Posted on 07 Nov 2025
Relocating German steel production abroad would result in billions of euros in economic losses in the event of a crisis, according to analysis by economists at the University of Mannheim.
According to the study, the German economy faces up to €50 billion ($57.6 billion) in annual loss of added value if it were to experience a global "steel shock" without domestic steel production, Kallanish notes.
The document speculates a scenario in which major steel exporters, such as China, would significantly reduce their exports to Europe in a short period of time due to geopolitical conflicts or supply chain problems. In such a case, downstream industries such as construction, metal production, mechanical engineering, electrical engineering, and the automotive industry would have to pay considerably more for steel, according to the report.
"This cost increase would reduce production and thus value creation in these sectors," note study authors Tom Krebs and Patrick Kaczmarczyk. “Such a crisis would also reduce household incomes, which in turn would negatively impact domestic demand.”
"But even a gradual decline of the steel industry would have economic and political consequences," they add. “Steel-intensive regions such as Duisburg, Eisenhüttenstadt, Bremen, and Saarland would be particularly affected. Experience from the US and Great Britain shows that economic decline in industrially dominated regions is often accompanied by a rise in right-wing populist movements.”
This also applies to Germany – a policy that abandons key industries not only weakens the economy but also democratic stability, the report notes.
"The study clearly shows that the steel industry is not like any other," Jürgen Kerner, second chairman of IG Metall union, told German state news agency DPA. "An end to steel production in Germany would massively jeopardise the country's industrial base as a whole – with serious consequences for the economy, society, and political stability."
German Chancellor Friedrich Merz held a “steel summit” on Thursday with representatives of the country's steel industry and the minister-presidents of each state where the steel industry is prominent – North Rhine-Westphalia, Lower Saxony, Brandenburg, and Saarland (see separate story).
Source:Kallanish
