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When suddenly everyone wanted disinfectant because of Corona, Thomas Büttner felt it. He is the managing director of Gemini PharmChem, which produces active ingredients for chemotherapy in Mannheim. Due to the disinfection boom, there was suddenly a shortage of certain alcohols. “I have been in professional life for almost 40 years,” says Büttner. “It was the first time that they only supplied me on installments.”
An experience that not only Büttner had. At the beginning of the pandemic, many pharmaceutical companies suffered from delivery restrictions in China and India, where more than 80 percent of common active ingredients come from. In other industries, too, supply chains were severely affected or even disrupted by the pandemic. Thus, Corona also brought up a discussion on the question of whether parts of the highly globalized industrial production should be relocated back to Germany.
At the end of the year, this debate is getting new food: in Britain there are bottlenecks in deliveries due to a new variant of Corona and the upcoming Brexit, supermarkets are rationing their products. And there is a shortage of corona vaccines across the EU. This was caused by a chaotic ordering policy, but also insufficient production capacities. German vaccine manufacturer Biontech is currently working on a new factory in Marburg.
“I think it is right that you need local production for certain products so as not to be completely dependent on worldwide deliveries,” Veronika Grimm had already told Handelsblatt in April. There, economist Bert Rürup also prophesied that bottlenecks in production “would provoke a rethinking in industries that are organized according to the division of labor; Parts of value chains are likely to be re-nationalized. ‘
During the first Corona wave, some companies seemed to be doing their job right away: manufacturers of underwear or mattresses switched to producing respiratory masks because products produced in China in particular were in short supply in Germany. But will there also be a broader trend toward renationalization?
Opinions on this vary and also depend on the participation of companies in the world market. “In the discussion about relocation of production, now everyone is backtracking a bit,” says Han Steutel, president of the Research-based Pharmaceutical Manufacturers Association, in which many global players in the industry are organized. the industry. »Because once investment decisions have been made, they cannot be reversed. Politicians will see it too. “
The Federal Association of the Pharmaceutical Industry, which is more medium, advocates increasing production in Europe again. “If a supplier cannot deliver due to technical difficulties, there are other companies that can step in.” Currently, this is “increasingly rare” due to the concentration on a few suppliers in Asia.
The pharmaceutical company Büttner believes that the discussion has only been postponed. “While we are looking for a vaccine, there is no time for the subject. But it will be on the agenda again in the first or second quarter to avoid bottlenecks and dependencies. “
»Aha experiences and moments of shock«
The federal government obviously wants to avoid the impression that the longtime world export champion is isolating himself. “The answer to the pandemic certainly cannot be to renationalise all international supply chains now,” said Chancellor Angela Merkel (CDU). “Then everyone would pay a very high price.” Dieter Kempf, president of the Federation of German Industries (BDI) also warned against renationalization: “That would be bad for us as an exporting nation.”
However, when asked, the BDI learned that the pandemic had given many companies pause. This particularly applies to just-in-time production, which is widespread in the automotive industry, where parts are only delivered when needed. “There were already some aha moments and moments of shock, especially in February and March,” says a representative of the association. The long-term consequences for foreign trade and investment cannot yet be predicted, but: “For many companies it will come down to more storage, more sources of supply and regional diversification.”
Therefore, very few companies will take home all their production. But many are trying to reduce their dependence on individual providers remotely. In a DIHK survey of German companies abroad in July, 38 percent said they were increasingly looking for new suppliers. Of these, 63 percent sought local suppliers in their respective locations. In this case, regionalization may also mean that German companies with production in China increasingly work with local suppliers.
Economists, however, warn against a general return to “Made in Germany” due to strong ties to the rest of the world. “In Germany, renationalisation and a return to production would have huge negative consequences for economic strength,” write Ifo researchers Lisandra Flach and Marina Steininger. According to his calculations, the impact of the corona pandemic would have been “somewhat less in a deglobalized world.” “At the same time, however, German gross domestic product will fall back to 1996 levels due to deglobalization and the impact of Covid-19.”
Can it be a bit more expensive?
But costs are not always decisive, as France, which is traditionally more protectionist, shows. In an Odoxa Institute poll, 89 percent of respondents supported a delocalization of industrial production, even if it raised prices for consumers. The mood fits with President Emmanuel Macron’s announcement that he will strengthen the country’s economic independence.
In Germany, too, price isn’t everything, at least when it comes to medicines and protective materials. In a Forsa poll for the Robert Bosch Foundation, 92 percent were in favor of increasing the production of such medical devices in Germany and Europe, even if prices rose as a result.
A slight tailwind for this course is coming from Brussels. Under the recently presented drug strategy by the EU Commission, Europe should reduce its dependencies on the health sector, possibly by diversifying production and supply chains, securing stocks of strategically important goods, and promoting production and investment in Europe. .
If it depended on entrepreneurs like Thomas Büttner, this commitment could be even more courageous. Until now, the price of very cheap drugs has been “that at some point in a crisis we don’t have any,” says the Gemini-PharmChem manager. The state can specifically promote national research and production of important drugs, as it has now done with the development of the corona vaccine. “That showed me: if the political will gives it, a lot can be done.”
