German companies are increasingly relocating operations abroad, with around 1,300 companies having moved functions outside the country between 2021 and 2023. This trend affects businesses of all sizes, with notable examples including Gardena, which plans to cut 250 jobs in Germany and shift part of its operations to the Czech Republic.
Job losses and relocations in the German market
According to reports, relocations have resulted in the loss of approximately 50,800 domestic jobs. Major corporations like BASF are also shifting jobs abroad, with the chemical giant aiming to transfer service positions to India. This trend raises concerns about the future of the German workforce amidst high energy and labor costs.
Despite fears of an accelerating trend, the state-owned development bank KfW has noted a decrease in medium-sized companies engaging in international business, dropping from around 880,000 in 2022 to 760,000 in 2023. KfW's chief economist, Dirk Schumacher, attributes this to deteriorating foreign trade conditions due to geopolitical tensions and increased competition from China.
Investments abroad: Shifting motivations
The Association of German Chambers of Commerce and Industry (DIHK) reports a record high in cost pressures on German industries, leading 43% of industrial companies to plan foreign investments in 2023. This marks an increase from the previous year, highlighting the changing motivations behind these investments.
