By using this site, you agree with our cookies usage in accordance with our cookies policy. You can always disable cookies in your browser settings.



VDB warns of “disastrous” prospects for German manufacturers

3 October 2022
Reading time ~ 3 min
Production of Siemens Mobility locomotives in Germany
Production of Siemens Mobility locomotives in Germany. Source: Siemens
Belov Sergey, Editor-in-Chief, ROLLINGSTOCK Agency
Reading time ~ 3 min
Litvintsova Olga, Editor of International Projects, ROLLINGSTOCK Agency

Germany: The VDB national railway industries association gave a tough talk, pointing out the need for urgent support measures at the European level.

Thus, at a special meeting of EU energy ministers held on September 9, VDB claimed that the exponential rise in energy prices and abrupt gas emergency could have disastrous consequences for the railway industry. “Drastically higher energy costs, sometimes galloping material costs and supply chain bottlenecks are all seriously threatening the rail industry. Politicians are called upon to quickly find effective emergency solutions so that we do not lose any company”, VDB CEO Ben Mobius is quoted in a publication by the association.

According to his words, the speed of decision-making, specifically at the level of EU authorities, is now of critical importance in order “to avoid the inevitable imminent insolvencies in small and medium-sized railway companies this year”. Mobius explained that rail traffic, due to its “complete” electrification, is one of the key elements in European climate protection initiatives, but now the protection is also required for industrial suppliers. Later, the VDB appealed to a significant increase in Germany’s 2023 budget to support rail and urban transport development, noting the need to “mobilize billions in additional funds” to ensure climate targets are met.

It is worth noting that earlier VDB cited data according to which 61% of the German rail network was electrified (total length is 33,400 km), and requested quick decisions on investing in electrification, both in terms of climate goals and reducing dependence on energy imports.

The situation in the German industry has deteriorated sharply due to the macroeconomic crisis and sanctions imposed by the EU against Russia following the combat actions in Ukraine. Thus, the ifo Institute notes the plans of the country’s enterprises for significant price increases, the IWH and IfW institutes expect a serious contraction of the German economy in 2023. In turn, Handelsblatt writes about the growing demand for the services of consultants on filing bankruptcy applications, as well as trends among industrialists to accumulate stocks and expand production within Germany instead of focusing on global supply chains. According to official statistics, the growth in industrial producer prices in Germany in August amounted to 45.8% compared to August 2021.

In an interview with WirtschahftsWoche, Ulf Schneider, the President of the Schneider Group consulting company, estimated the share of German entrepreneurs remaining in Russia at 80% and also indicated that German small and medium-sized enterprises are looking for opportunities to continue their activities.