Germany’s Days as an Industrial Superpower Are Coming to an End

As political paralysis grips Berlin, the energy crisis was the final blow for a growing number of manufacturers

In a cavernous production hall in Düsseldorf last fall, the somber tones of a horn player accompanied the final act of a century-old factory.

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Amid the flickering of flares and torches, many of the 1,600 people losing their jobs stood stone-faced as the glowing metal of the plant’s last product — a steel pipe — was smoothed to a perfect cylinder on a rolling mill. The ceremony ended a 124-year run that began in the heyday of German industrialization and weathered two world wars, but couldn’t survive the aftermath of the energy crisis.

There have been numerous iterations of such finales over the past year, underscoring the painful reality facing Germany: its days as an industrial superpower may be coming to an end. Manufacturing output in Europe’s biggest economy has been trending downward since 2017, and the decline is accelerating as competitiveness erodes.

“There’s not a lot of hope, if I’m honest,” said Stefan Klebert, chief executive officer of GEA Group AG — a supplier of manufacturing machinery that traces its roots to the late 1800s. “I am really uncertain that we can halt this trend. Many things would have to change very quickly.”

The underpinnings of Germany’s industrial machine have fallen like dominoes. The US is drifting away from Europe and is seeking to compete with its transatlantic allies for climate investment. China is becoming a bigger rival and is no longer an insatiable buyer of German goods. The final blow for some heavy manufacturers was the end of huge volumes of cheap Russian natural gas.
German Output Has Trended Downward Since 2017 Peak


Alongside global volatility, political paralysis in Berlin is intensifying long-standing domestic issues such as creaking infrastructure, an aging workforce and the snarl of red tape. The education system, once a strength, is emblematic of a long-term lack of investment in public services. The Ifo research institute estimates that declining math skills will cost the economy about €14 trillion ($15 trillion) in output by the end of the century.

In some cases, the industrial downshift is taking place in small steps like scaling back expansion and investment plans. Others are more evident like shifting production lines and trimming staff. In extreme instances — like Vallourec SACA’s pipe plant, once part of fallen industrial giant Mannesmann — the consequence is permanent closure.


“The shock was huge,” said Wolfgang Freitag, who worked at the plant since he was a teenager. The 59-year-old’s job now is to disassemble equipment for sale and help his old colleagues find new work.

Germany still has an enviable roster of small, agile manufacturers, and the Bundesbank and others reject the notion that full-blown deindustrialization is anywhere close. But with reforms stalled, it’s unclear what will slow the decline.

“We are no longer competitive,” Finance Minister Christian Lindner said at a Bloomberg event earlier this month. “We are getting poorer because we have no growth. We are falling behind.”

Chancellor Olaf Scholz’s fractious coalition was thrown into further disarray in mid-November by a budget crisis sparked by a court ruling over borrowing measures, leaving the government with little leeway to invest.

“You don’t have to be a pessimist to say that what we’re doing at the moment won’t be enough,” said Volker Treier, foreign trade chief at Germany’s Chambers of Commerce and Industry. “The speed of structural change is dizzying.”

Frustration is widespread. Although hundreds of thousands of people have hit the streets in recent weeks to protest against far-right extremism, the anti-immigration Alternative für Deutschland, or AfD, is ahead of all three ruling parties in the polls — trailing only the conservative bloc. Scholz’s Social Democrat-led alliance has support from 34% of voters, according to a Spiegel analysis of recent surveys.

Fading industrial competitiveness threatens to plunge Germany into a downward spiral, according to Maria Röttger, head of northern Europe for Michelin. The French tiremaker is shutting
two of its German plants and downsizing a third by the end of 2025 in a move that will affect more than 1,500 workers. US rival Goodyear has similar plans for two facilities.

“Despite the motivation of our employees, we have arrived at a point where we can’t export truck tires from Germany at competitive prices,” she said in an interview. “If Germany can’t export competitively in the international context, the country loses one of its biggest strengths.”

Other examples of decline surface regularly. GEA is closing a pump factory near Mainz in favor of a newer site in Poland. Auto-parts maker Continental AG announced plans in July to abandon

a plant that makes components for safety and brake systems. Rival Robert Bosch GmbH is in the process of slashing thousands of workers.

The energy crisis in the summer of 2022 was a major catalyst. While worst-case scenarios like freezing homes and rationing were avoided, prices remain higher than in other economies, which adds to costs from higher wages and regulatory complexity.

... That use of the term—to describe enclaves where immigrants have established some kind of hegemony—is in fact the exact opposite of how it was originally defined by right-wing extremists, who envisioned “national liberated zones” where

“the only figures of rule or the enforcement of order” were the extremists themselves, usually neo-Nazis

, wrote Lukáš Novotný, a professor at Jan Evangelista Purkyně University in the Czech Republic, in a 2009 paper. “They are zones to which foreigners have limited (or no) access.”

Novotný traces the history of far-right extremists’ no-go zone aspirations in Germany back to the ’90s, decades before conservatives popularized their own version of the term.

In the neo-Nazis’ fantasy of such an area, the local government, law enforcement, and the population either have enough neo-Nazis in their ranks to enforce the boundaries of the no-go zone

or contain a critical mass of sympathetic locals who turn a blind eye to the violence used.

This conception is a grim neo-Nazi pipe dream

. But evidence suggests that something resembling the no-go zone has existed in parts of Germany. A 2007 report conducted by the Office for the Protection of the Constitutional Order in the German state of Brandenburg counted 17 of what it called “fear zones.” According to Novotný, the report describes the areas as “zones where extremists have managed to cut out all other groups from participating in social life,” and where

the far right has “excluded other (non-neo-Nazi) groups from participating in or attending any cultural or other activities.”

...