German Manager Magazine: Northvolt, ZF, Thyssenkrupp, Intel, TSMC, Bosch, Siemens, Deutsche Bahn: These companies are now trembling for the state’s billions002906

With the budget judgment of the Federal Constitutional Court 60 billion euros are missing from the Climate and Transformation Fund (KTF), which had developed into the most important instrument for financing the energy transition and restructuring the economy. The federal government wanted to use the money from the KTF to, among other things, subsidize building renovations (around 19 billion euros), promote renewable energies (12 billion), and expand electromobility and the charging station network (4.7 billion). Billions more were earmarked as subsidies for chip factories, the steel industry and rail transport.

Now there is chaos. It wasn’t just politicians in Berlin that needed days to understand the extent of the verdict. There is also great uncertainty in the boardrooms of companies as to how much money will still come – and which projects planned with generous funding are still possible. Federal Finance Minister Christian Lindner (44, FDP) has now announced that to suspend the debt brake for the time being. But is that enough for the industry’s expensive plans? The following overview shows the most important corporations that now have to worry about state money.

German railway

25-Milliarden-Frage: Bahn-Chef Richard Lutz (r.) fehlt viel Geld, das er gern von Volker Wissing bekommen würde

25-Milliarden-Frage: Bahn-Chef Richard Lutz (r.) fehlt viel Geld, das er gern von Volker Wissing bekommen würde

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25 billion question: Bahn boss Richard Lutz (r.) is missing a lot of money that he would like to get from Volker Wissing

Photo: Kay Nietfeld / picture alliance/dpa

No other company is affected as badly as the state-owned company. The billion-dollar renovation of the rail network Germany should be financed, among other things, with money from the KTF. Should, mind you. Transport Minister Volker Wissing (53, FDP) has already told the Bundestag Budget Committee that he is probably missing a total of 25 billion euros for the renovation of the railway. Half of this sum should come from the KTF, the other half is the railway’s equity, which the federal government wanted to increase.

There will already be a gap of 5.3 billion euros in 2024 – money that will be used for… Complete renovation of the dilapidated rail network

is urgently needed. The goal set by railway boss Richard Lutz (59) to get 25 percent more goods on the rails by 2030 is now in question again. Wissing, meanwhile, tries to calm down. According to him, the planned renovation of important railway lines in Germany should not be delayed due to the federal government’s current budget problems. The Riedbahn, for example, the Frankfurt-Mannheim route, will be renewed as planned next year. The only question is where exactly the money comes from.

Northvolt

The Swedish battery manufacturer is planning in Schleswig-Holstein Heide a gigafactory for the production of battery cells for electric cars including a recycling plant. Investment scope: 4.5 billion euros. 3,000 jobs are to be created in this way and a significant amount has already been invested in various preparatory measures, according to the company.

Northvolt recently agreed on funding with the Federal Ministry of Economics and the state government, plus a state-guaranteed convertible bond. More than 600 million euros should flow from the KTF; The state of Schleswig-Holstein wanted to inject 137 million euros – also from a pot that is taboo according to the ruling. Prime Minister Daniel Günther (50, CDU) repeatedly stated: “We will keep the promises we made.” And a Northvolt spokesman also sees no reason to doubt the promises. Whether they will actually come is uncertain.

Thyssenkrupp

Ein Hochofen sicher: Thyssenkrupp-Boss Miguel Ángel López Borrego

Ein Hochofen sicher: Thyssenkrupp-Boss Miguel Ángel López Borrego

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A blast furnace for sure: Thyssenkrupp boss Miguel Ángel López Borrego

Photo: JANA RODENBUSCH / REUTERS

On the way to converting his steel site in Duisburg for the production of green steel, CEO Miguel Ángel López Borrego (58) needs money. The company’s goal is to use hydrogen from renewable energies to produce emission-free steel. In the summer, the EU Commission approved German subsidies worth up to two billion euros. There should also be subsidies for this from the KTF. Because Thyssenkrupp If you have already received your funding notice, you should still receive the funding. However, further conversion is now more open than ever.

