Bavarian Companies Increasingly Relocate Production Abroad, Raising Deindustrialization Concerns

A recent survey of 500 Bavarian companies reveals a growing trend of production relocation abroad, with significant implications for local employment and industrial competitiveness. Over 25% of the companies anticipate a decline in domestic production by 2027, with 7% even foreseeing a complete stop of production within Germany. Meanwhile, 20.8% expect an increase in foreign production. The top reasons cited for investing abroad include cost advantages and weaknesses in the domestic market rather than improved sales or tariff avoidance. Since 2013, direct investments abroad by Bavarian firms have grown faster than German exports, highlighting a persistent shift. The USA leads as the preferred destination, attracting 27.3% of Bavarian direct investments. Bertram Brossardt, head of the Bavarian Employers’ Association (vbw), expressed concern stating, "For our international competitive disadvantages, we are paying a high price with increasing deindustrialization." Additionally, an Ifo Institute survey reported that over one-third of German firms perceive declining competitiveness against non-European companies. This trend raises urgent questions about Germany’s industrial future and the potential job shifts outside Bavaria, underscoring the challenges faced by domestic markets in retaining production activities.