Hannover is the center of the industrial world in the coming days. 4000 exhibitors and more than 120,000 expected visitors meet at the world’s largest industry show Hannover tradefair. There, for example, it is about CO₂-neutral production processes and resource-saving circular economy in factory buildings, about the development of a hydrogen economy, but also about robots, automation and artificial intelligence.
In the middle is too Gunther Kegel, President of the Association of the Electrical and Digital Industry (ZVEI) and CEO of Pepperl+Fuchs from Mannheim, a manufacturer of industrial automation technology. In the WELT interview, Kegel speaks, who is planning the fair together with Federal Chancellor Olaf Scholz (SPD) has openedabout the problems of Germany as an industrial location, political world saviors and the power supply in this country.
WELT: Mr Kegel, how concerned are you about him Industrial location Germany?
Gunther Kegel: My concerns have been growing for some time. Because the worrying signals are constantly increasing in Germany: Hardly any new factories are being built, not enough is being invested in existing ones and with the sharp rise in energy prices caused by the war, many companies from the energy-intensive sectors are now threatened with a quick farewell. But they are the basis and starting point of many value chains. And if they tear, that also has an impact on medium-sized companies that plan, build, service and maintain systems for industry or are suppliers to the large corporations in the industry. Many companies get into trouble in the shadow of the shadow.
WELT: How big is the topic deindustrialization in this country?
Kegel: Industry’s share of German economic output has been falling to an alarming extent for years. We are now at around 20 percent, before the financial crisis of 2008 it was 25 percent. And this trend can even accelerate – if we don’t pursue an active industrial policy in Germany, but simply hope that everything will sort itself out somehow. But that doesn’t happen. We are threatened with a fate similar to Great Britain or France, where the industrial share tends towards 10 percent.
WELT: With what consequences?
Kegel: The result would be a massive loss of prosperity. Because industrial jobs are lost and thus particularly well-paid jobs that are subject to social security contributions.
WELT: Do politicians understand the seriousness of the situation?
Kegel: My impression is that large parts of politics see and understand this development. The problem is that there are forces that are even happy about this and want to destroy individual branches of industry in order to create something new and want to accelerate the undoubtedly necessary transformation towards climate neutrality in a way that is almost impossible to achieve. These are ideological world saviors who want to show and demonstrate to the whole world what industry should look like in the future. But one thing is being misunderstood – and I hear this again and again on my many trips abroad: nobody wants to be guided and instructed by Germany with a raised index finger. On the contrary: many countries are looking at us with complete dismay and wondering how and why their own industry is being driven so openly against the wall.
WELT: What kind of industrial policy do you want?
Kegel: The thinking in parts of politics and authorities is far too prohibitive. There it seems to be primarily about preventing rather than doing. You can talk so much about the new German pace. Practically none of this has arrived in practice. We still regulate ourselves to death. But what we need is less regulation through guidelines and laws and also less bureaucracy and documentation requirements, but instead more openness for people who want to make a difference. At the same time, planning and approval procedures must be significantly accelerated. And we need a competitive electricity price for everyone. This helps industry with decarbonization, but also for achieving climate targets in the private sector, for example in transport and in the building sector. When electricity is cheap enough, people voluntarily build one heat pump on, even without a gas heating ban. And they will then also buy electric cars instead of combustion engines. The only way to a climate-neutral future is through electrification.
WELT: Where is the cheap electricity that is needed in gigantic quantities supposed to come from?
Kegel: That can only come from renewable energies, in this country mainly from wind power. But solar energy is also a lever. However, the necessary expansion is progressing far too slowly. Because for almost 20 years there have been constant announcements, but hardly any actions. This brings us back to the planning and approval procedures, which take far too long. To do this, politicians must finally have the courage to set clear priorities, to defend them publicly and to reduce the possibility of objections to the contrary. If I, as a government, want to have a rapid expansion of renewable energies, I cannot have every resident go before the Federal Constitutional Court to prevent a wind turbine or a power line. Nuclear power could also have made a temporary contribution.
WELT: How serious is the shutdown of nuclear power plants for industry?
Kegel: If we don’t have to, we give up capacities that are also capable of providing base loads and deliver reliably even when the wind isn’t blowing and the sun isn’t shining. But no one should say they didn’t know. The Greens have always spoken out in favor of phasing out nuclear energy, but it was decided in 2011 by the black and yellow Merkel cabinet. The people acting today know exactly what exit risk they are now taking. But the Greens, for example, have already had to give up their stance as a peace party with the arms deliveries to Ukraine. You can’t do a 180-degree turn on the nuclear issue without giving up your core brand. The electricity market is now coming under additional pressure given the slow expansion of renewables. And time is pressing. Because the industry needs reliable forecasts for its future planning, also and above all for the availability and costs of energy. Otherwise companies will migrate to places where the framework conditions are better.
WELT: For example in the USA.
Kegel: For example. The Inflation Reduction Act is epochal and will bring many companies and investments into the country. What is unfortunately often suppressed in the discussion about a European answer is the counter-financing of this gigantic economic stimulus program: a minimum tax of 15 percent for the big tech companies. It’s impressive how pragmatic the Americans approach and implement things. In Germany and Europe, unfortunately, more is announced and then less implemented. After all, something seems to be slowly moving in the network infrastructure. At least that’s what we’re seeing in the incoming orders. That would finally be a milestone.
Kegel: Because the power grids in Germany are outdated. We have to almost double the network capacity in the next few years – and make this infrastructure smart. A smart network with intermediate buffers and sector coupling allows efficiency gains to be realized and thus real electricity savings to be made.
WELT: How big is the boost for the industry?
Kegel: We definitely have tailwind right now, also because electronic components play a role in all topics related to the energy transition and climate protection. The production in the first two months was so good that we can raise the full-year forecast for 2023. So far we have assumed a sideways movement with zero growth at a high level. But it is already foreseeable that the industry will grow. The range of orders is extremely high at almost six months. Usually around three and a half months.
WELT: Is your industry at least staying in Germany?
Kegel: With the exception of the semiconductor, cable and battery industries, electrical engineering is not as energy-intensive and is therefore not under as much pressure as other industries. In any case, our industry has been operating globally longer than most others. Pepperl+Fuchs, for example, established its first production facility in Singapore back in 1979. The entire supply chain has therefore been international for decades, with structures in Europe as well as in Asia and America. To decouple that again would be an economic catastrophe for many countries.
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