This was quite an eye-opening article here.

Germany’s biggest companies are ditching the fatherland.

Chemical giant BASF has been a pillar of German business for more than 150 years, underpinning the country’s industrial rise with a steady stream of innovation that helped make “Made in Germany” the envy of the world.

But its latest moonshot — a $10 billion investment in a state-of-the-art complex the company claims will be the gold standard for sustainable production — isn’t going up in Germany. Instead, it’s being erected 9,000 kilometers away in China.

I’m not sure that I’d be betting the farm on China right now with any assets, but they were probably already in the works.

BASF lost a significant amount of money last year in its home country, and is attempting to stanch the bleeding. What German companies are increasingly finding is that they cannot compete from their home turf. Contrary to EU sensibilities and socialist assertions, companies do need to be profitable.

…“We are increasingly worried about our home market,” BASF Chief Executive Martin Brudermüller told shareholders in April, noting that the company lost €130 million in Germany last year. “Profitability is no longer anywhere near where it should be.”

Such malaise now pervades the whole of the German economy, which slipped into a recession in the first quarter amid a flurry of surveys showing that both companies and consumers are deeply skeptical about the future.

The elite corps of diplomats in Brussels, with the Germans having led the charge there for decades, have created a Green energy fantasy built out of whole cloth, enabled in large by taxing the profits of efficient, wealthy, compliant multinational companies like those in Germany. All in to save the planet!

The only problem is, now they’re all looking for an out.

…Suddenly, a perfect storm is brewing over the former European powerhouse, signaling that its current recession isn’t just “technical,” as policymakers pray, but rather a harbinger of a fundamental reversal in economic fortunes that threatens to send tremors across Europe, injecting even more upheaval into the Continent’s already polarized political landscape.

Confronted by a toxic cocktail of high energy costs, worker shortages and reams of red tape, many of Germany’s biggest companies — from giants like Volkswagen and Siemens to a host of lesser-known, smaller ones — are experiencing a rude awakening and scrambling for greener pastures in North America and Asia.

Energy costs are killing German industry and, as he notes, it’s the dirtiest grid in the most holier-than-thou country in Europe.

Energy intensive industries in Germany are now doing worse than during covid

Loss of industry, loss of skilled labor, loss of know-how until loss of status as a major economy

All while having one of Europe's dirtiest grids

They replaced decarbonization with deindustrialization https://t.co/cvHsuoageA

— Ralph Schoellhammer (@Raphfel) July 8, 2023

As I wondered the weekend Germany shut down their last three clean, reliable nuclear reactors – how could they square doing that when their answer to making up the wind power shortfall was digging new lignite coal mines, and opening new coal burning plants? I thought coal was “dirty” and dirty was “bad”?

It’s no wonder the Greens are a catastrophe – they can’t even keep their own propaganda straight.

The prices continue to be beyond all reason, driving residents to breaking and businesses to relocating if they can.

German energy prices are so high that some companies are considering leaving the country altogether, according to Siegfried Russwurm, head of the German Industry Federation (BDI).

CNBC’s Annette Weisbach asked Russwurm whether the ongoing energy situation was “bad enough” for companies to relocate, to which he responded: “It is indeed.”

“A lot of family-owned companies … have very operational plans to relocate,” Russwurm said, adding that the current business conditions in Germany had created a “cocktail” of obstacles for companies.

“Many Germany-headquartered businesses are doing well globally, but they are struggling with operations in their own country,” he added, listing red tape and slow administration as additional pressures faced by companies in the current climate.

Green party leader and Economy Minister Robert Habeck – one of the frequent villains of my Germany focused posts – seems unconcerned with the outflow.

…“In my view Germany is an attractive location for both new and existing companies,” Habeck said, according to a translation by CNBC. “Of course, materials industries are under pressure as a result of higher energy prices, but there are political decisions to be made.”

GERMANY’S LOVELY THIS TIME OF YEAR

Habeck’s answer is more industrial subsidies for supporting electricity purchases.

Well, that’s a snake that’s going to bite its own tail, because Germany is running out of money to offer subsidies to the wind and solar people. So they tried something new – making those industries pay their own freight for access to new development. Danish wind developer Ørsted (you might remember them from the ongoing NJ debacle) told them to blow it out their turbine. They weren’t paying for jack, Jack.

They were kind of pissed the idea was even raised.

