We live in turbulent times. Donald Trump’s election as President of the United States has fundamentally altered a geopolitical landscape that was already in a state of flux. Global trade has been disrupted by US tariff threats, the transatlantic partnership between the US and the European Union has been all but dissolved, and a pact with Russia is being pursued to end the war in Ukraine, which would allow the US to fully focus on its systemic rival, China. All this has significant consequences for Europe, not least for Germany. The country’s economic and, above all, industrial development is under threat. On top of this, the ecological challenges posed by the climate crisis demand a fundamental restructuring of production.
Heinz Bierbaum is Chair of the Rosa Luxemburg Foundation’s Executive Board.
German Industry in Crisis and a Stalled Industrial Transformation
Germany is facing significant challenges — economically, socially, and politically. The country is effectively in a recession, and Germany’s economic model is in crisis. Its material foundation — a strong, export-oriented industrial sector — is crumbling. This is especially true for the automotive sector, the backbone of German industry. All major German car manufacturers, including VW, Mercedes, and BMW, are experiencing declines in revenue and profits. The planned factory closures and the termination of employment security agreements at VW are emblematic of this trend. Although these measures were ultimately prevented through a collective bargaining agreement backed by strikes, workers are still paying the price — an annual labour cost reduction of 1.5 billion euro has been agreed upon. Audi has announced plans to cut 7,500 jobs, and similar reductions are expected at other car manufacturers. The situation is even more dire for automotive suppliers, who face an uncertain future due to the transition to electric vehicles.
Despite these clear market signals, the shift to electric mobility is making slow progress. Driven by short-term profit motives, automotive companies continued manufacturing large combustion-engine vehicles for far too long, relying on China as a seemingly endless market. However, the situation has significantly changed: China is now mass-producing for its domestic market while also exporting electric vehicles. The essential ecological transition, therefore, is facing obstruction from the companies themselves. In addition, there is a lack of sufficient political support, particularly when it comes to addressing the inadequacies of the country's infrastructure. It remains to be seen whether the newly approved multibillion-euro infrastructure fund, which is now also intended to help combat climate change, will lead to significant improvements. Above all, there is a lack of a proactive and clearly guided industrial policy. Instead, government actions have so far proven counterproductive — both at European and national levels, efforts are being made to relax the ban on combustion engines. This is not only environmentally harmful but also extremely short-sighted, as it threatens jobs in companies that have already made the transition to electric mobility.
Due to a lack of green hydrogen, the ecological transition is also making little progress in the steel industry, despite subsidies. As high energy costs remain one of the biggest competitive disadvantages for German industry, the burden is somewhat eased by the new government’s planned reduction in industrial electricity prices, which is backed by trade unions.
Workers Pay the Price
Industrial development is stagnating, and there is a growing risk of deindustrialization. In response, companies are implementing cost-cutting measures at the expense of employees. Increasingly, companies are relocating abroad. The transition process in and of itself also involves shifting operations out of the country. Within the framework of capitalist competition, the transition process is proceeding counterintuitively, often at the expense of employees. A striking example is the closure of the Ford plant in Saarlouis, where over 4,000 jobs were lost. The site fell victim to competition for a new electric vehicle production location, with Ford ultimately choosing Valencia, Spain over Saarlouis. However, even the future of the Valencia plant is uncertain.
Only if co-determination at company level is broadened can workers truly influence the structure and direction of company policy.
Trade union resistance is needed to combat these policies. Under the slogan “Future Over Cutbacks!”, the trade union IG Metall launched a major campaign advocating for investments and improved infrastructure while opposing job losses, site closures, and relocations abroad. On 15 March 2025, the union organized well-attended demonstrations. Workplace resistance must be strengthened and linked to broader industrial policy measures. The industrial transformation that lies ahead is about more than ecological adaptation: it affects the very nature of work itself, including the organization of work processes through digitalization and artificial intelligence. Industrial policy cannot only rely on subsidies and purchase incentives for electric vehicles; it must provide clear direction and perspective for the much-needed processes of transformation. The transformation agencies co-established by trade unions play a crucial role in this, supporting company-level measures such as training programmes, and intervening in structural policy. A regionalized structural policy is required that fosters industrial diversification and creates jobs in sectors where employment is being lost due to restructuring.
With regard to the automotive industry, new concepts of mobility are required that go beyond a sole focus on cars and also include public transport solutions. The aim is a “just transition” — a shift that integrates social justice into the shift to sustainable energy. Such a transition necessitates the direct involvement of trade unions and workers themselves in these processes. Only if co-determination at company level is broadened can workers truly influence the structure and direction of company policy.
Militarization Undermines Labour Values
Trade unions are also facing pressure from another side. The Zeitenwende (historic turning point) declared by former Chancellor Olaf Scholz of the Social Democratic Party (SPD) has led to a comprehensive militarization of the country. On the one hand, this entails massive rearmament, with the Christian Democratic Union (CDU), the Christian Social Union (CSU), the SPD, and the Greens approving an unlimited increase in military spending. On the other hand, militarization is affecting society on a broader level, with efforts being made to prepare the population for war. This development significantly affects trade unions as well.
Trade unions have to step up.
Their response has so far been contradictory: while there remains a continued commitment to the idea that trade unions stand for peace and disarmament, only a minority critically engages with or outright opposes the militarization agenda. The majority remains passive, or even supportive of it — for instance, by endorsing the expansion of the arms industry. At the same time, rearmament is viewed as a way out of the industrial crisis. For example, a plant of the automotive supplier Continental was recently taken over by the arms manufacturer Rheinmetall, while the tank manufacturer KNDS has acquired Alstom’s rail plant in Görlitz. Although these takeovers have preserved jobs, they also raise fundamental questions, as the shift towards a war economy directly contradicts the peace-oriented values of trade unions. There is now little talk of transformation — a shift away from military to civilian production — which was once a core principle of IG Metall. This makes conferences on peace, organized by the Rosa Luxemburg Foundation and parts of the trade union movement, all the more important. In any case, the RLS provides a crucial platform for trade union policy discussions through its strike conferences.
We Need Proactive and Independent Trade Unions
Trade unions are currently engaged in a defensive struggle. The situation at Volkswagen is a prime example of this — the company is emblematic of Germany’s corporatist system of industrial relations. A defeat, recently only narrowly avoided, would severely undermine trade unions.
At the same time, attacks on workers’ rights are increasing. This is evident in the ongoing struggles over both the right to strike and the right to co-determination. The German Trade Union Confederation (DGB) has criticized companies for unlawfully disregarding legal regulations, and even in large corporations, co-determination is coming under pressure. Additionally, employer associations — backed by conservative political forces — are calling for longer and more flexible working hours as well as an increase in the retirement age.
Trade unions have to step up. It would be a grave mistake if they were to adopt a defensive stance out of old loyalties to social democracy. In times of crisis, a proactive and independent trade union policy is particularly essential.
Translated by Charlie Wührer and Ryan Eyers for Gegensatz Translation Collective.