When German voters go to the polls on Sunday, the fate of companies like SKW Piesteritz will be at the top of their minds. The chemical factory halved its annual Christmas bonus for workers last year, and it just shut down one of its two ammonia plants.
Hammered by high energy costs and what they call excessive German regulation, executives say they might be forced to move production abroad. That would jeopardize 10,000 jobs in and around the small community of Lutherstadt Wittenberg in the country’s economically depressed eastern region, which has already been hurt by pullbacks at the company.
“It is a catastrophe,” said Torsten Zugehör, the local mayor.
The German election has in part focused on hot-button issues like immigration and more recently on the threat to the Atlantic alliance presented by President Trump. But the overriding concern in daily German life, according to interviews and polls, and the thing most likely to drive the choice of voters, is the nation’s anemic economy.
Business executives, workers and politicians alike agree that the next German chancellor must move quickly to repair the country’s ailing industrial sector, or risk economic and political disaster for years to come.
German competitiveness, long a source of national pride, “was never as bad as it is today,” said Petr Cingr, chairman of the board of SKW, which makes products such as fertilizers and an additive for diesel motors.
The German economy has not grown in five years. Its once-powerful industries are suffering through what corporate and labor leaders call a crisis of competitiveness. Structural problems, including crumbling public infrastructure, from bridges and roads to schools; a lack of high-speed broadband networks; and public services that still work with paper have dragged on growth. So have regulations, tax rates and, in particular, high energy costs.
Energy prices spiked when Russia invaded Ukraine in 2022. They have fallen slightly since, but remain nearly 20 percent higher than the European average, according to Eurostat. Company leaders say measures from Berlin and Brussels that are meant to reduce fossil fuel emissions and combat climate change have exacerbated the problem.
Increasing competition from China, which is able to produce machinery and other industrial products more cheaply than German firms, and the looming threat of tariffs from the United States have added to the pressure on Germany’s industry.
BASF, the world’s largest chemical company, has already begun closing its factories in Germany and shifting production to China and the United States.
SKW fears it could be next.
“If this becomes a permanent loss-making operation, then we can’t rule out the possibility that some of the production will be relocated to France, to Austria,” said Carsten Franzke, the company’s head of operations.
The leading candidates for chancellor have all promised changes to jolt growth. Olaf Scholz, the incumbent chancellor from the Social Democrats, has pledged to increase government spending in targeted industries. Posters across the country cast him as the “Made in Germany” candidate.
The favorite to supplant Mr. Scholz, Friedrich Merz of the Christian Democrats, has promised to slash regulation — including scaling back some climate goals — reduce taxes and build new advanced nuclear fusion reactors in a bid to push energy costs down.
“Germany is stuck in stagnation,” Robert Habeck, the economic minister and the chancellor candidate for the Green Party, said late last month.
Not all the economic news is grim. Even as Germany’s traditional industries, such as auto manufacturing, are suffering, the country has seen its service sector expand in recent years. The unemployment rate is low, at 3.2 percent, and some economists point out that the country has experienced industrial ups and downs before.
“Germany has repeatedly experienced phases of deindustrialization,” said Marcel Fratzscher, president of the German Institute for Economic Research. He pointed to the textile industry that disappeared in the 1970s and the electronics industry a decade later. “For the companies and employees affected, it was difficult, but Germany came back stronger in other sectors,” he said.
SKW operates in multiple European countries. But since its founding in 1993, the company, which sits on the Elbe River, has focused on tailoring its products to meet the needs of local farmers.
“We live and die with Germany and Europe,” Mr. Frantzke said.
Lutherstadt Wittenburg lives and dies, for now, with SKW. Aside from its tax bill, the company has opened its on-site day care and medical center to the public. It has donated money for playgrounds, sports teams and local events. Area firefighters train with the factory fire brigade. The company sponsors the local high school prom.
It has stopped new donations this year, and its lack of profits means it will not pay local business taxes. City officials say they will need to cut spending on sports and culture to balance this year’s budget.
If SKW relocated operations, there is no other industry to replace it, said Mr. Zugehör, the mayor. Many of the well-educated, highly skilled workers and their families would leave, gutting a region that has spent the past three decades working to create an attractive standard of living, he said.
“We would not be able to compensate for the loss,” he said.
One of those at risk of leaving would be Valentin Koch, 27, who arrived seven years ago from the western region of Rhineland Palatinate, because he saw more opportunities to find a good job and build a life here. He got a job at SKW and has worked his way up, becoming a plant operator and deputy shift manager.
His hope had been to spend the next two to three decades at the company, but he fears that might not be possible much longer.
Mr. Koch said he was able to handle the unexpected drop in last year’s Christmas bonus, despite having recently purchased his first home. But not everyone was so lucky.
“I know some people who counted on that, who calculated their loans on the bonus payments,” Mr. Koch said. “That makes people more worried. And it all depends on politics.”
Many companies, including SKW, say government directives have raised their costs and hurt profits, especially those aimed at meeting Germany’s ambition to be carbon neutral by 2045. Mr. Franzke hopes that a new government will grant companies more freedom and flexibility to reach carbon neutrality, including by using technologies the government has not championed.
Asked about his preferred future government, Mr. Franzke praised the Christian Democrats. He was on his way last week to personally deliver a letter with industry recommendations for the economy to Mr. Merz, ahead of a campaign rally.
“We hope that at some point common sense will prevail and that competition will reassert itself in Germany,” Mr. Franzke said.
Mr. Koch was also hopeful, but he was less sold on Mr. Merz. A few days before the election, he said he still had not decided which party to back.
“It’s difficult,” he said. “It’s really difficult.”
