Speaking for Germany
Peter Altmaier is the Federal Minister for Economic Affairs and Energy. Markets Germany talks to him about prospects for the automobile and energy
industries, the “Made in Germany” brand, and what is attracting foreign investors.
Mr. Altmaier, Germany has the largest population in Europe, the “Made in Germany” brand is unique and is often a decision-clincher for success overseas. Germany’s research landscape is at the forefront in the world, its workers are well-educated and motivated. Yet there is a shortage of skilled workers, the expansion of broadband is lagging behind and – in comparison with other European countries – the energy prices are high. How would you convince a foreign investor to come to Germany?
Peter Altmaier: Germany is an open, attractive and world-renowned investment location. Investors can build upon the foundations of well-educated workers, a stable, quality environment and great legal security. Foreign direct investment in Germany has risen consistently since 2010, 20 percent overall against the 2010 level, and in 2015 it reached a value of €466bn. Some 80,000 foreign companies, employing around 3.7m people, are located in Germany. These stats paint a very clear picture: Germany is a good location for foreign investors.
Reliability and Germany – these used to be synonymous in German products and in German politics. But the diesel emissions scandal and the somewhat drawn-out process of forming a government have harmed that image. Is it lasting damage? Or is it simply a case of the country having problems just like any other?
Altmaier: I don’t really see much damage to the overall image. The diesel emissions scandal is a warning for the leadership and governance in the companies involved. But in the wake of the scandal the government itself has put into place a series of concrete measures to prevent any repeat – for example, producers must now perform the test procedures on their emissions systems publicly, emissions testing in real road conditions has been extended and a public testing laboratory is being built at the Federal Motor Transport Authority. And while it is correct that the process of forming a government took some time, there were extraordinary circumstances surrounding that process that are unlikely to be repeated.
The automotive industry is crucial to Germany’s economy. In electromobility, however, there is already very strong competition and the industry is facing huge challenges. Can Germany remain at the pinnacle of the global automobile industry?
Altmaier: The automotive industry is by some distance the most important industrial sector in Germany’s economy, with 820,000 employees and a turnover of €423bn in 2017. It is a world leader in product and process innovation. The industry has to start using this know-how actively if it is to continue playing a leading role in a continually changing global market. The industry must set itself the target of remaining a global leader.
Peter Altmaier is a passionate believer in free trade. He openly welcomes foreign investors to Germany but remains cautious of what he calls “state-driven strategic investments.” © Jonas Holthaus/laif
How would you convince an energy-intensive company to locate to Germany?
Altmaier: For the same reasons as any other company: they can rely upon excellent infrastructure and superbly-educated labor. There are innovative clusters and an excellent R&D landscape. High energy prices are not a competitive disadvantage. Under the existing balancing system, the energy costs for energy-intensive companies are, relative to other parts of Europe, low – and that with an extremely reliable supply.
We have made huge steps in Germany toward restructuring our energy supply while keeping energy-intensive industries in mind. This will remain so, as we know that energy-intensive companies are at the centre of industrial value creation in Germany. They don’t just supply the ideas for the energy transition either, rather they contribute to the process with their energy efficiency optimizations, increased flexibility and improved load management.
Are Chinese investors still welcome in Germany? The attitude toward Chinese companies seems recently to have been somewhat critical, both in public and in politics.
Altmaier: The E.U. and Germany are open investment locations. This is a good thing and should remain so. Local and foreign companies are, as a rule, treated exactly the same. But our open doors must not be an invitation for the industry-political or geo-strategic interests of other states, with state-owned or state-sponsored companies who endanger our critical infrastructure and thereby threaten national security. And we demand fair competition both in trade and investment. For example, trade barriers and unequal treatment of foreign companies prevent German companies in some locations overseas from realizing their full value potential. We will therefore continue to make representations for the removal of all barriers and a level playing field.
Can Germany still afford to strongly represent free markets and be so open to foreign investors, given the current protectionist tendencies throughout the world?
Altmaier: I have always been clear on this: an end to open markets is useless for us. Seclusion negates growth. We stand for a free, fair and well-regulated trade environment. And we are now standing together with Italy and France to call for the creation of an E.U. framework to examine foreign direct investments. Member states must be equipped with the right regulatory systems in order to detect, regulate and/or prevent state-driven or state-financed strategic investments.
»Germany is an open, attractive and world-renowned investment location.«
Do you still think that Germany benefits from a free market and foreign investors?
Altmaier: Yes I do. Germany is in a better state than it’s ever been. In spite of all the current global uncertainty, Germany’s outlook is positive. The global economy continues to grow and strengthen Germany’s export sector. Germany’s economic health is closely linked to the global economy. A strong export economy needs open markets. So we need to continue our trade interests without escalating any conflicts. That can only exist with our European partners: even if other countries seem to be shying away from multilateral cooperation, the E.U. has to be a fair and reliable trading partner.
Employee rights in Germany are extremely strong. Many businesspeople in other countries just don’t get the institutions of works councils or the voting rights of employees within companies. How do you convince potential investors about the “German model”?
Altmaier: Employee representation in Germany is a major foundation of our social market economy and an integral part of German corporate and company culture. The “German model” provides a regulated system for conflict resolution that contributes to social harmony, which makes it an important location factor for investors. Not least because of this was the German economy able to survive the effects of the global financial crisis better than many other industrial countries. So employee representation is a location advantage to investors.
»Germany is in a better state than it’s ever been, in spite of global uncertainty«
How important is digitalization for Business Location Germany? Is it an opportunity or a threat?
Altmaier: Above all, it is unstoppable. But the digital transformation brings huge opportunity for companies and the population. It is now up to companies to recognize the signs of the times and adapt to them, particularly those producing for the global market. We will stand close by and consult with the companies to some extent in the Mittelstand 4.0 competence centers. As artificial intelligence is becoming the key technology of the future we must be leaders in this field and not depend on others. And crucially, Germany and Europe must be leaders in transferring and sharing innovative solutions.
Germany, and especially Berlin, is one of the world’s most attractive locations for startup founders. But the debates on refugee immigration and the success of populist political parties could cause foreigners to doubt whether they really are welcome. Against this background, how would you convince a foreign founder to come to Germany?
Altmaier: Germany is and will remain an open country and a good location for international companies and their employees. The current debates, however heated they may get, don’t change that. Fortunately, the relevance of populist parties is much less here than in other major countries in the world, despite the fall-out from the 2015 refugee crisis. In pretty much every industry there are successful entrepreneurs with immigrant roots. There are generous assistance programs for innovative founders and ideas, such as the EXIST program, where almost 20 percent of the participants are of foreign origin. The pilot project “Startup your future” actively targets introducing refugees to experienced entrepreneurs in the Brandenburg-Berlin region.
In March 2018, Peter Altmaier was appointed Federal Minister for Economic Affairs and Energy.
Head of the Federal Chancellery, Federal Minister for Special Tasks and the refugee coordinator of the German Federal Government (since 2015).
Federal Minister for the Environment, Nature Conservation and Nuclear Safety.
Parliamentary secretary of the CDU/CSU parliamentary group.
Parliamentary state secretary in the Federal Ministry of the Interior.
Parliamentary legal counsel of the CDU/CSU parliamentary group.