According to a study by the Fraunhofer Institute for research on innovation and systems, the return of the Steiff company, a cuddly toy producer, to Germany is not a single case. According to this study, 20% of companies which had relocated abroad in the past have been coming back to Germany. The main reasons for this are lacking flexibility and quality problems at the production sites abroad.
Even though it is true that still one in eleven companies relocate part of their production to places outside Germany, there is, however, a downward tendency to this. In the opinion of Prof. Bruno O. Braun, who is the president of the Association of German engineers (VDI), this shows that relocations are often planned in a shortsighted manner. In particular cost-driven relocations due to high wages were often pointless given that in many companies these costs accounted for just 10% of total costs. On the other hand, the time needed to start production and networking abroad or costs for tutoring and controlling production are often not adequately taken into account, says Mr. Braun.
Nevertheless, each year Germany loses up to 74.000 jobs due to relocations. “In the long run Germany cannot afford such a development. Business leaders have to base their decisions on sound analyses and make use of potentials for optimization here in Germany”, is the appeal made by the VDI president to German business managers.