The German chemical industry is experiencing an unexpected boom as a result of the Iran war. However, this is unlikely to prevent further site closures and the loss of thousands of jobs. This also puts the supply of essential goods at risk.
The chemical giant BASF wants to take over the specialty chemicals provider Evonik. Evonik has announced that it will cut thousands more jobs - as did BASF in the past two years. One of Germany's most important industrial sectors is experiencing a "shock wave", as Ifo expert Anna Wolf puts it. "Large chemical companies obviously no longer consider the production location to be competitive."
Further location closures like those in recent months are likely, predicts the expert for industry analyzes at the Ifo Institute in an interview with ntv.de. Thousands more jobs could therefore be lost.
The German economy is currently recovering and the global economy is relatively robust. The German chemical industry is even benefiting from the Iran war, despite the massive increase in energy and raw material prices. Asia is particularly affected by the supply chain bottlenecks as a result of the war in the Middle East, which means demand in this country is increasing. As a result, German chemical companies have recently been able to increase their prices, contrary to the trend of recent years. “But your competitive disadvantages will only be eliminated in the short term,” explains Wolf.
According to the industry observer, the energy-intensive chemical industry is suffering so much from high energy prices and regulations that it can no longer produce competitively, at least in the area of basic chemicals. China is also flooding the European market with basic chemicals. The USA's protectionist measures would also divert products to Europe. “The only screw that German chemical companies can turn is personnel costs,” says Wolf. "In chemistry, a lot of things are determined by price because the products are standardized. Quality is ensured through specifications."
“We need strategic reserves”
Companies like BASF are therefore cutting jobs in this country - and expanding their locations in China. Wolf considers further migration to be extremely dangerous. “We no longer have open markets,” regrets the economist, referring to China or the USA. In order to guarantee its own supply even in the event of a crisis, the EU should, in its opinion, ensure part of the chemical production itself, following the example of the rules for critical raw materials.
“For chemicals in the areas of nutrition, defense and pharmaceutical products, we have to build up our own reserves like other countries, for example the USA or China,” demands Wolf. Otherwise, geopolitical tensions and supply chain problems could put supplies at risk.
In addition to such strategic reserves, the economist calls for a reduction in bureaucracy and more speed in the expansion of the energy infrastructure, for example for hydrogen. The competitive pressure in the chemical industry is enormous, including in future fields such as the AI sector: “Specialty chemicals for data centers are also being massively expanded in Asia,” explains Wolf.
A further exodus of German chemical companies would not only affect essential goods from food, medicine or defense. Other industries would also have to worry about their supply of chemical products in the event of new global upheavals and supply chain problems. "The chemical industry is a basic supplier for the entire economy: its products are found in an incredible number of things, for example in plastics and building materials or in cleaning agents," emphasizes Wolf. "The chemical industry does not deliver a specific product that then becomes more expensive, but rather is at the beginning of many supply chains."
