Geopolitical crises are casting a shadow over the European economy. The unpredictable trade policy of the U.S. keeps threatening, without warning, to raise tariffs and erect trade barriers – a toxic scenario for free global trade and export-oriented companies. Meanwhile, China is no longer merely a low-cost manufacturer but has become a highly aggressive technological competitor that, with its tremendous speed, threatens to outpace key European industries in future-oriented fields.
What is often perceived as pure technological supremacy or even innovative strength is, however, largely the result of a well-targeted governmental industrial policy. Massive subsidies in key strategic industries, along with a currency policy artificially focused on competitiveness, are leading to noticeable market distortions and overcapacity. For private companies operating on a market-based basis, this creates an imbalance that makes fair global competition almost impossible.
The consequences for the industrial heart of Europe are alarming. The loss of tens of thousands of industrial jobs and the decline in production volume show that deindustrialization is not an abstract threat – it is happening right now. When plant closures and production relocations are being negotiated in key German industries such as the automotive and manufacturing sectors, it must be clear even to the most optimistic observer: We are at a critical turning point.
As a family-owned company with 170 subsidiaries in 87 countries, Kärcher has weathered these turbulent times robustly thanks to its balanced business model – combining B2B (editor's note: Business to Business, i.e. corporate customers) and B2C (editor's note: Business to Consumer, i.e. private customers) – and its unconditional focus on customers. We are investing significantly in research and development, setting new standards in autonomous cleaning robots and battery technologies, and driving digitalization across all areas of the company. However, even innovation leaders cannot withstand increasingly challenging operating conditions and unfair competition in the long term.
Considering the massive rise in structural and employee costs, expanding capacity or increasing headcount in domestic production is no longer economically feasible. While the latest economic forecasts – which expect Germany’s growth to return to 1.3 percent this year – seem cautiously optimistic at first glance, we must not be misled by this modest increase. What we are seeing here is largely “borrowed growth,” artificially driven by special government funds, defense contracts, and subsidies.
A short-term boost fueled by debt is no substitute for a real, self-sustaining recovery in private investments. And the causes of the ongoing weakness are largely homegrown: a creeping reform fatigue and a regulatory frenzy on the part of government institutions that hinders rather than facilitates investment. Instead of promoting entrepreneurship, regulations from Brussels to Berlin are suffocating the courage to embrace change.
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