If we limit this claim to _just_ German manufacturing competitiveness (which is often synonymous with "European manufacturing" in the context of these discussions -- and I will assume this is true of your comment as well, given the nuclear energy remark), this really isn't true.
What changed my view on this was one of Adam Tooze's newsletters from last year.[1] The relevant points here are:
- Germany manufacturing is less gas-intensive than the global average.
- Energy costs only constitute a small and decreasing share of total industrial costs -- about 5.8% for the German manufacturing industry as a whole, and 3% for leading export sectors (namely the auto industry).
- Most German manufacturing -- and this is true of European manufacturing more broadly -- is primarily in high-margin, value-added sectors where quality, rather than cost, are the competitive factor.
Another important detail lost in the invocation of "cheap gas" is that Europe as a whole, and German in particular, has never had particularly "cheap gas." European natural gas prices have long been well above those in the US, and Germany's have been above the European average for the last 15 years or so.
I agree with both Tooze and the majority view that, notwithstanding the above points, Germany's post-war energy policy has been a catastrophe. It has certainly limited its manufacturing potential. But the effect of the Ukrainian war on its _already_ limited manufacturing sector, due to _already_ not-so-cheap energy, tends to be exaggerated.
What changed my view on this was one of Adam Tooze's newsletters from last year.[1] The relevant points here are:
- Germany manufacturing is less gas-intensive than the global average.
- Energy costs only constitute a small and decreasing share of total industrial costs -- about 5.8% for the German manufacturing industry as a whole, and 3% for leading export sectors (namely the auto industry).
- Most German manufacturing -- and this is true of European manufacturing more broadly -- is primarily in high-margin, value-added sectors where quality, rather than cost, are the competitive factor.
Another important detail lost in the invocation of "cheap gas" is that Europe as a whole, and German in particular, has never had particularly "cheap gas." European natural gas prices have long been well above those in the US, and Germany's have been above the European average for the last 15 years or so.
I agree with both Tooze and the majority view that, notwithstanding the above points, Germany's post-war energy policy has been a catastrophe. It has certainly limited its manufacturing potential. But the effect of the Ukrainian war on its _already_ limited manufacturing sector, due to _already_ not-so-cheap energy, tends to be exaggerated.
[1] https://adamtooze.substack.com/p/chartbook-150-why-cheap-rus...