Germany faces significant political instability, impacting its economic policy amid global challenges. Energy costs pose a major issue for industries, particularly those dependent on high energy consumption. Despite these obstacles, Germany retains strengths in innovation and industrial capacity. In contrast, Switzerland benefits from political stability and a skilled workforce. Siemens excels in Switzerland, emphasizing productivity and R&D. The Smart Infrastructure sector is set to grow substantially, driven by trends like urbanization and decarbonization, with investment focusing on high-potential markets.
Current State of Germany: A Lack of Stability
Mr. Rebellius shares his perspective on Germany’s current situation, highlighting a concerning lack of political stability amid global geopolitical tensions, upheavals, and trade barriers. This instability is far from ideal, necessitating a clear direction for the future of Germany’s economic policy.
Opportunities and Challenges for Industry
Energy costs emerge as a critical challenge for the German industry. Although Siemens itself doesn’t have highly energy-intensive production, many of its customers do, and they are feeling the pinch. The energy mix, particularly the phase-out of nuclear energy without adequate alternatives, has triggered a spiraling cost situation. Addressing this requires transparent signals regarding the future of energy policy.
Despite the challenges, Germany possesses significant strengths that often go unrecognized. The nation boasts a rich culture of innovation, excellent research facilities, and a robust industrial base—assets that haven’t vanished just because of rising electricity prices or missteps in the automotive sector. There’s still time for the new German government to foster a spirit of renewal and capitalize on these strengths.
In comparison to Switzerland, Germany’s larger size offers advantages, especially in terms of exports and market access. Swiss industries are reliant on competitive delivery to Germany and Europe, raising questions about how best to maintain this edge in light of concerns over exchange rates and access to the European internal market.
Switzerland enjoys the benefit of political stability, which is currently lacking in other nations. Its well-educated workforce, high productivity rates, low inflation, and prestigious universities position it favorably in Europe. However, the political framework will ultimately dictate the risks involved, and there is cautious optimism surrounding potential advancements with the new EU agreement.
When it comes to Siemens’ operations in Switzerland, the company’s strong performance negates the need for defense of its expensive location. Despite challenges faced after the Swiss franc shock in 2015, Siemens has invested in productivity and managed wage increases to offset initial disadvantages. Today, Siemens employs approximately 6,000 individuals in Switzerland, many of whom hold specialized roles in research and development, underscoring the high-tech nature of operations.
Smart Infrastructure has recently experienced significant success, driven by a long-term plan and internal enhancements. The market for Smart Infrastructure is projected to expand from €185 billion in 2020 to over €310 billion by 2029, fueled by megatrends such as decarbonization, urbanization, and the rise of data centers. This growth indicates a promising future for Smart Infrastructure, although the focus for investment remains on regions with the highest growth potential, particularly in North and South America, rather than expansion in Switzerland.