With the approved “tkH2steel” project, the conversion at the Duisburg location is far from complete. The plans only refer to one blast furnace, three more remain at Thyssenkrupp alone and an additional two at the subsidiary Hüttenwerke Krupp Mannesmann (HKM). Steel boss Bernhard Osburg (55) therefore sounded the alarm. “If politicians do not find a clear answer as to how the transformation of the industry can be reliably financed, there is a risk of a standstill in investments and in central transformation projects,” he said in his role as President of the Steel Industry Association. Funds for the development of the hydrogen core network are also at risk, said Osburg. The expansion of power plant capacity to stabilize the electricity supply through renewable energies is also affected.

ArcelorMittal

“With regard to our decarbonization projects, we are disappointed and, above all, concerned,” said Reiner Blaschek, German head of the steel manufacturer ArcelorMittal, in the “Handelsblatt”. The federal government is responsible for finding suitable ways and means to finance the funding for the restructuring of steel production, explains Blaschek: “We have developed a clear plan for our production sites in Germany and can help reduce CO2 emissions significantly to reduce.”

At ArcelorMittal it is primarily about the plants in Bremen and Eisenhüttenstadt. After conversion, the higher costs should be managed in the coming years using climate protection agreements because the state could offset the additional costs incurred compared to conventional production. Dirk Vogeler, the chairman of the works council at ArcelorMittal in Eisenhüttenstadt, now fears the worst: “We are worried that something is going really wrong in Germany.” The federal government should also provide up to 55 million euros to promote green steel production in Hamburg, and the EU Commission had already agreed. The next steps are unclear. According to Hamburg Environment Senator Jens Kerstan (Greens), the hydrogen project at Arcelor Mittal is now in question.

Siemens

Plan B? Siemens-Boss Roland Busch hofft auf alternative Finanzierungswege

Plan B? Siemens-Boss Roland Busch hofft auf alternative Finanzierungswege

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Plan B? Siemens boss Roland Busch hopes for alternative financing methods

Photo: ANNA SZILAGYI / EPA

For Siemens-Boss Roland Busch (59) should be the one The day of the annual press conference is a public holiday

become. Record profits, order boom and billions in dividends. But towards the end he became very serious again. When asked about the Federal Constitutional Court’s ruling, Busch said: “I hope the government has a plan B, because in times of transformation it’s all about speed.” The man who was just celebrating the past is suddenly worried about the future: “The most important thing we have to work on is innovation. That is our strength. We need a modern infrastructure so that, for example, trains run on time again.”

Siemens would also have benefited enormously from the climate fund. Four billion alone were budgeted for the digitalization of the rail network and Siemens Mobility was ready to process the corresponding orders. As a factory supplier to the semiconductor industry, which was also to receive four billion euros in funding, Siemens was almost certain of further orders.

Volkswagen, Mercedes, BMW

German car manufacturers have already firmly planned for state subsidies from the KTF when switching to electromobility: as an environmental bonus when purchasing an electric car and in the form of state subsidies when setting up charging infrastructure. So far, almost every fifth new car in Germany is a fully electric car.

We are still a long way from the goal of getting at least 15 million electric cars on the road by 2030. In total, around three billion euros will be missing next year.

Around 2.2 billion euros should flow from the KTF in 2024 to build charging stations and hydrogen filling stations, after 1.9 billion euros this year. Germany’s top car lobbyist, VDA President Hildegard Müller (56), is already putting pressure on: “The fact that there is not a single charging point in every second municipality in Germany is sobering and illustrates the need for political action,” says Müller. Transport Minister Volker Wissing originally wanted to provide around 6.3 billion euros for the development and expansion of charging infrastructure by 2025 – it is unclear whether the money will actually flow.

The environmental bonus affects the automotive industry even more directly. Last year, the federal government subsidized the purchase of electric cars with around 3.2 billion euros, this year it is a total of 2.1 billion, and next year the amount is expected to fall to around 800 million euros. There is always criticism of this from the industry, most recently VW sales director Imelda Labbé (56) criticized the declining funding amounts and called for new help for fleet customers. The background is that there has been no environmental bonus for businesses since September. However, commercial customers have recently been primarily responsible for the growth of electric cars.

Vaillant

Anyone who replaces their oil or gas heating system with an environmentally friendly heat pump can currently benefit from government subsidies. The state is currently covering up to 40 percent of the investment amount; the next adjustment to the funding programs is expected on January 1, 2024. The heat pump program is a central component of the new heating law. After the Karlsruhe court ruling, Federal Chancellor Olaf Scholz (65, SPD) and Economics Minister Robert Habeck (54, Greens) emphasized that measures to promote energy efficiency and renewable energies in the building sector are exempt from the budget freeze. For the Heating engineer and heat pump manufacturer Vaillant still applies

: The greater the political uncertainty, the greater the reluctance of customers and the more difficult medium-term planning.

