Strong location and competitiveness as key objectives for 2023

Strong location and competitiveness as key objectives for 2023

At the big digital press conference at the beginning of the year, Hildegard Müller gave an overview of the most important topics for the German (automotive) industry in 2023. The VDA President emphasized above all that Germany and Europe as leading industrial locations must be strengthened to ensure the success of the transformation. In addition, market forecasts for the German automotive industry in 2023 were presented.

"Closer linking of economics and geopolitics"

The annual targets for 2023 for Germany as an industrial location cannot be set without looking back at the past year: the pandemic, the war in Ukraine, strained supply chains, the energy crisis and other global conflicts were with us in the past year - and people, economy and industry faced major challenges.

These experiences have also created an awareness that our current economic model is no longer an automatic guarantee of prosperity. Geopolitical events have also exposed Germany's weaknesses as a place to do business in a ruthless way: "While intense international competition for locations has begun, Germany - in addition to the ongoing crisis management - is now faced with the fact that economic and geopolitical policy must henceforth be even more strategically thought out and developed," summarised Hildegard Müller.

*VDA President Hildegard Mueller gives an interview at the VDA Annual Press Conference

Ensuring international relevance

What mandate does this give Germany as an industrial location? Political and economic actors need to pursue the transition to climate neutrality with even greater vigour. Furthermore, Hildegard Müller emphasised that as the world's leading economic power, Germany can only in the long term strengthen its global responsibility, values and position on climate protection internationally.

She sees the key in a clear political and societal commitment to industry: "Without an ambitious competitiveness and location agenda, we risk losing the connection globally - with negative consequences for prosperity, employment and climate protection."

One thing is clear: location and competitiveness must be the political priorities in 2023 to strengthen and secure Germany's global relevance as an industrial location.

In her speech, Hildegard Müller presented the following areas of action that are crucial for this agenda:

1. Energy policy

The industry needs energy - and at the same time CO₂-free and affordable. That is why it is important that policymakers not only deal with the acute consequences of the energy crisis, but also secure strategic long-term supplies.

Energy needs to be affordable and not a 'luxury good' for people and industry, but achieving this will be even more challenging given the upward trend in electricity costs this year. It will be crucial that demand is met with all available options and that short-term tax breaks quickly lead to relief without red tape.

In this context, Hildegard Müller stresses, "The more the costs of purchasing and producing energy increase, the more the state must ensure that other costs and the tax burden will be reduced."

Another point: access to energy has now become a key issue in international competition. That is why Berlin and Brussels should in future work more consistently on international energy partnerships and conclude them.

2. Digital and analogue infrastructure

79% of companies in Germany believe that poor infrastructure hinders their operations. This is according to a survey by the German Economic Institute (IW). Blocked motorways, rail disruptions and congestion at seaports make it difficult for companies to operate. Here's why: infrastructure in Germany must once again be central if this former location advantage is to contribute to an efficient economy and the success of transformation.

This becomes clear, for example, when e-mobility is stepped up: a reliable infrastructure of charging options is the basis for people's confidence in traffic. Charging should be possible at fair prices and with climate-neutral energy, but at the moment there is a big gap between targets and reality.

Focus on digitisation: Companies are also significantly affected by an inadequate communications network. More than two-thirds of the companies surveyed said that some of their problems were related to communications infrastructure. Conclusion: In order to achieve challenging economic goals, not only an excellent analogue infrastructure is needed, but also an excellent digital infrastructure - and here the efficiency of the state needs to catch up urgently.

3. More speed in bureaucratic processes

Slow and bureaucratic approval processes are becoming an increasing challenge for the industry - there is an urgent need for reform.

Small and medium-sized enterprises are particularly burdened by complex approval procedures and reporting requirements, which also applies to the automotive industry. For our industry this means: Long and complex processes have become a huge investment obstacle. And more: there is a huge gap between the operational reality and the federal government's claims of speeding up the planning and approval processes.

Our demand: In order for industrial and medium-sized enterprises to develop better, the German tax system and approval procedures must urgently become more digital, simpler and faster.

4. Raw Materials

Today, raw materials are critical to the global competitiveness of an industrial site - and specific raw materials make transformation possible. The automotive industry has long followed a consistent path towards alternative powertrains - in the passenger car sector, electromobility is at the forefront.

For its successful deployment, the availability of raw materials is crucial: batteries need mainly lithium, nickel, graphite and cobalt, while rare earth elements are needed for the production of electric motors. According to all forecasts, this demand will increase enormously: for the raw materials mentioned for batteries, at least fourfold, and in some cases sevenfold. Therefore, a new raw material base is needed to make the industrial shift towards climate protection a reality.

Hildegard Müller's appeal to Berlin and Brussels: "Preventing raw material shortages is not just a geological challenge - it is above all an economic policy requirement. This basic insight must lead to greater political speed: Europe now needs a strategic raw materials agency." Conclusion: industry is ready for the corresponding entrepreneurial initiatives and projects, now it is the turn of politics!

5. International trade agreements

As already mentioned in the above paragraphs, a paradigm shift is needed to provide Germany with new opportunities in the global commodities market as an industrial location.

Hildegard Müller called on Berlin and Brussels to act together on energy and raw material supplies, to secure them with partnerships and to ensure internationally competitive prices: "The European response to the many scenarios of deglobalisation must be a clear programme for reglobalisation. This agenda is based on a much broader basis - with commodity and trade agreements as well as energy partnerships."

Additional benefits of these collaborations: they are the linchpins for a crisis-resilient, stable and successful economic transformation. They also help Germany to reduce dependencies and become more resilient. The aim is therefore to conclude as many international trade agreements in as many regions of the world as possible. African countries must also be taken into account, as well as the Gulf States, Brazil and India.

Ultimately, all these aspects contribute to Germany and Europe maintaining their international significance and therefore being a role model in the area of climate protection and values. Exporting innovative and climate-friendly technologies globally is the greatest contribution Germany can make to global climate protection. We want German industry to be at the centre of this mission.