The country’s large companies face a loss of competitiveness due to the rise in their internal costs.

“We are at a dangerous point,” worries Arndt Kirchhoff, head of the North Rhine-Westphalia employers’ association and one of three brothers who run Kirchhoff, a maker of auto components. Germany recently entered a technical recession. Many companies are investing abroad instead of at home. Chinese consumers are importing less after the pandemic restrictions are lifted than German manufacturers expected. And Ukraine’s counteroffensive against the Russian invaders is injecting uncertainty into Germany’s backyard.

In May, an Ifo Institute business confidence index fell for the first time in seven months. On June 5, the gloomy mood among manufacturers was further darkened when the VDMA, the main lobby group for machine manufacturers, announced that orders from engineering companies fell by 20% last month, year after year. A small contraction in GDP (German production fell 0.3% in the first quarter) can have a big effect on machine builder orders. However, the drop in orders also “reflects the recent deterioration in the mood of the economy”, laments Olaf Wortmann of the VDMA. After promising a new “German speed” on trade and economic issues, the ruling coalition of Social Democrats, Greens and Democrats is delivering what to disillusioned German businessmen seems increasingly slow.

The most pressing concerns of businessmen are, according to a recent survey of industrial companies, the prices of raw materials and energy (which remain high); the availability of skilled labor (which is in short supply); and rising wages (which further raises costs).

To the list we must add the bureaucracy. Bureaucratic approvals still take too long. A sensitive new law requires companies with more than 3,000 employees in Germany to check whether their suppliers around the world comply with environmental and human rights standards.

It has taken ten years to build the wind farm that Robert Habeck, Minister of the Economy, inaugurated in Bad Berleburg, North Rhine-Westphalia, on June 6. “We have to speed up the approval processes,” Habeck conceded during his inauguration. He insisted that Germany manage to double its wind power capacity by 2030. But this goal, by his own admission, would require tripling the pace of wind farm development.German companies are increasingly reluctant to make the effort to invest and expand. His country ranks sadly 18th out of 21 industrialized countries as a place for family-owned companies to do business, according to the Zew Mannheim economic research institute (the United States, Canada and Sweden are the top three). “We’ve been on the wrong track for the last 20 years,” laments Natalie Mekelburger, CEO of Coroplast, a leading manufacturer of adhesive tapes. Targeted state intervention in business is “indirectly destroying business forces,” says Mekelburger, who accuses the Green party in particular of a “planned economy approach.

“German companies are increasingly reluctant to make the effort to invest and expand. His country ranks sadly 18th out of 21 industrialized countries as a place for family-owned companies to do business, according to the Zew Mannheim economic research institute (the United States, Canada and Sweden are the top three). “We’ve been on the wrong track for the last 20 years,” laments Natalie Mekelburger, CEO of Coroplast, a leading manufacturer of adhesive tapes. Targeted state intervention in business is “indirectly destroying business forces,” says Mekelburger, who accuses the Green party in particular of a “planned economy approach.

Almost a third of German medium-sized companies are thinking of moving production and jobs abroad; one in six is already doing it. BioNTech, a pioneering biotech firm that helped develop a vaccine against Covid-19, is building its cancer research center in Britain. Viessmann, a heating equipment manufacturer, is selling its core heat pump business to Carrier of the United States. “We are in danger of progressive de-industrialization,” warns Nikolas Stihl, director of the supervisory board of Stihl, a leading manufacturer of chainsaws.

Stihl’s company does not plan to move production elsewhere. But he hopes the decisions by BioNTech and Viessmann serve as a wake-up call for the government. Neither move would have happened, he says, if Germany were as business-friendly as it used to be.