Low energy prices in the USA and dynamic growth in Asia

More investments abroad by German chemical companies

Germany is becoming less attractive as a chemical industry location. This is reflected in the foreign investments by the German chemical industry: In 2012 they rose by some 25 percent while domestic investments stagnated. In particular, the USA is experiencing a renaissance as an investment country – a clear indicator that mainly the high energy costs are putting companies under pressure at home.

VCI: Germany is becoming less attractive as a chemical industry location. © Victoria - Fotolia.com
VCI: Germany is becoming less attractive as a chemical industry location. © Victoria - Fotolia.com

Germany is becoming less attractive as a chemical industry location. Investments increasingly go to regions outside Europe. This is shown by a data gathering exercise of the German chemical industry association VCI: In 2012, foreign fixed asset investments by German chemical companies rose by some 25 percent to 7.7 billion euros – while domestic investments of Germany’s third largest industry stagnated at 6.3 billion euros. For the first time since 2001, foreign investments by the German chemical industry are higher than investments at home.

The demand for chemicals is stagnating in Europe, and the growth forecasts are cautious for the coming years. By contrast, the demand for chemical products is rising especially in emerging markets. This makes Asia and Latin America attractive for investments by German chemical companies: In 2012 their invest-ments in these regions went up by 27 percent to 2.6 billion euros.

The USA is experiencing a renaissance as an investment country in corporate global strategies: In the past three years, German chemical companies invested in North America some 6.5 billion euros in new production plants or in expanding existing ones. In 2012 alone, German chemical industry investments in North America rose by 54 percent to around 3.2 billion euros. The fact that meanwhile over 41 percent of their foreign investments go stateside underlines the renewed attractiveness of the USA for German chemical businesses (a comparison: just under 28 percent back in 2005). The main underlying reason is the drop in energy and raw material costs in the USA since the start of the boom in shale gas production in 2009 – whereas raw material and energy costs have risen significantly in Germany, mainly because of the energy transition Energiewende. At present, electricity in Germany is roughly 2.5 times more expensive than in the USA; the gas price is even three times higher.

The VCI’s director-general Utz Tillmann comments: “Cost increases for energy at the industry location Germany put our companies under strong pressure. They seem to find better production conditions in other countries and in particular in the USA, which enables them to secure their competitiveness. Politicians are called upon to make the Energiewende affordable so that this development does not turn into a trend.”

Charts as well as a table illustrating the VCI survey regarding foreign investments of the German chemical industry are available in the download section at the top of this page (only in German, sorry). Additionally, you will find here the excel raw data for the charts.

The VCI represents the politico-economic interests of over 1,650 German chemical companies and German subsidiaries of foreign businesses. For this purpose, the VCI is in contact with politicians, public authorities, other industries, science and media. The VCI stands for over 90 percent of the chemical industry in Germany. In 2013 the German chemical industry realised sales of more than 190 billion euros and employed around 438,000 staff.

Contact: VCI Press Dept., Phone: +49 69 2556-1496, E-Mail: presse@vci.de
Please note: VCI news about the chemical industry is also available via Twitter: http://twitter.com/chemieverband

For questions or suggestions, please feel free to contact us.

Contacts

Stud. Ass. Manfred Ritz

E-Mail: ritz@vci.de