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,<p>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
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.<p>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.<p>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.
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.<p>The taxes will kill the old Europe.<p>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?).
People are blaming energy prices but I don’t understand:<p>As far as I can tell, wholesale prices for both gas and electricity are lower than before the start of the war.
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.<p>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.<p>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.<p>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.<p>Germany has three challenges:<p>1) Infrastructure is a disgraceful mess and it needs fixing. Roads, rails, and energy sector. All of it.<p>2) There's an energy crisis that was caused by the Russians. Which is accelerating the trends that are causing the next challenge.<p>3) There's a lot of old industry that is becoming less relevant. Coal, steel, ICE cars, etc.<p>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.<p>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.<p>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.<p>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.<p>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.<p>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.
"political paralysis in Berlin is intensifying long-standing domestic issues such as creaking infrastructure"<p>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.<p>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.
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.<p>[1]Cybertank 300 Is A Batshit Crazy $47K Chinese SUV With 227 HP:<p><a href="https://carnewschina.com/2021/08/17/cybertank-300-crazy-47-000-chinese-suv-with-227-hp/" rel="nofollow">https://carnewschina.com/2021/08/17/cybertank-300-crazy-47-0...</a>
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).<p>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]!<p>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.<p>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.<p>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.<p>[1] <a href="https://netzpolitik.org/2018/danke-helmut-kohl-kabelfernsehen-statt-glasfaserausbau/" rel="nofollow">https://netzpolitik.org/2018/danke-helmut-kohl-kabelfernsehe...</a> [DE]<p>[2] <a href="https://en.wikipedia.org/wiki/NRLA" rel="nofollow">https://en.wikipedia.org/wiki/NRLA</a><p>[3] <a href="https://www.politico.eu/article/spam-email-gdpr-lawsuits/" rel="nofollow">https://www.politico.eu/article/spam-email-gdpr-lawsuits/</a><p>[4] <a href="https://www.tagesschau.de/wirtschaft/unternehmen/bahn-deutschlandtakt-101.html" rel="nofollow">https://www.tagesschau.de/wirtschaft/unternehmen/bahn-deutsc...</a> [DE]
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.<p>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.
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.<p>What is the cause of that?<p>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)?
The article lists a lot of things going bad for Germany. But was there some underlying reason? Like demographics, shrinking population?<p>Or is it just the obvious , Russian gas, rising Energy costs, now their prices are too high, so exports are down.
Patience. This is just a minor setback of demographics and energy supplies - Angela Merkel (a supremely skilled stateswoman who was in power for <i>17 years</i>) 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.<p>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.