Hüttenes-Albertus’ CEO Christoph Koch gives his views on the many current challenges such as high energy costs, overwhelming bureaucracy and production migration in Germany

“We have far too many regulations. Germany will only remain viable for the future if the government finally stops this bureaucratic madness.”

In a recent interview with WirtschaftsWoche (a German weekly business news magazine published in Germany (“Wirtschaft” means economy and “Woche” is week) Hüttenes-Albertus’ CEO Christoph Koch, who has been running Hüttenes-Albertus Chemische Werke GmbH together with Franz Friedrich Butz since April 2015, gives his views on the many current challenges such as high energy costs, overwhelming bureaucracy and production migration in Germany.

WirtschaftsWoche (WW): Mr. Koch, Germany is in recession and the global economy is weakening. How badly is your company affected by this?
Christoph Koch (CK): Our business did very well globally in the first half of the year and the economic development in the entire foundry industry is solid. Although the production volume in Germany is no longer at the level of previous years, our company can compensate for this through its strong global presence and growth in foreign markets. Our business in Turkey, Mexico, the USA and also Europe is running stable. I believe that the German economy overall is not as bad as it is sometimes made out to be.

Hüttenes-Albertus’ CEO Christoph Koch. Photo credit WirtschaftsWoche

WW: What are the company’s investment plans?
CK: As a chemical company, you always have to invest one to three per cent of sales in systems in order to keep inventory at a stable level. However, we are not currently building completely new chemical plants. Our strategy is more like a puzzle. It is modular investments in our production network that allow us to continually adapt to demand. Our investment plans for 2024 therefore focus primarily on our largest growth markets of India, Turkey and Mexico.

WW: The company’s largest factory in the world is in Hannover, Germany. Will you continue to stay in Germany as a location in the future?
CK: Yes, Germany is the backbone of our group. This is also the centre of our research and development. Our roots here go back more than 100 years. Withdrawing from Germany is out of the question for us.

WW: Such confessions are currently rather rare. According to surveys, one in four medium-sized companies is currently thinking about relocating production abroad.
CK: We are committed to Germany as a location – but I didn’t say that everything was going well here.

WW: And what is going wrong?
CK: We have far too many regulations. Germany will only remain viable for the future if the government finally stops this bureaucratic madness. I would like to see a radical reduction in bureaucracy. For every new regulation, two old ones should be abolished. That would be a huge economic stimulus programme not only for Germany, but for all of Europe.

WW: Which old regulations would you cut off?
CK: One of our biggest problems is the long approval processes. Let’s take our new administration building. You can’t imagine how long it took to get permission to demolish the old building! And do you believe that our telecommunications provider managed to lay an Internet line for the new building within a year? No, instead we had to temporarily extend the cable from the old building for a lot of money. That’s typically German for me. We have to become much more agile and faster.

WW: A key locational disadvantage in Germany is currently the high energy prices. The foundry industry needs a lot of gas and electricity. As a supplier, do you feel this cost pressure?
CK: We have customers who suffer greatly from high energy prices. And yes, unfortunately there are also foundries that go bankrupt. Some are also moving production abroad, for example to Turkey, where energy costs and wages are lower. While 5.4 million tons of castings were produced in Germany five years ago, this year there are only around 3.5 million – around a third less.

WW: And that has no consequences for you?
CK: Of course the market for us in Germany is getting smaller. But if the casting volumes move to Turkey, China or India, we have the advantage that we are already represented in these countries. We have a global production network, which protects us from the effects of market shifts and geopolitical shocks.

WW: So you remain future-proof primarily through your global positioning?
CK: Yes. Globalisation and our international interdependence are our lifeline for difficult times. We compete because we do profitable business abroad. In Germany we have suffered economically over the past four years. If we had only produced in Germany during this time, we would certainly not be making any profits today.

WW: Can the migration of medium-sized companies still be stopped?
CK: I think we need to start thinking in long-term cycles again. We are currently experiencing many negative developments in Germany and Europe. High energy prices, a shortage of skilled workers and the conflict in Ukraine are creating a difficult environment. But that doesn’t mean it will always stay that way. Sooner or later the tide will turn again for our region, and we have to set the right course for this now. Companies that leave today may come back in a few years.

The full WirtschaftsWoche interview can be read at: