y ago
    South Korea produces more cars than Germany with 32 million fewer people? Impressive.
  - bamboozled 3y ago
    I'm talking about going backwards. Japan, how is that sustainable with a collapsing population? Robots, perhaps, but not yet.
- fsloth 3y ago
  When you first learn that the industrial revolution started in England, you imagine it must be still amazing given 200 years at it. Then you grow up, and learn what they actually did was 100 years of manufacturing with the same infrastructure since they could just funnel their product to the colonies, and when their empire collapsed, they were finally forced to compete in the open market, at which point they chose to close down manufacturing and focus on finance.

MrDresden 3y ago

One of the myriad issues mentioned in that article is that Germany's workforce is not going to be able to sustain the economy after some years. What is the cause of that? There is plenty of immigration and with cost of living having been fairly low in many places in Germany for the last two decades, plus the economy booming in that time, why is there a lack of workers now (+-5-10 years)?

intalentive 3y ago
German workers are famously productive. Non-German substitutes are unlikely to be so industrious.
- polotics 3y ago
  Can you substantiate this statement?
  - latency-guy2 3y ago
    What is the profile of the average migrant coming into Germany compared to the average German? The standard need only be more/less educated or qualified, unless Germany wants to remove regulations. I of course think Germans are not really "productive" in the first place, from what I've seen they only work about 80% as much as Americans do, and output is not necessarily exemplary for time spent (or saved if you will). Americans put in more, and you get out more, and their pay also exceeds top XX percentile for overseas counterparts.

vmchale 3y ago

Shutting down nuclear plants surely couldn't have helped.

pgeorgi 3y ago
The last new nuclear plant to go online in Germany was Greifswald 5 in November 1989. For 23 days. Given the massive failure of AVR Jülich, whose design was supposed to be "fail safe" while it's now the most 90Sr-contaminated nuclear facility world-wide, and the corruption around it, there's little trust that even if the technology is safe, operations would be. That accident in Jülich was 1979, rumors that something happened were struck down with political support, and so the acknowledgement by the operator was 21 years later in 2000 and the government confirmed it only in 2010. The plan for decommissioning is to get it done by the end of this century, after we "develop some procedure during the next 60 years." (that is, we have no f'ing clue what to do with that thing right now). By that time, the incident has been 120 years ago... https://en.wikipedia.org/wiki/AVR_reactor https://en.wikipedia.org/wiki/AVR_reactor (and even more so its German equivalent page) has the gory details of that mess. Germany likes to do things at industrial scale, and so it also messes up at industrial scale. As a result (and while Chornobyl didn't help the nuclear-power cause, the German anti-nuclear-power movement predates that incident by ~10 years), Germany moving away from nuclear power has been a long time coming.
- ulfw 3y ago
  Germany getting rid of nuclear power will not make Germany any safer at all. Cattenom and Fessenheim to name just two examples are French power plants within viewing distance of the German border. The latter even having a German name due to history.
  - pgeorgi 3y ago
    It's fewer operators that are full of shit and might mess up things. Cattenom, Fessenheim, Tihange etc are already getting their share of criticism and protest, but that's all German citizens can do about foreign reactors that happen to be built right across the border.

neovialogistics 3y ago

The reliance of the German industry on the prolific use of petroleum and gas products isn't just an energy/heat generation story. Their economy sits on a foundation of cheap downstream intermediate products produced domestically with very few middlemen compared to other national industrial complexes: cheap propylene oxide, cheap monoethylene glycol, cheap acetaldehyde, cheap acrylonitrile, cheap cumene, cheap C4 aromatics, etc, etc, Each of these chemicals, plus more that I haven't mentioned, sit at the base of their own value chains. All of those have recently lost their comparative savings versus product refined elsewhere which means an end to German manufacturers enjoying cheap rubbers, resins, coatings, greases, fuels, paints, plastics, etc

jillesvangurp 3y ago

I've lived in Berlin for fifteen years now. My view is very different from what this article is portraying. Germany definitely has issues. Some of them are short term issues. Some of them self inflicted. And others have been issues for a long time. But all of these are fixable. All it takes is change. Change is hard for Germans but if you look at their history, you see that that wasn't always the case. They are hard workers and they have a culture of just getting shit done and being very proud of their ability to do so. This is part of their culture and value system. The wave of conservatism that has crippled the country for decades is being challenged by a younger generation that is starting to take over from the baby boom generation that is the root of this problem. They inherited a booming economy and have been reluctant to change because they never had to. And now they are old and incapable of change, like most old people. But that generation is on the way out. Most people that were employed before the cold war ended are now closing in on retirement age. Another ten years and the working force will consist exclusively of people that are used to using computers, never knew a Germany that wasn't united, and have modern ideas about how to run a company. Or indeed the country. Germany has three challenges: 1) Infrastructure is a disgraceful mess and it needs fixing. Roads, rails, and energy sector. All of it. 2) There's an energy crisis that was caused by the Russians. Which is accelerating the trends that are causing the next challenge. 3) There's a lot of old industry that is becoming less relevant. Coal, steel, ICE cars, etc. The fix for each of these challenges is addressing the first challenge. Doing so will fix all their issues and create a lot of jobs and economic opportunities. And unlike the US and China, Germany is not crippled by debt. They've been frugal and reluctant to spend. That's actually the main reason the infrastructure is a mess. But their credit rating is awesome. They are a bit slow and indecisive right now but with the right leadership, they can make a lot of changes in a short amount of time. My prediction is that they will have largely cleaned up the energy sector by 2035-2040 at great cost. This is a good thing. All of that spending will flow directly into their economy. Spending lots of money is a great way to jump start an economy. As a result, they will no longer be dependent on fossil fuel. This will really suck for economies whose main business is exporting that stuff. Related industries will have largely adapted or died off by then. Steel production will move to places where renewable energy is cheap and plentiful (i.e. not Germany). Part of the car industry will be sold off to the Chinese and the rest will have transitioned to battery electrical. This will be very tough for Germany but there's very little they can do to stop this at this point. The same conservatism that cripples their country is also in charge of these industries. However, once the new energy sector start booming, there will be a lot of re-shoring of manufacturing that is currently happening in China. Formerly labor intensive production processes will transition to high tech and largely automated processes. Germany does high tech stuff extremely well. Both the Americans and the Chinese build EVs using equipment that is made in Germany. You look around in a Tesla factory and they have all the best stuff. Made in Germany. The key insight here is that Germany already makes all the things that they need for re-shoring manufacturing. Chips, machines that make chips, tools, machines, etc. In short, they have the means and the money to do what needs doing, which is fixing their infrastructure. All they need to do is start doing that. The key blocker for that is their bureaucracy. They are hopeless paper and process fetishists and stuck in their old ways. I often make fun of my German friends over this and they all are a bit ashamed and embarrassed about this. They are well aware and the next generation of politicians is going to have to do things differently in order to get the confidence of voters. Which is why they are all trying to outdo each other with plans on just how to do this.

teleforce 3y ago

It's interesting to note that a GWM Tank 300 that cost 1/5 or 1/10 of Mercedes G-Wagon price (depending on the countries) is as good if not better in term of interior luxury, moving from A to B and off-road capability [1]. It now has reached its 300K milestone production recently, and fast becoming Corolla of 4WD world. [1]Cybertank 300 Is A Batshit Crazy $47K Chinese SUV With 227 HP: https://carnewschina.com/2021/08/17/cybertank-300-crazy-47-000-chinese-suv-with-227-hp/ https://carnewschina.com/2021/08/17/cybertank-300-crazy-47-0...

nothercastle 3y ago
Zero safety features?
- teleforce 3y ago
  5-star NCAP

b212 3y ago

Im Polish. 20 years ago my parents were taking 1-2 months of PTO every year to work on German farms. 2 months * 2 people and you could’ve renovated a whole mid-sized flat or get a decent 3 years old car. Now I’m making 2-3x more after taxes than my German friends. Yes, I’m self employed and yes I’ll need to take care of my own retirement but I’ll be better off after 1-2 years of putting $100k in ETFs than they could ever be with their state pensions. The taxes will kill the old Europe. On the other hand juniors at FAANG in California make more than I do ($160k before taxes, $135k after, how much do you need to earn in Berlin to be left with 135k?).

brnt 3y ago
Here in Western Europe (West) Germany has always been known for its bad wages. Was it Mitterrand who likened German workers to the Chinese, or was it even before that?
eklitzke 3y ago
You think someone earning $160k before taxes in California takes home $135k?
- triceratops 3y ago
  Eh...it's sort of right. If they max out their 401k contributions and count it as take-home (not entirely unreasonable, people save their take-home pay after all) it's about $132k. More if the employer matches 401k contributions.
zrn900 3y ago
What do taxes have to do with German industry going bankrupt because their cheap oil and gas have been cut due to the sanctions against Russia... Those taxes made all that infrastructure that Europe uses possible. From fast trains to ports. Also, those taxes help you avoid paying $1000 per head for healthcare and then up to $18,000 out of pocket every year labeled as 'copay' until the medical insurance picks up... then tries everything it can to reject paying. Then up to $3000/month for a small room in a shared flat for housing, and then a few thousand on food and other costs. And like they said - if you think that juniors in California take home $135k after taxes, you are living in a very different universe.

effnorwood 3y ago

[dead]

aiisdoomed 3y ago

[flagged]

fxtentacle 3y ago

"political paralysis in Berlin is intensifying long-standing domestic issues such as creaking infrastructure" That is exactly the opposite of my impression. I'm seeing lots of useful initiatives finally gaining momentum after the previous (conservative) party had delayed/suppressed them for years. That said, it seems that some German companies refuse to pay high salaries on principle. And that's very dangerous, in my opinion, because it forces the most experienced employees to work for US companies instead.

pasabagi 3y ago
Calling German infrastructure 'creaking' is also completely ridiculous. What would you call infrastructure in the UK, then? The US?