Fixing Germany's economy is a critical task for the country's next government

Germany, Feb. 18: Germany needs a new business model. The old one, fueled by cheap natural gas from Russia and lucrative exports to China, is broken, leaving Europe's biggest economy mired in stagnation and angst about the future.

Delivering that fresh growth strategy is going to be the biggest challenge for the government that takes office after a national election set for Feb. 23, seven months ahead of schedule. The nation that became known for the quality of its products has not seen real economic growth for five years.

Multiple factors conspired to take Germany from industrial powerhouse to post-pandemic straggler: too much bureaucracy, a shortage of skilled workers, slow deployment of technology and a lack of clear direction from the outgoing coalition government are among them. Rising competition from China and high energy prices due to Russia's war in Ukraine were additional hits. "We really need a more company- and enterprise-friendly politics," said Klaus Geissdoerfer, CEO of industrial fan manufacturer EBM-Papst. "We have bright talent in Germany. We have good companies, but at the moment we don't have the awareness on the political level."

Business criticism gets louder as election nears With 2.5 billion euros ($2.6 billion) in annual revenue and plants on three continents, EBM-Papst describes itself as the global leader in its field. The company reported last year that it was "suffering in Germany in particular" and experienced a 4.1% revenue decline in its home market.

Geissdoerfer said EBM-Papst's heating technology division lost 18.7% of its sales through a clumsily handled push to get property owners to replace gas furnaces with less polluting electric heat pumps.

The requirements of the Building Energy Act put forward by Chancellor Olaf Scholz' three-party coalition were so confusing, people put off the upgrades to their heating systems or rushed to buy new gas devices before the law took effect, he said. That sapped demand for the ultra-quiet heat pump fans EBM-Papst makes.

Consumers wondered, "What is the right technology for my house?" Geissdoerfer said. "And so everybody said, 'If I don't have to, I better wait.'"

Geissdoerfer made a complaint heard across industry: Germany's bureaucracy is excessive. A 2023 law that requires public and private entities to combat climate change by reducing their energy use means EBM-Papst must assign employees to detail what the company is doing to comply, he said. "So now, instead of implementing measures, they write and report," the CEO said, adding that the documentation work is a poor use of time at a company whose core business is energy-saving equipment. "I really hope with the new government we can get this solved, because at the moment it's too much."

EBM-Papst is moving in the direction where economists say Germany as a whole should put its industrial resources: into green and digital technology. The company, headquartered in Mulfingen, a town of 3,700 residents in rural southwest Germany, is equipping energy-hungry artificial intelligence data centers with efficient cooling systems for their servers. It also is working on incorporating AI features to help tech companies optimize their power use and to predict when equipment needs to be replaced.(AP)