Intel

Big Spender: Intel-Boss Pat Gelsinger im Juni mit Olaf Scholz vor der Unterzeichnung des Förderdeals im Bundeskanzleramt

Big Spender: Intel-Boss Pat Gelsinger im Juni mit Olaf Scholz vor der Unterzeichnung des Förderdeals im Bundeskanzleramt

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Big donor: Intel boss Pat Gelsinger in June with Olaf Scholz before signing the funding deal in the Federal Chancellery

Photo: FILIP SINGER / EPA

The US chip giant wants around 30 billion euros Intel invest in the construction of a new chip factory in Magdeburg. Intel boss Pat Gelsinger (62) has told the federal government around 10 billion euros in tough negotiations in terms of state subsidies, part of which should flow from the KTF. According to information obtained by Reuters from government circles, it is certain that the federal government will keep its funding commitment even after the KTF ruling: the damage would be too great and the signal to foreign investors too fatal if the federal government were to withdraw now. Intel boss Gelsinger probably doesn’t have to worry too much about his 10 billion euros in funding. They’re just not as safe as they were two weeks ago.

TSMC

The same arguments that speak for Intel also speak for it world’s largest chip manufacturer TSMC from Taiwan, which wants to build a chip factory for the automotive industry in Dresden in a joint venture with the German companies Infineon and Bosch. Around 3,000 jobs are to be created here – and will be largely supported by the state.

The federal government has already promised 5 billion euros in subsidies for the project, which is estimated at 10 billion euros. Federal Chancellor Scholz promised a few days ago that funding would not be up for grabs. However, it is not yet legally binding; there are only declarations of intent to the companies. The funding application for the joint venture in Dresden is being processed by TSMC, which does not want to comment on the current status.

Infineon

Infineon also bet on the five billion euros for the TSMC plant. “We cannot speculate about the possible effects of the Constitutional Court’s ruling,” said TSMC’s joint venture partner. “We are evaluating the verdict and are also in discussions with the federal government about this.”

The Munich chip company itself is affected by the Karlsruhe ruling with another project: Infineon wants to expand its factory in Dresden and add 1,000 jobs. Infineon has already taken into account subsidies of up to one billion euros for this purpose.

Bosch

The world’s largest automotive supplier is not only planning investments with TSMC and Infineon in Dresden, where it is now worried about the jointly planned five billion euros. The company also wants its own Expand car chip production in Reutlingen for up to three billion euros. And the federal funding that has been promised but not yet legally binding? “We assume that the federal government will stick to its promises,” emphasized a spokesman for the company.

ZF Friedrichshafen

The auto supplier ZF from Friedrichshafen wants to set up a factory for energy-saving chips together with its US partner Wolfspeed

made of silicon carbide in Ensdorf, Saarland. The associated research center is to be built in Nuremberg. ZF and Wolfspeed want to invest a total of 3.5 billion euros and, according to information from industry circles, have received promises of 700 million euros in subsidies from the federal and state governments. However, the problem is similar to that at other chip locations: There is not yet a legally binding funding decision for the project.

“We have taken note of the decision of the highest German court and are concerned about the possible impact on Germany as a business location,” said a ZF spokesman shortly after the Karlsruhe ruling. “It’s not just about our country’s reputation and reliability as a partner for future-oriented large-scale projects. The planned funding is central to the successful transformation of the industrial location.” In view of the “commitments received from the highest authorities,” ZF assumes that it will receive the necessary support.

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Semicron Danfoss

Many medium-sized companies are also directly affected by the 60 billion gap in the KTF. The Nuremberg family company Semikron Danfoss, for example, produces chips and modules for power electronics. These are needed in solar modules, electric cars and wind turbines. Almost half of the chips are currently produced in Europe. But China is catching up a lot because the country is massively supporting the sector with state subsidies, a spokesman for the company told the “Handelsblatt”. Semicron-Danfoss plans to triple its capacity for power semiconductors at its Nuremberg plant. They want to invest 250 million, 75 million of which are needed as state funding. However, the expansion of the Nuremberg plant would not be conceivable without state subsidies.

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