Exit of fabricators threatens to drain Germany industry

The current environment of economic insecurity and extreme energy prices is threatening the survival of many automotive suppliers and other types of steel fabricators, warned speakers at this week’s MBI Stahl Tag conference in Frankfurt.

Heinz-Jürgen Büchner of Deutsche Industriebank IKB cited the example of Kostal, a supplier of electronics in cars, which recently announced it will move all three production sites to locations east of Germany. Similarly, Daimler Truck plans to move its production in Mannheim to the Czech Republic. “I wonder if this is only the start of a wave,” Kallanish heard him say in his presentation. “And what will smaller ones [suppliers] do who cannot just go elsewhere?”

One way out, especially for small companies with only one traditional location, is consolidation, meaning acquisition by another player, if the opportunity arises. “There will be a massive wave of that in the next five years,” Büchner forecasted.

The industrial value chain in Germany, especially in automotive, involves many small-and medium companies that are “hidden champions” in their fields, and invaluable to the functioning of the chain.

On the sidelines of the conference, participants noted that especially smaller family-owned companies without a successor are facing an uncertain future and might just close. But if their business is lost for the connected industries, the heavyweights will feel the blow, too.

“When you take an element out of a functional structure, the whole thing can fall apart,” Büchner warned. “We need a joint initiative to retain Europe as an industrial landscape.”

Christian Koehl Germany