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VERBAND DER CHEMISCHEN INDUSTRIE e.V.
PRESS RELEASE
26 September 2014
New study by Oxford Economics
The chemical industry location Germany is losing
competitiveness
The German chemical industry is strong on the export side: 60 percent of sales
are realized with customers abroad. But the high export ratio conceals the
problem that global competition and falling competitiveness are more and more
impacting Germany as a chemical industry location. It is particularly alarming that
this downtrend has become stronger since 2008. Now, a new study by the
researchers Oxford Economics substantiates the described development with
facts and figures.
At the presentation of the study, Karl-Ludwig Kley (the outgoing president of the
German chemical industry association VCI), stated: “Germany is an attractive
location for the chemical industry. But the truth for the past two decades is that we
have been losing shares in global chemical trade and global chemical production.
Politicians and the general public should realize that we are in a crucial phase, as
regards our international competitiveness.” The study entitled “Competitiveness of
the German chemical industry: historical trends and future prospects” was
presented in Frankfurt on the occasion of the VCI’s general assembly. This study,
which was mandated by the VCI, fills a gap: Previously, there had been no
scientific comparative studies on the competitiveness of various chemical
manufacturing nations.
Irrespective of the growing foreign trade surplus, the German chemical industry’s
share in the global export market has fallen over the past two decades, so the
analysis by Oxford Economics. The research institute highlights that this drop in
market shares was mainly due to a loss in global competitiveness of Germany as
a chemical industry location. This is one of several factors that have brought a
growth and investment weakness: Since 2011 the chemical industry has
expanded neither production nor investment in this country.
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Kley: “Given the persistently weak growth in Europe, competitiveness on
international export markets is essential for the chemical industry location
Germany.” In the past, Germany benefited with exports from the dynamic
catching-up process of emerging markets. But the success of those past years is
no guarantee for the future. Kley continued: “If our competitiveness declines any
further, we might be left behind by the global economy.”
Factors influencing competitiveness
The study by Oxford Economics examines which factors have a particularly strong
influence on the competitiveness of a chemical industry location. Here, the
researchers identified energy and raw material costs as well as the R&D spending
of the industry. Also important are the quality of the transportation infrastructure,
investment, exchange rates, taxation, regulatory burdens and the density of the
industrial network.
The study substantiates that overly high energy prices have a strong negative
impact on competitiveness and lead to falling export shares. Referring to these
findings, the VCI president had a message for all those who repeatedly claim in
the political debate that high energy prices bring more investment and, finally, are
even good for a location. Kley emphasized: “We should say goodbye to the myth
of strongly rising energy prices without losses in competitiveness. A glance across
the Atlantic shows how favourable energy costs can enhance competitiveness.”
In the long term, a high R&D intensity has positive effects on competitiveness and
on the share in the global chemical export market, so the study. Kley concluded:
“We simply need to be better than others.” For this reason, the German chemical
industry has increased its annual R&D spending since 2009 by well over 2.5
billion to 10.5 billion euros. But it should be possible to turn new research results
into innovative products. According to Kley, an open mind for technology is a task
for society as a whole. But he also stressed the following point: “In this respect, it
is up to industry to take the initiative. We should explain more clearly which
advantages new technologies bring for individuals and for society overall.”
Furthermore, Oxford Economics identified investments as a major influence factor
for competitiveness. Kley: “It gives rise to concern that for several years the
investments at the chemical industry location Germany barely exceed
depreciation – even more so as massive investments go to other parts of the
world.”
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Better political framework conditions are needed
The study by Oxford Economics shows which factors have the greatest leverage
for improving the competitiveness of a chemical industry location.
Kley: “For lasting success, Germany needs affordable energy and better ideas.”
The course for better political framework conditions for companies can be set
mainly in three fields: by lowering the energy costs attributable to public
administration measures, by giving up the over-ambitious pioneering role in
climate protection, and by strengthening the R&D intensity. The latter also means
strengthening the innovation capability of chemical companies located in
Germany.
The competitiveness of the chemical industry location is no purpose in itself
Kley underlined: “Chemistry is at the hub of Germany’s network of industries, and
this network is central to the success of Germany as an industrial nation. Jobs and
prosperity depend on this.” If major parts of the chemical industry relocate away
from Germany, there is the danger of breaking the value chains. This puts at risk
the German industrial network in its entirety. Kley rounded off his statement:
“Therefore, we want to continue the dialogue with politicians on a common
framework for further developing the competitiveness of Germany as a land of
industry – keeping up the good tradition of our industry.”
Extra: The 24-page VCI report (in German) based on the study by Oxford Economics
can be accessed here: http://bit.ly/VCI-Bericht-Oxford-Economics-Studie
The full study in English language (63 pages) can be downloaded from:
http://bit.ly/competitiveness-German-chemical-industry-Oxford-Economics
The VCI represents the politico-economic interests of over 1,650 German chemical
companies and German subsidiaries of foreign businesses. For this purpose, the VCI
is in contact with politicians, public authorities, other industries, science and media.
The VCI stands for over 90 percent of the chemical industry in Germany. In 2013 the
German chemical industry realized sales of more than 190 billion euros and employed
around 438,000 staff.
Contact: VCI Press Dept.
Phone: +49 69 2556-1496
E-Mail: [email protected]
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