By Rachel More
BERLIN, Feb 10 (Reuters) – Germany’s standing as an automotive industrial hub risks being hollowed out as investments and jobs drift abroad, an industry association warned on Tuesday, calling on Berlin and Brussels to focus on measures that spur growth.
“Germany is experiencing a huge crisis as a business location,” VDA President Hildegard Mueller said.
A VDA survey of small- and medium-sized German enterprises across the auto supply chain, presented by Mueller on Tuesday, showed that 72% of companies plan to dial back their investments in Germany, either by moving them abroad (28%), postponing them (25%) or cancelling them completely (19%).
“These investment decisions are already having an impact on employment figures,” Mueller said of the results of the survey, conducted from January 11 to 25.
Just under two thirds of the 124 companies surveyed cut jobs in Germany last year, with 87% citing competitive disadvantages.
Currently, 49% are cutting jobs in Germany, compared with just 7% cutting jobs abroad.
German auto suppliers have faced falling orders, stiff competition from abroad and a difficult transition towards electric vehicles and software as top carmakers like Volkswagen and Mercedes as well as suppliers Bosch, ZF and Aumovio have announced tens of thousands of job cuts.
POLITICAL IMPLICATIONS OF JOB LOSSES
The number of jobs in Germany’s automotive industry is at its lowest point since 2011, according to government data from November.
Mueller said the loss of jobs would also have political implications, adding that the far-right Alternative for Germany (AfD) was targeting businesses where workers lack job security.
“The migration of investment and employment will not be without consequences for our country’s prosperity and for its social and political stability,” Mueller said.
She criticised an EU package of measures to support European carmakers while transitioning to electric cars and more environmentally friendly production.
“As an automotive nation, we absolutely cannot be satisfied with the current proposals,” Mueller said, calling for market-driven incentives instead of regulatory obligations.
The VDA echoes German carmakers’ calls for flexibility in EU targets for the shift to electric vehicles.
(Reporting by Rachel MoreEditing by Linda Pasquini and Susan Fenton)
