16.03.2012 - "Germans have to become globalization champions"
A trade war over important raw materials threatens technology and jobs in Germany. Is the further globalization a way out?
As so often in recent years, the German economy looks once again full of optimism into the new year. Despite the ongoing smoldering debt crisis in Europe, Halle Institute for Economic Research (IWH) expects growth of 1,3 percent and even 2013 percent in 2,2.
The Kiel Institute for the World Economy (IfW) also sees the coming of spring and is promising growth of 0,7 percent, and for 2013 it even predicts the “start of the boom” with growth of 1,9 percent. And the ifo business climate index rose for the fourth time in a row in February. Accordingly, the companies are going into the current year full of confidence.
At the moment, concern for the availability of important raw materials can undermine this optimism. There is talk of a trade war with China. Two years ago, since Beijing severely restricted exports of raw materials that have been indispensable to the steel industry, electric motors, smartphones, wind turbines or lasers, the situation has worsened considerably.
Western industrialized nations accuse China of an inadmissible shortage of these "rare earths" with the aim of gaining competitive advantages. Because export restrictions increase prices for producers in the western industrialized nations. China supplies over 90 percent of rare earths. Now, the European Union and the US have joined forces with the World Trade Organization (WTO) against China.
The consequences of a shortage of raw materials especially for an industrialized country like Germany, which itself has virtually no raw materials, are shown by reactions from the economy. Over half of German technology companies see energy and commodity prices as the biggest risk to the economy.
"In the industry, there are even 80 percent, of which almost a third already has difficulties to meet its demand for raw materials," reported the Chamber of Commerce and Industry for Munich and Upper Bavaria after the raw materials summit last year. A further shortage of raw materials could thus abruptly slow down the up-and-coming German economy.
Export world champion is not enough
That's why Sven Marlinghaus, partner at the consulting firm "BrainNet" specializing in global purchasing, advises German companies on a new strategy. "It is not enough to be export world champion. German companies must become globalization world champions if they want to defend their technological lead and secure production jobs in Germany, "says Marlinghaus in an interview with" Welt Online ". "That means they have to globalize the value chain and secure access to raw materials locally."
Although Germany needs to buy raw materials worldwide for its high-tech products, 80 percent of strategic buyers today are still in Germany - and not where the critical goods are being purchased. Although companies have set up production facilities worldwide, they have only rarely secured direct access to raw material sources.
Commodity market is changing radically
In recent years, the commodity market has changed radically. He is characterized by high price fluctuations, which could ever be between 30 and 40 percent. Above all, this is due to the artificial shortage for strategic reasons, as in the case of China, and the increasing speculation with raw materials.
"That's why German companies have to build up new local skills, which means they have to organize their purchasing much more locally. It would also make sense to connect the first steps of production there directly, "advises Marlinghaus.
The German government is also aware of the concerns of German companies. Therefore, it has intensified its efforts to conclude raw material agreements with other countries. A few months ago, Chancellor Angela Merkel signed a corresponding agreement with Mongolia, and in February a contract with Kazakhstan was signed.
Source: World online