A new offshore wind tender that allows bidders to compete on their willingness to pay the German government rather than receiving subsidies could ultimately result in higher power prices, Orsted’s (ORSTED.CO) CEO said on Wednesday.

Germany’s federal network regulator on Tuesday launched a tender for offshore wind turbines in four areas in the North and Baltic seas, with a total capacity of 7,000 MW.

The tender will use a “dynamic bidding process” which means that if multiple companies forgo government subsidies, the one with the greatest “willingness to pay” will be win the lease.

“We don’t think that is the best way of going about securing the build-out of offshore wind,” Mads Nipper, chief executive of Orsted, the world’s biggest developer of offshore wind, said.

Two companies ultimately “won” the leases after Ørsted pulled out of the bidding process, but guess what that’s going to do to already overheated utility rates.

Oh, yeah, baby – through the roof.

GOT ME A TICKET ON AN AEROPLANE

The German government steps in it again and again.

Take a note:

Friendly note to developing nations:

If Germany or its ministers try to offer you energy advice, as Germany's Climate Minister is doing here, just understand that you are not rich enough to survive doing to yourself what Germany is doing to itself, and Germany may not be either https://t.co/QrNvnMxKDT pic.twitter.com/fzYPQ6nUbk

— Mark Nelson (@energybants) July 14, 2023

The word being bandied about is “deindustrialization” and it is not a good word. It’s a shame Habeck and his friends keine Deutsche sprechen (no speaka da lingo).

…New orders at the country’s engineering companies, long a bellwether for the health of Germany Inc., have been dropping like a stone, falling 10 percent in May alone, the eighth consecutive decline. Similar weakness is apparent across the German economy, from construction to chemicals.

Foreign interest in Germany as a place to invest is also receding. The number of new foreign investments in Germany fell in 2022 for the fifth year in a row, hitting the lowest point since 2013.

“One sometimes hears about ‘creeping deindustrialization — well, it’s not just creeping anymore,” said Hans-Jürgen Völz, chief economist at BVMW, an association that lobbies for Germany’s Mittelstand, the thousands of small- and medium-sized firms that form the backbone of the country’s economy.

Germans are also not known for being quick on their feet adapting to change. Innovation is for other people. And it’s not even innovation – just keeping up with the Joneses or Schmidts would be a real net positive at this juncture and the Germans aren’t doing that much.

…Innovation begets economic growth and as Germany’s traditional industry declines, the question is what big new thing will replace it. So far, there’s nothing in sight.

Germany ranks only eighth in the Global Innovation Index, an annual ranking compiled by the U.N.’s World Intellectual Property Organization. In Europe, it’s not even in the top three.

In artificial intelligence, a technology many observers believe will drive economic growth for the coming generation, Germany is already an also-ran. Only four of the 100 most-cited scientific papers on AI in 2022 were German. That compares with 68 for the U.S. and 27 for China.

“Germany has nothing to offer in any of the most important future-oriented sectors,” said Marcel Fratzscher, the head of Germany’s DIW economic institute. “What exists is old industry.”

And where they could always count on their cars to pull them out, give them breathing room? It doesn’t appear as if that is going to be the case this time.

Tesla and the Chinese are eating their lunch in the EV market, and the headwinds against internal combustion engines in Europe are so strong, it’s as if designers are frozen in indecision.

Executives at VW plants said demand for some EV models had fallen “to zero", as they rapidly lose market share to low-cost Chinese manufacturers and to US rival Tesla. A VW spokesperson pointed to “a general reluctance to buy electric cars”.#CostOfNetZero

👉… pic.twitter.com/xUYBUr2d1a

— Net Zero Watch (@NetZeroWatch) July 13, 2023

Do they stay or do they go?

Unless they score that Green green…

…German industry isn’t abandoning Deutschland altogether. They’re happy to stay — as long as the government pays them off.

BASF opened a plant near Dresden that makes cathode materials for electric-car batteries just two weeks ago and has pledged to keep investing in its home market. To secure such commitments, however, local and federal governments have been forced to offer generous incentives. BASF will receive €175 million in government support for its new battery operation, for example.

Similarly, in June, the U.S. chipmaker Intel secured an eye-watering €10 billion subsidy for a massive new factory in the eastern city of Magdeburg. That translates into €3.3 million for each of the 3,000 jobs the company has pledged to create.

…they’re beatin’ feet to the exits.

Deindustrialization, third world to your left.