Sunday , 21 July 2024
Home Global Economy How German companies are now reacting
Global Economy

How German companies are now reacting

The Hamburg port and logistics group (HHLA) has ceased operations at its container terminal in Odessa in south-western Ukraine. The German group has been operating a container terminal on the Black Sea with 480 employees since 2001. This makes him one of the largest foreign investors in Ukraine.

"Odessa and the Ukraine are an important location for us," said an HHLA spokeswoman for the "Handelsblatt": "We can only wait and see how the situation develops." The company has set up a crisis team that is in contact with the local authorities and the federal government. Two ships are still there, which have already been dispatched. It was unclear whether they could leave the port. The employees are all safe, it said.

Thousands of German companies active in Russia

For many German companies, the question now is how to react to the Russian invasion of Ukraine. According to the German-Russian Chamber of Commerce Abroad (AHK), around 3,651 German companies are currently active in Russia. "German companies are therefore among the most active foreign investors in Russia. In addition to the high need for modernization and the good image of the 'Made in Germany' brand, the comparatively high profit margins are particularly attractive," explains a spokesman for the Association of German Chambers of Industry and Commerce (DIHK). Request from tagesschau.de.

Before the invasion, foreign trade had recovered somewhat: According to the DZ-Bank, Russia was ranked 14th among the most important destination countries for German exports – 1.9 percent of German exports went to Russia according to the DIHK – and 12th among the most important countries of origin for German exports Imports to Germany, 2.8 percent of all imports to Germany came from Russia. According to the Federal Statistical Office, raw materials, vehicles and machines were primarily traded between Russia and Germany. In 2021 as a whole, German exports increased by 15.5 percent compared to the same period last year to 26.6 billion euros.

Deutsche Bank refers to emergency plans

Deutsche Bank, for example, is directly involved in Russia, although it has significantly reduced its business in Russia since the annexation of Crimea in 2015. In a first reaction, the money house referred to its emergency plans: A bank spokesman told the Reuters news agency in the morning that they were deeply concerned about the attack on a sovereign European country and that the borders in Europe were being called into question. "We have prepared for various scenarios and created contingency plans," said the spokesman.

Deutsche Telekom is reacting in a similar way: Measures are being taken for the approximately 2,000 employees at the software development site in St. Petersburg and a withdrawal of staff is being considered. "We have to think about how we deal with the people in the region," said company boss Tim Höttges. This also includes the question of whether Telekom offers Visa. This could partially shift the work, said the CEO, adding that one wanted to proceed individually. The employees in Russia work, among other things, for the IT subsidiary T-Systems and are responsible for planning and documenting the fiber optic expansion. Now it is necessary to examine whether and how these tasks could possibly be relocated, said Höttges.

Automakers and suppliers are watching the situation with concern

The German auto industry is also affected by the war in Ukraine. According to the Association of the Automotive Industry in Russia and Ukraine, suppliers and car manufacturers have 49 production sites: "The consequences for the companies and their employees cannot yet be specifically foreseen," said Association President Hildegard Müller: "A disruption to the supply chains would also have negative effects Effects." Last year, German manufacturers exported almost 40,000 vehicles to Russia and Ukraine. That is less than two percent of all cars exported from Germany.

One of those affected is the German carmaker Volkswagen, which is observing the developments with concern: "Volkswagen hopes that hostilities will end quickly and that there will be a return to diplomacy," said a spokesman for the group when asked by tagesschau.de. The economic impact on the group's activities is continuously determined by a crisis management team: "In all on-site activities, the safety and integrity of our employees is the top priority."

The German automotive supplier Bosch made a similar statement when asked by tagesschau.de: "We are following the latest developments in the region and their possible political and economic effects with great concern. At the same time, we are taking all necessary precautions to protect our employees." German employees are currently not on site, and business trips have been severely restricted for some time. "The development of concrete options for action is the responsibility of politics," said a spokeswoman. The group was able to generate sales of around 1.2 billion euros in Russia last year and employs around 3,400 people there. There is also a production site in the Ukraine, in Krakovets in the west of the country. Starters for the automotive aftermarket are repaired there.

"Consequences not foreseeable"

For machine and plant manufacturer Dürr from Stuttgart, business with Russia accounts for only one to two percent of sales: "It is not yet clear what the consequences of Russia's invasion of Ukraine will be how this will affect economic relations with Russia," said a spokesman for the group when asked by tagesschau.de.

Commerzbank said the institute had little business with Russia. Further developments are observed closely and the risk assessment is continuously adjusted: "We are prepared for various scenarios." Precautions have also been taken for tightened sanctions.

Economic consequences not yet foreseeable

The Association of German Chambers of Industry and Commerce considers an assessment of the situation to be premature: "The economic consequences of this invasion are not yet foreseeable, but they are certainly serious," says DIHK President Peter Adrian. Today he is thinking "in particular of the employees of German companies and the Chamber of Commerce Abroad in the Ukraine".

According to the AHK, around 2,000 companies with German capital participation are affected by the Russian invasion within the Ukraine. According to the Deutsche Bundesbank, German direct investments in Ukraine amounted to 3.6 billion euros in 2019. In terms of total import and export value, Ukraine currently ranks 41 among our most important trading partners.

Lufthansa and DB Schenker are terminating connections

Airlines had gradually suspended their connections to Ukraine for a few days. In response to Russia's invasion, Germany's largest airline, Lufthansa, canceled its last destination in the country. The flight from Frankfurt to Lviv in western Ukraine, scheduled for Thursday evening, was canceled for security reasons, a spokesman said in the morning. The group had previously canceled the connections to Odessa and Kiev. In the course of the day, the overall situation will be assessed and the procedure for the next few days will be discussed. Lufthansa crews are not staying in Ukraine.

The German logistics service provider DB Schenker has also stopped its operations in Ukraine and asked its employees in Ukraine to stay at home. "All connections to and from Ukraine have been suspended for the time being. So far, all other programs are running as usual. We are working on contingency plans for various scenarios and will inform you about major changes," the group said.

Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Articles

Global Economy

Spotlight on 2023: S&P 500 and the Significance of the 4400 Level

In our past exploration of the financial landscape of 2023, we delved...

Global Economy

AI and Data Analytics Drive Efficiency in Money Laundering Detection

BIS Innovation Hub Turns to Tech for Money Laundering Detection The BIS...

Global Economy

Russell 2000 Gains Momentum as Tech Stocks Outperform Value

Tech stocks have dominated the equity markets in recent months, surpassing value...

Global Economy

Crypto Exchange Bybit Announces Exit from Canadian Market Amid Regulatory Changes

Regulatory Shifts Prompt Bybit's Strategic Withdrawal from Canadian Crypto Market