German, European industries study possibilities of shifting part of production bases to other countries
German and European engineering companies are considering shifting parts of their production and R&D facilities to countries like India and China. This move is driven by challenges such as rising energy costs due to the Russia-Ukraine war, US tariffs, and increasing competition from China, prompting a need for strategic capabilities and secure supply chains.
Why it matters
This potential relocation of industrial bases could significantly impact global supply chains, economic development in host countries, and the long-term competitiveness and resilience of European industries facing geopolitical and economic pressures.
Many German engineering companies are considering shifting a part of their production to other bases, including their research and development facilities.
Ing.Timo Wurz, Managing Director (Metallurgy and Thermprocessing) of VDMA, told The Hindu recently that not all companies can look at investments in other countries. Thus, while some are able to cope with the current challenges, there are some struggling to survive too. However, “There will be a growing part of value creation done by German companies in other parts of the world. India is a very important market. China is also important. So it makes sense to be there and make products,” he said.
Companies need more strategic capabilities to see what will work for them. More companies are thinking of doing research and development too in key markets to see what extent it is possible, he said.
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