German chemicals industry calls for “offensive 2030” to tackle declines

Frankfurt, Germany – The German chemicals and pharmaceutical industry needs ‘an offensive’ to see the industry through to 2030, amid continuing declines.

“We have to rethink Germany. We need an offensive in 2030,” said Markus Steilemann, president of industry association VCI during a 15 Dec annual press conference.

For a competitive economy and a green transformation, the industry also needs competitive energy prices, Steilemann said, calling for a short-term solution of relief in prices.

In the long-term, according to the VCI president, the main requirement is to speed up the restructuring of the energy system.

This, said Steilemann, includes the expansion of the electricity-supply networks and the creation of reserve capacities with back-up power plants and energy storage.

However, he added, the electricity price-package, which has been planned after the agreement in the budget dispute, “only maintains the status quo”.

According to Steileman, the energy issue is “just one of many unsolved problems.

“The list of shortcomings still includes the dilapidated infrastructure, the shortage of skilled workers and excessive bureaucracy and regulation.”

Reviewing this year, VCI said 2023 had been difficult for the German chemicals industry with a “quick recovery not in sight”.

Production fell 8% year-on-year and with the exclusion of pharmaceuticals, the decline stands at 11%, according to VCI.

With “increasingly lacking orders”, utilisation rates fell to an average of 77% over the first nine months of the year, far below the ‘economically necessary’ rate of 82%.

At €230 billion, industry sales were 12% lower than in the previous year. The decline was particularly severe in domestic business, where sales fell 16% to €86 billion.

At €144 billion, exports were 10% lower than last year, also impacted by the declining chemical prices.

For 2024, VCI said “there is still a recessionary mood in the industry. Both the current business situation and the expectations for the coming months are negative.”

This, said Steileman, means that there will “probably still be” a lack of orders in the chemical business next year.

Furthermore, the association predicts a decline of 3% in industry sales for the year.

Citing the results of a recent members survey, VCI said 45% of respondents “did not expect an improvement until 2025 at the earliest.” 

“Germany is in a crisis that not only affects the chemical industry,” said Steilemann in his address.

To get Germany “back on the road to success”, a profound policy change and a focus on a competitive economy are urgently needed.”

“Politicians must finally wake up so that Germany's model of prosperity does not suffer shipwreck,” Steilemann concluded.