“Now we have it in black and white once again,” comments Rolf Werner, Chairman of the Board of Kupferverband e.V., on the latest short report from the German Economic Institute (IW)*. “The decline in orders and production in the copper industry is symptomatic of a steady industrial downsizing that is particularly affecting the energy-intensive sectors in Germany.” Coupled with the extensive transformation requirements, the poor economic conditions for the domestic copper industry are leading to negative growth.

Germany’s climate protection targets imply high transformation requirements for the industry. The energy-intensive sectors play a key role in this, but have seen a continuous decline in their capital stock since 2001, according to the authors of the short report. Overall, this has shrunk by around a fifth between the turn of the millennium and 2021. While Germany’s high energy prices in an international comparison had already placed a heavy burden on energy-intensive industries before the energy crisis in 2022, the developments of the last two years now also suggest further declines in capital stock, according to the IW experts.

Distorted competition

“Energy prices continue to be a considerable burden for our industry. The conglomerate of high energy costs in Germany, high non-wage labour costs, excessive bureaucracy at home and the exact opposite abroad, less bureaucratic, business-friendly incentive programmes such as the US Inflation Act, have a very clear impact on investment decisions,” Werner continues. “All of this leads to a distortion of competition on international markets on the one hand and also contributes to ongoing deindustrialisation locally on the other.” The IW study also cites high energy costs as a factor influencing investment decisions and even goes so far as to predict that entire value chains could be weakened if the framework conditions for the German economy do not change and companies are forced to relocate abroad. “A migration of the industry abroad could also jeopardise the targeted decarbonisation, as copper materials in particular make up a significant proportion of the renewable energies required for this,” adds Michael Sander, Managing Director of the Copper Association.

A recent economic survey in the copper industry already shows an alarming situation: the lack of orders, which is also a result of the overall economic situation in the customer industries, as well as obstacles to investment, together with the lack of prospects, are leading to great uncertainty in the industry. Around 36 per cent of the companies surveyed are currently working short-time and nine per cent expect to do so in the next three months.

* IW-Kurzbericht Nr.76/2023, Anhaltende Schwächung energieintensiver Branchen, Hubertus Bardt/ Dennis Bakalis, 16.10.2023