On February 5th, German economy minister Peter Altmaier presented his 2030 Industrial Strategy. The strategy aims to improve the military industrial complex as well as the industry as a whole.
The strategy listed the areas in which Germany is a world leader and strives to reinforce its positions.
- the steel, copper and aluminum industries;
- the chemical industry;
- mechanical and plant engineering;
- the automotive industry;
- the optical industry;
- the medical device industry;
- the GreenTech sector;
- the defense industry;
- the aerospace industry as well;
- additive manufacturing (3D printing).
One of the main aims of the strategy is the clear objective of increasing industry’s share of gross value added in Germany to 25%, while the total for Europe should reach 20%.
The Mittelstand (small and medium-sized enterprises) should be strengthened and there should be heavy investment in artificial intelligence.
Altmaier’s strategy also includes the German state facilitating mergers between larger companies, creating “European Champions” as a result.
“The question is whether we voluntarily dispense with this market segment and allow it to be served by the USA and China alone, or whether we’re also entitled to be in this market. But this is only possible if mergers are permitted so that existing companies can reach necessary size,” Altmaier said.
According to the strategy, business should be forced to innovate.
But for “challenges which are fundamental to an economy,” the state should, for a limited period of time, be able to acquire companies’ shares or provide financial state aid to support the necessary mergers.
Bundesverband der Deutschen Industrie (Federation of German Industries) [the BDI] tweeted tweeted: “Concept was overdue, international competition doesn’t sleep! Proposals worth discussing, now a matter of how they’re shaped. Still underexposed: climate policy, high tax burden, industrial ‘Mittelstand’.”
➡️ Konzept war überfällig, internat. Wettbewerb schläft nicht!
➡️ diskussionswürdige Vorschläge, jetzt geht es um Ausgestaltung!
➡️ Noch unterbelichtet: Klimapolitik, hohe Steuerbelastung, industrieller Mittelstand pic.twitter.com/PoIjtyVLuY
— BDI (@Der_BDI) February 5, 2019
EURACTIV cited Dr Tomaso Duso from the German Institute for Economic Research, according to whom the German Economic Ministry’s approach was wrong.
“The idea that the state knows better than the market what are the technologies, sectors and markets of the future is quite far-fetched,” Duso said.
“Protectionism and massive subsidies may be currently working in China. But the strategy of creating a bad and lightweight copy of this in Europe won’t succeed,” he added.
According to EURACTIV, the proposed strategy was a last-ditch effort to convince the European Commission to reverse its decision on blocking the merger between rail giants Alstom and Siemens.
“The EU’s rejection of the Siemens-Alstom merger demonstrates the urgent need for a European Industrial Strategy,” Altmaier said on Twitter on Wednesday (6 Febrruay). “It involves orders of many $100 billion worldwide. That is why we need strong European champions. France & Germany agree.”
Die Untersagung der Fusion Siemens/Alstom durch die EU zeigt die dringende Notwendigkeit einer Europäischen Industriestrategie. Es geht um Aufträge von vielen 100 Mrd $ weltweit. Deshalb brauchen wir starken europäischen Champion. Frankreich & Deutschland sind sich einig.
— Peter Altmaier (@peteraltmaier) February 6, 2019
While presenting Germany’s industrial strategy 2030, he said that EU merger rules should be reformed to allow the creation of “European industrial champions” with the size to compete against Chinese and US competitors.
Separately, a German Finance Ministry analysis showed that the country may be unable to deliver on its pledge to increase the defense budget due to smaller economic growth.
On February 10th, US Ambassador to Germany Richard Grenell criticized Germany’s pledge to increase its budget, claiming that it is not doing enough, in an interview with German newspaper Welt am Sonntag.
“Germany’s NATO promise to raise defense spending to 1.5 percent is not enough,” Grenell said. “Again, it is not US standards that have to be met here but NATO commitments that Berlin has already agreed to. The US is simply reminding its great German ally that now is not the time to undercut or weaken NATO.”