Central European industry 25 % more expensive than China
Ten levers to slow deindustrialisation. Without decisive cooperation between business and politics, Germany and Austria face a severe contraction of industry.
- 25 % cost gap: Central European automotive suppliers are on average around a quarter more expensive than comparable operations in China.
- Shared responsibility: Companies must close around two thirds of the gap themselves; the remaining third is achievable only through political reform.
- Speed as a survival factor: Only those who transform quickly can hold market share. Those who wait, lose.
The competitiveness of industry in Germany and Austria is on the edge. High wages, energy prices and bureaucracy meet global pressure, particularly from China. The Herakles Management study "Can the deindustrialisation of central Europe be slowed?" quantifies the cost gap for the first time and sets out concrete levers for slowing the relocation of production.
Only a narrow window to act
"Deindustrialisation has long been in full swing. Many companies can no longer be saved, but those who act boldly now still have a chance," says Bernhard Morawetz, CEO of Herakles Management. "If business and politics do not act at the same time, we face a dynamic that will irreversibly weaken the industrial substance of Germany and Austria."
Ten levers for competitiveness
The study identifies ten central levers for at least easing the cost disadvantage of around 25 %. Three are especially decisive. First, raising productivity through automation, lean methods and the consistent use of AI. Second, lowering energy costs, for instance through energy market reform, own generation and efficiency programmes. Third, cutting bureaucracy and overhead so that companies can act faster and leaner.
It cannot be done without political support
"Industry can close around two thirds of the cost gap on its own, but without reform of energy, taxation and regulation the location stays unattractive," Morawetz concludes. "We have put forward a clear catalogue of measures. It is now up to business and politics to slow the downward trend."
About Dr Bernhard Morawetz and Herakles Management
Herakles Management specialises in crisis, transformation and interim management in industry. The Vienna-based firm leads businesses through exceptional situations and delivers operational solutions for restructuring, realignment and lasting earnings improvement.
Dr Bernhard Morawetz, CEO and owner, has more than 20 years of industry experience. Among other roles he was CEO of Anger Machining, ran plants of the Tyrolit Group and was responsible for numerous turnaround and transformation projects in the automotive and supplier industry. Morawetz is a member of the industrial strategy committee of the Federation of Austrian Industries and has led more than 20 industrial companies successfully through restructuring.
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