- The government must campaign even more for open markets and relieve medium-sized companies from bureaucracy
- EUR 40 billion for the development of a comprehensive fiber optic cable network
- Small exports need better risk protection
Mechanical engineers in Germany expect the new government will set the correct economic course immediately after its constitution.
VDMA President, Carl Martin Welcker spoke to journalists at the 9th German Maschinenbau-Gipfel (Mechanical Engineering Summit) in Berlin: “Our key demands include increased investments, particularly in the digital infrastructure, more incentives for research and development, for example with a tax concession for research funding, as well as greater flexibility on the job market.” In the new legislative period, it is more about increasing the efforts in campaigning for open markets and finally relieving medium-sized companies from unnecessary regulations. “We reject isolation tendencies and backwards-looking policies, irrespective of their complexion! Mechanical engineering and the entire German industry thrives on its cosmopolitan outlook and any reversal here would damage our society and our well-being,” Welcker reiterated.
EUR 40 billion for a comprehensive fiber optic cable network
According to the mechanical engineering sector, the largest industrial employer in Germany, a strategic factor for success is the rapid development of a comprehensive fiber optic cable network for faster data transfers even in rural areas. “The new government should allot EUR 40 billion to the federal budget in the upcoming legislative term. In particular medium-sized companies, which are often not located in urban areas, desperately require substantially improved support from local municipalities and large providers, such as Deutsche Telekom, in order to continue to compete at the top of the global competition,” said Welcker.
Goals of the Paris Agreement can only be met with a willingness to use technology
The VDMA President also warned the government against the preference of single technologies in the debate on climate change, the transition to alternative energies and electromobility. “The goals of the Paris Agreement can only be met if the participants are open to the use of technology! The best and most suitable technologies must be given the opportunity to prove themselves on the market,” said Welcker.
Due to the cost reductions in the energy sector which have been made possible, particularly thanks to mechanical engineering, pure market economy models can be created without requiring billions in funding. Electromobility and e-fuels, as well as ever-improving internal combustion engines, are all part of the drive technology of the future. “Many drive technologies will use battery power for the foreseeable future, however this is not yet economically viable. Therefore, we must continue to improve internal combustion engines, rather than wanting to ban them outright,” Welcker warned.
More dedication for open markets required
The overall economic situation of the German mechanical and plant engineering sector in the fall of 2017 is very good, and the VDMA President affirmed the association’s production prognoses. The VDMA economists expect a real production plus in mechanical engineering of 3 percent, in both the current year and upcoming year.
In the first eight months of the current year (January to August), production indeed recorded a growth of exactly 3 percent compared to last year. However, with an export rate of 76 percent, it is vital that the markets remain open and protectionism kept to a minimum in order to continue this success. “We were delighted that the President of the European Commission, Jean-Claude Juncker, named free trade as the first of five priorities for the EU in 2018 in his recent speech on the state of the European Union. This is an important signal in times where protectionism is becoming ever more socially acceptable,” said Welcker. Blocking free trade agreements – as was the case with Canada – must not be possible in future. The Commission’s suggestion to initially concentrate on market openings that fall within the EU's responsibility for future trade agreements is the right direction, the VDMA President emphasized. “Sometimes less is more, and the experiences gathered over the previous years have shown us that this is definitely the case when it comes to negotiating free trade agreements.”
Small export loans must be better protected
In addition, medium-sized companies require a genuine reduction of bureaucracy in foreign trade and more support when hedging small export loans of up to EUR 5 million. “The magic word for the policies for medium-sized companies is ‘small ticket’,” said Welcker. These amounts in export financing are often only small fry for the banks, however they come with high administrative expenses, which is why there are very few respective offers. “We therefore call for the simplification of the Hermes cover for contract values of up to EUR 5 million for medium-sized companies,” said the VDMA President. “We need bank offers for small ticket financing, for example by a special bank, but which does not have to be a state bank. We are pushing for the German government to include our concept for “Small Tickets” in their coalition contract.