Mona Neubaur, Minister for Economic Affairs, Industry, Climate Protection and Energy of the state of North Rhine-Westphalia, is optimistic in an exclusive interview with the leading german fachmagazin IAD that the current economic crisis will be overcome quickly. The Deputy Minister-President of North Rhine-Westphalia hopes that the global markets will ease and wants to tackle the dual transformation towards climate protection and digitalisation together with the many small and medium-sized enterprises.
Low production figures, a lack of large orders and a sharp decline in new business: German industry is demonstrably in crisis. What are the reasons for this?
Mona Neubaur: In view of the stacking crises of our time, the current situation in many companies remains tense. There is still a great deal of uncertainty. Russia's war of aggression against Ukraine, which violates international law, and the associated energy price increases are particularly affecting energy-intensive companies and industries, which are disproportionately represented in NRW. The shortage of skilled labour also presents us with major challenges. Further geopolitical conflicts, for example in the Middle East, uncertainties in international supply chains, a slowdown in global economic growth and increasing isolationism and protectionism are slowing down an export-orientated industry like ours in North Rhine-Westphalia in particular. However, I am also encouraged by the many hidden champions and numerous small and medium-sized companies in the state, which have often demonstrated their strengths, especially their adaptability and innovative strength.
The mechanical engineering sector in particular is struggling with the current developments. Why is this sector in particular being hit so hard?
Mona Neubaur: Mechanical and plant engineering is a global business. With export quotas of up to 80 per cent, a weakening global economy is having a particularly severe impact. Although many companies are benefiting from good order backlogs, new orders are often a long time coming and global uncertainties are still high. Much now depends on how the world's key markets develop, particularly China, but also India, the USA and Mexico. However, I am optimistic about the future of the industry for one reason in particular: we will always need the mechanical and plant engineering sector - as an enabler and enabler for the major challenges of our time, such as climate and resource protection, the circular economy and digital transformation.
What measures are you planning as a state government to help industrial companies and, in particular, SMEs in North Rhine-Westphalia?
Mona Neubaur: Together with industry, chambers and social partners, we are working to overcome the current crisis and are tackling the structural challenges of the dual transformation towards climate protection and digitalisation with determination. We are fully committed to making North Rhine-Westphalia the first climate-neutral industrial region in Europe by 2045. Last year, I described very specific "Seven points for a strong industry" and underpinned them with industrial policy measures for good framework conditions. For example, we must finally make progress with planning and authorisation procedures: We need to simplify procedures and speed them up so that we can expand renewable energies even faster and provide companies with competitively priced solutions. We are not leaving anyone to face the current challenges alone. That is why we have launched a wide range of financial support and funding programmes, be it the programmes from the European Regional Development Fund (ERDF), the Just Transition Fund (JTF), European Territorial Cooperation (ETC) programmes or the Regional Economic Development Programme (RWP).NRW.Bank, for example, also offers numerous funding lines to improve the financing of investments. And finally, let me give you another example that is close to my heart: at the end of 2022, we put together a package of measures in the form of the starter package for climate-neutral SMEs with advisory grants and loans to provide targeted support for companies switching to climate-neutral production.
Many companies complain about too much bureaucracy and more and more regulations. How do you intend to solve this problem?
Mona Neubaur: The state government is consistently driving forward the reduction of bureaucracy and is committed to relieving companies of excessive requirements and record-keeping obligations. To this end, we will introduce de minimis limits, adjust threshold values, place greater emphasis on change notifications and review reporting obligations. In the case of new laws, the state government will examine where bureaucracy can be reduced in return. We are also working on planning and authorisation procedures that are as simple and quick as possible, which should also be accelerated in appropriate places by means of automated, digital processes. The Wirtschafts-Service-Portal.NRW (WSP.NRW) will be further expanded as the most modern service portal for the economy in Germany. A total of around 18 million euros will be available for this purpose in 2024, which will be used to provide additional online services for the efficient and digital processing of administrative services.
Almost a third of large industrial companies are already planning or realising the relocation of capacities abroad. How do you intend to convince these companies to continue producing in Germany and NRW?
Mona Neubaur: As the largest federal state and a strong business location in the heart of Europe, North Rhine-Westphalia is an attractive state for companies, even in the current challenging times. This is ensured by a good infrastructure, a high density of universities of applied sciences, universities and research institutions and a large potential of well-trained skilled labour. Interest in foreign direct investment remains high, with 390 new relocations and expansion projects from a total of 36 countries last year. The state government supports companies with their investment projects and relocations together with the state's own foreign trade organisation NRW.Global Business. It goes without saying that many companies from North Rhine-Westphalia also invest abroad in order to open up markets and be close to their customers. Establishing production facilities abroad is a common strategy for diversifying supply chains and production and tapping into new growth markets. This also strengthens the domestic economy. At the same time, we continue to work on constantly improving the economic framework conditions for strong investments in NRW.This is not only about faster planning and approval procedures, but also about recruiting skilled workers through our NRW skilled labour campaign.
You were or are a strong advocate of the industrial electricity price. In November 2023, the German government agreed on this plan. But are the reductions ultimately just a drop in the ocean or will they bring real added value to companies?
Mona Neubaur: I am aware that the high electricity and energy costs pose major challenges for many companies in North Rhine-Westphalia. As the state government, we are therefore campaigning for further relief. The agreement reached by the federal government on an electricity price package is an important signal, but the overall effect is still somewhat limited. In view of the tight budget situation and the judgement of the Federal Constitutional Court on the KTF, it is understandable that the federal government has now designed the electricity price package in its current form. Nevertheless, we continue to advocate that the federal government find a way to provide even greater relief for energy-intensive and trade-intensive companies in the coming years, even if the production costs for renewable energies have already reached a competitive level.
