German, European industries study possibilities of shifting part of production bases to other countries

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Many German engineering companies are considering shifting a part of their production to other bases, including their research and development facilities.

Ing.Timo Wurz, Managing Director (Metallurgy and Thermprocessing) of VDMA, told The Hindu recently that not all companies can look at investments in other countries. Thus, while some are able to cope with the current challenges, there are some struggling to survive too. However, “There will be a growing part of value creation done by German companies in other parts of the world. India is a very important market. China is also important. So it makes sense to be there and make products,” he said.

Companies need more strategic capabilities to see what will work for them. More companies are thinking of doing research and development too in key markets to see what extent it is possible, he said.

Industries in the European Union and Germany are facing challenges as the Russia-Ukraine war is driving energy costs up, especially in Germany, and there are tariff related problems too from the US. Further, competition from China is on the rise.

Till Schreiter, Managing Director, ABP Induction Systems GmbH, said governments and industries are looking at securing the energy needs. On the raw material front, alternative sources should be developed to ensure there is no disruption. “To secure supply, we need fair trade, need to a create a win - win situation,” he said.

“As producers, we believe research and development should be where you produce and not where you serve. So, we do research in countries such as Indian and China,” he said.

Mr. Wurz added that European and German machinery manufacturers are export-based businesses. This model is under pressure now as markets are not so open.

Regulations are needed to restrict unlimited inflow of machinery, products, and technology that are subsidised by governments in countries such as China. The VDMA is calling for simplification of anti-dumping process. “We are just against unfair practices among trading partners. We need a level playing field and fair play,” he said.

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