Martin Brüdermüller, CEO of the chemical giant BASF, spoke clearly these days: “We make profits all over the world, except in Germany. The Ludwigshafen headquarters has losses of 1.6 billion.”

It was a positive and negative message at the same time. Positive because the largest chemical company in the world knows how to produce efficiently and sell for profit. Negative because BASF, based in Ludwigshafen, Rhineland-Palatinate, cannot compensate for Germany's disadvantages as a location.

But it is not true that Brudermüller's statement points to a specific problem at BASF. The 40 leading German companies listed on the Dax stock index generate between 75 and 80 percent of their sales abroad. Furthermore, a much higher proportion of production is carried out abroad than in medium-sized companies.

A worrying development for Germany as a place

Siemens, Adidas and SAP are German companies that make their living mainly abroad. From the perspective of these managers and shareholders, where the money is made is secondary. However, this is worrying for Germany as a place of business and employment.

But this is not a phenomenon exclusive to large corporations. Banks report an increase in complaints from their average customers. They did not leave Germany, but built new production facilities abroad, in other EU countries and, last but not least, in the USA.

In this context, the threat of deindustrialization in Germany is often talked about. The German Economic Institute (IW), which depends on business associations, complains that the policy makes it “anything but attractive for companies to invest in Germany.”

IW Conclusion: Policy must “dramatically improve investment conditions.” Otherwise, it could “greatly accelerate” deindustrialization.

Germany will be “less attractive” for industries

BASF boss Brudermüller, known for his sometimes idiosyncratic assessments, considers the term deindustrialization “too harsh.” It would seem that “everything would disappear.” But that is definitely not the case.

However, Brudermüller is convinced that the industry's share of the gross domestic product, i.e. total economic output in Germany, will decline. This applies to industries that consume a lot of energy, such as chemicals, cement or steel. Germany in particular will be “less attractive” for these sectors.

BASF has already drawn conclusions about the above-average energy prices in Germany. Brudermüller's recipe: reduce costs and close one or two plants in Germany that are no longer competitive.

At the same time, Brudermüller, who will soon retire from BASF, is not afraid to continue investing heavily in China. The company is building a petrochemical plant in southeastern China for 10 billion euros.

There is no “de-risking” regarding China

The CEO of BASF does not accept the “elimination of risks” that politicians demand. Although BASF is based in Germany, “it is highly dependent on the world.” From this perspective, for BASF, intact economic relations with China take priority over political considerations to reduce its dependence on this country.

In any case, Brudermüller prefers to rely on business strength rather than political help. His thesis: European industry, and therefore also German industry, could improve its competitiveness by letting the “invisible hand of the market do its work.”

Brudermüller sharply criticized the tendency in Brussels and most European capitals to “achieve change through regulations.”

There is no doubt that it also refers to the traffic light government in Berlin. After all, even Economy Minister Robert Habeck (Greens) described the economic situation as “dramatically bad.” BASF's figures at its main plant in Ludwigshafen clearly demonstrate this.