If Germany does not innovate economically in a strong way, the country will "fall behind very quickly." That is what Monika Schnitzer, an important advisor to the German government, says to Nieuwsuur. "Because other countries, they do get moving."
It is no coincidence that the German government is coming up with a substantial reform package to encourage companies to invest. But can the large German industries be set in motion?
The German economy, the engine of the European economy and the Netherlands' most important trading partner, has been faltering for years. Economic growth is minimal and large corporations are laying off thousands of people. For example, in the automotive industry, 100,000 jobs will disappear by 2030.
The diagnosis has been known for years. Yes, the once flourishing German industry suffers greatly from high energy prices, but companies themselves have also failed to sufficiently adapt to the digital age. Car companies held on to combustion engines for a long time, while competitor China quickly succeeded with electric cars. Government and companies continue to print a lot while other countries digitize their bureaucracy much further.
The solution therefore seems obvious, says Roland Boekhout, chairman of the German-Dutch Chamber of Commerce and CEO of ASN Bank. "Digital services must make enormous progress, because productivity increases are linked to that. It sounds simple, but it really starts with filing taxes online, paying with your debit card, phone or watch."
Entrepreneurs in Germany face "much more paperwork than we are used to in the Netherlands," he says. "That bureaucracy stands in the way of developing new things. New initiatives take a lot of time."
AI
Germans still see too little of what they can gain from innovation, says Schnitzer. "Change is something people find difficult. They always only see what they lose."
That also applies to the large industries that were long crucial for the German economy, she says. As a result, Germany loses out to other countries that do move forward. "We see progress at a rapid pace, especially in the field of artificial intelligence in the United States. We see that China has become a very large competitor. Many did not have that on their radar ten years ago. And that will continue."
The old German business model, the export of classic industrial products, is soon over, warns Schnitzer. In terms of price, cars and other products cannot compete with China.
That Europe protects its own industries against that Chinese competition with import tariffs has possibly saved large car companies, but has also led to fewer incentives to innovate. Schnitzer: "The restructuring process is too slow with us. And there is too little influx of new companies."
Joining forces
Still, Schnitzer thinks the German industry can flourish again. "We have previously succeeded in attracting customers with particularly high-quality, technologically very advanced products, who were then willing to pay a particularly high price for these great products. And that is exactly the direction we must work towards. That would be the future, and not so much always just focusing on the question: how can we maintain what we have done so far?"
Schnitzer and Boekhout have confidence in the rise of new companies. Boekhout: "A quarter of start-ups are converted into scale-ups in the Netherlands. In Germany, that is 40 percent. The potential is there. If the Netherlands and Germany join forces on digitization and energy strategy, we would benefit together."
Schnitzer: "Do not let a crisis go unused. Once the situation is difficult enough, you can usually also more easily make clear that something must change now, because the status quo is no longer sustainable anyway."
Charlotte Waaijers, correspondent Germany:
"New problems pile up on old problems that have been going on for a long time. It is relatively expensive to produce in Germany and it takes a lot of paperwork. Industrial producers are increasingly suffering from Chinese competition and American import tariffs. Then there was the low water level in the Rhine, which makes transport difficult. And due to the war in Iran, energy prices are rising.
The governing parties feel the pressure of the faltering economy. They are investing heavily in infrastructure and defense and they are trying to reduce bureaucracy. But structural reforms are politically much more difficult. For example, the Christian Democrats and Social Democrats differ on the labor market and social security. Because they are under pressure in the polls, they are afraid of alienating their base. As a result, reforms can be less far-reaching."