🔔 Germany's In Deep Scheiße

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Property, like in many other countries in the world (but strangely it is so sacrosanct in a communist state) is of vital importance.

But this importance and leverage could serve to undermine the prospects at some point in the future...

Again, not collapse, but a slow trudge into the similar mediocrity and apathy that many face in even more 'developed' countries.

 It's already started... (chart via @FabienBossy) pic.twitter.com/uiYEI7q8m7— Tim (@VolaTim) September 29, 2022 

Broadening our analysis to include all energy intensive material industries being impacted by high energy prices (chemicals, glass, paper, steel, ceramics, cement etc), we estimate the scope of European de-industrialisation risk increases to €1.6tn sales, 5.1% European workforce (c.11mn jobs at risk) and 7.9% of European IP

Among customer industries, we see the automotive and construction end markets as most vulnerable to these risks given high energy-intensive raw material dependence and local supply chain requirements.

 In the BDI survey, 58% of firms saw skyrocketing costs as an existential challenge & c 25% were considering or in process of relocating part of their business.

10% of German medium-sized companies see themselves on the verge of collapse— Derrick Berthelsen (@DerrickBerthel1) October 12, 2022 

Yara International (with 17,000 employees), one of the world's largest nitrogen fertilizer manufacturers, announced that it wants to shut down around 40 percent of Europe's ammonia production capacity - because of skyrocketing gas prices that make profitable production impossible

The chip supplier Siltronic AG is about to be sold to Asia. Siltronic boss Christoph von Plotho said "The high electricity price makes the location unattractive," we pay “less than half the price of electricity” at the Singapore location. Sales of 1.4 billion euros in 2021.

Vitesco Technologies Group AG (an automotive supplier / around 42,000 employees) will cut 810 of 1,160 jobs at the Nuremberg production site by 2026. The company reported sales of 7.8 billion euros in 2019.

"For both the German and neighbouring markets, the risk of serious impairments to supply security due to the failure of individual import supply infrastructures is very limited,"

Against the background of significantly weaker earnings in Europe – especially in Germany, where earnings in the third quarter of 2022 were negative – as well as the deteriorating framework conditions in the region, BASF has initiated a cost savings program focusing on Europe and particularly Germany to be implemented from 2023 to 2024.

More than half of the cost savings are to be realized at the Ludwigshafen site. Operating, service and research & development divisions as well as the corporate center are to be streamlined.

Ludwigshafen site, a 10 sq km industrial complex so sprawling that the company runs its own bus network to usher employees from its gates to their workplace.

Byproducts from making ammonia, for example, are funnelled through a 1,771-mile (2,850km) pipeline network from one end of the site to another, where they are recycled to produce fertiliser, disinfectant, diesel exhaust fluid, or carbon dioxide for fizzy drinks.

The German confectionery industry’s electricity costs in 2021 were estimated at around 250 million euros ($242.6 million), but are expected to rise to about 2.5 billion euros this year with the same energy use, the association said.

Risk is what you can’t see, think only happens to other people, aren’t paying attention to, are wilfully ignoring, and isn’t in the news.

A little surprise usually does more damage than something big that’s been in the news for months. ~ Morgan Housel