“Gas Price Brake Should Be A Blueprint for Electricity Price Brake”
VDMA President Karl Haeusgen
Mechanical engineering sees the Gas Price Commission’s proposals as a good bridge to a new normal state of energy supply. And as a blueprint for the electricity price brake, which must now come quickly. “We urgently need calmer waters again,” emphasizes VDMA President Karl Haeusgen.
Mechanical and plant engineering sees good chances that the gas price commission’s proposals will ease the burden on companies along the value chain. “The result goes in the right direction: capping the price of gas for 70 percent of consumption is an ambitious and good framework. The fixed price of 7 cents per kilowatt hour plus taxes roughly corresponds to the price cap of 12 cents that was set for private households. This is fitting as a bridge to a new normal from today’s perspective. At the same time, there are still incentives for industry to save energy,” said VDMA President Karl Haeusgen in a press conference at the 13th German Mechanical Engineering Summit in Berlin.
Medium-sized companies are concerned about connection
contracts In addition, many medium-sized companies are concerned about connection contracts for electricity and gas. It is also important that the reorganization of the gas and electricity market does not lead to permanent energy subsidies, he added. “And it has to fit into the European framework! In principle, the following applies to us: high prices are always an incentive for transformation and investment in new technologies. They can noticeably accelerate the expansion of renewable energies and thus help in the fight against climate change.”
Personnel increase planned for 2023
Despite the increasing burdens, the VDMA economists confirm their production estimates of real plus 1 percent for this year and minus 2 percent for 2023. In the first seven months of the current year, production in mechanical and plant engineering is according to Destatis actually fell by 0.8 percent in real terms compared to the previous year. “But a slight easing of the material bottlenecks, together with the high order backlog of around a year, could still lead to the production growth we estimate for 2022,” said Haeusgen. “But it is also clear that the risks have increased further as a result of the Ukraine war .”
The industry draws confidence from the personnel plans of the companies. The association’s most recent survey of 640 member companies showed that half of the companies want to increase their workforce in 2023. 30 percent of the companies are planning to increase jobs by up to 5 percent, almost 20 percent even more. Only 15 percent of companies expect job cuts, mostly up to 5 percent.
Plea for free trade and the international climate club
The German export-oriented economic model has also come under criticism as a result of the corona pandemic and the Ukraine war. However, the following applies in particular to the high-employment industrial SMEs: Open borders and resilient supply chains will continue to be vital for survival in the future. This applies to Germany, but also to many other European countries. “The EU must therefore not fall into protectionist defensive reflexes, but must first and foremost continue to fight for free trade, new free trade agreements and the implementation of agreements that have already been negotiated such as Ceta or Mercosur,” Haeusgen demanded. He also emphasized that a revival of the World Trade Organization (WTO) should not be taken off the agenda.
An international climate club would be an important vehicle for the necessary international cohesion and also for the fight against climate change. “Like-minded industrialized countries with a similar level of ambition could lead the way in climate protection and at the same time open up new technology markets,” explained Haeusgen. In addition, progress in transatlantic trade is now urgently needed, especially in view of the Russian aggression. “Our main demands here are the reduction of industrial tariffs and mutual recognition of conformity assessments,” said Haeusgen, adding: “We were recently in the USAand spoke to high-ranking politicians and many member companies. American industry, for example the US industrial association NAM, is also very interested in trade facilitation.” Haeusgen demanded that the outcome of the next round of negotiations by the Trade and Technology Council (TTC) in December should send correspondingly clear signals. “That would also be a clear message to Vladimir Putin.”
However, politics can help to open up new sales markets in Asia; A functioning export financing system for SMEs would be an important basis for this. In addition, consideration should also be given to improving the promotion of investments, for example in the form of special depreciation for investments. “In addition, the EU must adapt its trade policy instruments to the new situation in relation to China – for example through an instrument to protect against economic pressure from third countries, effective protection against subsidized products and services in the internal market and public tenders.” Haeusgen demanded.