The head of the German Lanxess warned about the beginning of deindustrialization in Germany

German chemical group Lanxess on Friday unveiled plans for massive cost cuts amid rising raw material and energy prices. Its head, Matthias Sachert, in turn, warned about the beginning of deindustrialization in Germany, urging the country’s authorities to support the industry, writes Frankfurter Allgemeine newspaper.

“Deindustrialization is starting… This seriously threatens the prosperity of Germany and the welfare of the people in the medium and long term. We need a decent economic policy,” he said at a conference call.

In order to remain competitive, the company will cut costs this year by 100 million euros. In particular, Sachert warned of upcoming layoffs, as well as the closure of two production facilities at the plant in Krefeld-Uerdingen by 2026. We are talking about a hexane oxidation plant with 61 employees, as well as a chromium oxide production with 52 employees.

The group hopes to help Germany’s remaining 51 businesses weather the crisis through cost cuts and a hiring freeze, but acknowledges the possibility of “reviewing their viability” if conditions deteriorate further.

“We urgently need a sustainable framework – above all, an internationally competitive electricity tariff for the industry,” quotes Reuters Sachert, who called on politicians to “finally wake up.” The group’s second-quarter EBITDA profit fell 57.7% to 107 million euros, the agency said.

In this situation, writes Frankfurter Allgemeine, other chemical companies are also cutting costs. For example, the Evonik Group will stop temporarily hiring new employees and cut consultant and travel costs, saving €250 million in 2023.