After the news that Europe's largest car producer VW may close two plants, experts are sounding the alarm that the downsizing of manufacturing isn't just limited to the car industry. The German Institute for Economic Research (DIW) says companies need to evolve.
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00:00After the news that Europe's largest car producer, VW, may close two plants, experts are sounding
00:06the alarm that a downsizing of manufacturing isn't just limited to the car industry.
00:11The German Institute for Economic Research, DOW, says companies need to evolve.
00:17Germany is very export-dependent. Germany is very industry-dependent. And like Volkswagen,
00:23many other companies have missed out on the transformation. And for Volkswagen that means
00:28specifically they have not managed to make the transition to electric cars. They're falling
00:35behind. They have had very high profits in the past, very successful, and now they're
00:40suffering from a hangover, if you wish. And this is not just the automotive sector, it's
00:47machinery, it's the pharmaceutical, the chemical sector. This is quite a problem many have.
00:53The largest chemical producer in the world, who has its headquarters in Germany, BASF,
00:57is also looking at relocating some of its workforce to Asia and laying off workers
01:02in Germany amid exploding energy prices due to the full-scale invasion in Ukraine and
01:07burdensome bureaucracy in Germany.
01:10Germany's biggest problem is not short-term. It's structural. It's long-term. So we expect
01:17in our forecast a stagnation, maybe for another year, and then a gradual recovery. So it will
01:22take some time, and that's frustrating for companies, for the government to hear, but
01:28that's part of the truth. It will require some resilience and continued investment for
01:34the next five years, and then hopefully over that period Germany, or the German economy,
01:39will manage the transition.
01:42Europe's strongest economy is still grappling with leaving its recession behind.
01:48As EU car companies struggle with the phasing out of combustion engines and a transition
01:54to electric vehicles before 2035, experts are predicting that thousands more jobs may
02:00be cut across different sectors over the next couple of years. With the German economy largely
02:07dependent on the car industry, these mass layoffs may lead to an increase in disillusionment
02:14and play into the hands of the far right. This could have a major impact on next year's
02:21federal elections. Liv Stroud, in Berlin, for Euronews.