Highlights
 

•  One in five companies in rubber industry mulling shifting in 2025
   

• Regulatory burdens and high energy costs among major concerns
   
•  Place ‘first-touch principle’ in EUDR, erase reverse burden of proof
   

The German rubber industry is facing mounting difficulties as production costs spike while demand slows. The latest member survey by the German Rubber Industry Association (wdk) reveals a concerning trend: industry sales declined by nearly 2% in 2024 while production fell by 3% in 2024 compared to the previous year.

Michael Klein, President of wdk, characterized the current situation as a "clear warning signal" for the industry. Speaking in Frankfurt recently, Klein noted that financial pressures on companies have intensified. While in 2023, only about a quarter of firms reported earnings that were either strained or existentially threatening, it has now risen to over 40%.
 

A particularly worrying issue is the potential relocation of production. More than one in five companies in the rubber industry is planning to shift production away from Germany in 2025. This trend underscores concerns about the country’s competitiveness as a manufacturing base. Industry representatives have emphasized the need for urgent policy interventions to improve conditions for domestic production.
 

Since 2019, Germany has introduced 13,000 new laws!
 

The survey identified five key challenges for rubber manufacturers: weak demand, regulatory pressures, high energy costs, sustainability requirements, and overall site conditions. Of these, regulatory burdens appear to be a major concern. Klein pointed out that 90% of surveyed companies report an increase in bureaucracy, attributing this to a surge in new regulations. Since 2019, Germany has introduced 13,000 new laws, which industry leaders argue have placed a significant burden on businesses.

Klein urged policymakers to prioritize reducing bureaucracy both at the national and European levels. He emphasized that regulatory complexity is not a sign of progress but a barrier to industry growth.

"High energy costs, excessive bureaucracy and dwindling international competitiveness are jeopardizing the future of our industry. Therefore, decisive economic policy measures are urgently needed to stop the impending deindustrialization of Germany. Above all, the documentation and reporting obligations have become a paralyzing burden and must be reduced immediately," Klein said last month.

The wdk chief said the state must ensure a secure and affordable energy supply. "Industrial production in Germany is only possible with competitive electricity and gas prices. The new federal government must establish a reliable production electricity price as quickly as possible and suspend purely national CO2 pricing, which burdens German industrial companies unilaterally in European competition.”

SMEs urgently need relief

“Germany as an industrial location is acutely endangered. The parties have still not fully recognized the seriousness of the situation. There seems to be no awareness that we also have industrial SMEs in Germany that urgently need relief,” Klein said and emphasized that the German rubber industry is also available for dialogue with the new federal government, but called for action.

Meanwhile, the wdk welcomed the EU Commission's plans for an omnibus initiative to simplify companies' reporting obligations.  "The European reporting obligations mean an immense effort for companies, without any added value," said Klein, adding either these reports would disappear into the official archives without a precise review and evaluation, or they would have no tangible use as public information.

Klein, therefore, called for a significant streamlining with regard to the EU Supply Chain Act (CSDDD) and the Sustainability Reporting Directive (CSRD), which are covered by the Omnibus initiative. "Sustainability reporting obligations are too extensive and overwhelm companies. The CSRD obliges companies to take and document measures for responsible action in the supply chain. That's enough. An additional supply chain law, such as the CSDDD, is therefore superfluous."

Misplaced suspicion of the legislator

In addition, the wdk president called for the Omnibus initiative to be extended to the EU Regulation on Deforestation-Free Products (EUDR). The "first-touch principle" must be established here, according to which it is sufficient for the first player in the European supply chain to meet the legal reporting and due diligence obligations. The fact that the EU imposes the same obligations on all companies in the subsequent supply chain within the EU is absurd and creates a bureaucratic monster.

Klein criticized the "misplaced suspicion of the legislator", which is reflected in a reverse burden of proof: "In the case of European supply chain regulation and the regulation on deforestation-free products, companies must collect evidence that they are behaving in accordance with the law. They are thus practically under general suspicion. This also urgently needs to change. We need not only a more business-friendly policy in Europe, but also a more business-friendly perspective."

Uncertainty over government

Friedrich Merz’s conservative CDU/CSU bloc secured victory in the recent German elections but with only 28.52% of the vote, and coalition negotiations to form a government are underway. The wdk president stressed the importance of avoiding prolonged talks for government formation.
 

“Neither our business nor Europe can afford months-long stalemate,” Klein cautioned.
 

Klein further emphasized the need for political leaders to align economic policy with the country’s recent shift in security strategy, as businesses have long demanded.
 

“It is important that politicians finally take action and implement the economic policy turnaround,” he said.