Germany is bracing for widespread disruption to rail services after train drivers embarked on a record six-day strike Wednesday, which will further strain crucial supply chains and deal a new blow to the sputtering economy.
It’s the second time this month that members of Germany’s GDL Union have walked off the job in an ongoing wage dispute with Deutsche Bahn. The state-owned rail operator said the action would cause “massive disruptions” to long-distance, regional and city commuter services until Monday. Freight transport will also face “considerable restrictions.”
The longest industrial action in Deutsche Bahn’s 30-year history will pile more pressure on Germany’s vast manufacturing sector, which is already grappling with high energy costs, strained supply chains, elevated interest rates, and weak domestic and foreign demand.
Industrial production, dominated by manufacturing, contracted 2% last year, the country’s statistics office said last week. That was a major drag on the economy overall, with gross domestic product falling 0.3% in 2023, likely the weakest performance among Europe’s big countries.
According to Commerzbank chief economist Joerg Kraemer, although the latest disruption could cost the transport sector “a mere” €30 million ($32.6 million) a day, costs will be much higher “if factories have to reduce their production due to missing supply.”
The strike “is straining the nerves of the public” and hurting “the already tarnished reputation of Germany as a business location,” he added.
Businesses have been left scrambling to find workarounds since the walkout was announced Monday, but industry bodies have already warned that these won’t fully offset the scale of the disturbance, which coincides with existing bottlenecks caused by disruption to one of the world’s main trade routes.
The strike represents “a major logistical challenge” for the chemical and pharmaceutical sector, the German Chemicals Industry Association told CNN.
“The railroads are very important for the industry’s logistics when it comes to supplying raw materials, and shipping intermediate and finished products,” added the trade body, whose member companies employ nearly 550,000 people.
A significant proportion of the 16,000 vehicles made in Germany every working day are also transported by rail, according to the German Association of the Automotive Industry, which warned that the disruption would extend beyond Germany’s borders.
“A short-term shift from rail to road is extremely difficult,” a spokesperson said. “The ongoing wage dispute is damaging Germany as a business location. We appeal to all parties involved to return to the negotiating table quickly and find a solution.”
Likewise, on Tuesday Deutsche Bahn spokesperson Anja Broker called on GDL to “negotiate and find compromises.”
“Everything is now on the table,” she said, including a “generous offer” of a wage increase worth up to 13% and a reduction in working hours.
GDL has rejected the latest offer, however. The union is demanding a decrease in working hours from 38 to 35 hours per week for shift workers, in addition to a pay increase of €555 ($603) per month and a one-off bonus of €3,000 ($3,260) to compensate for inflation.
“With its third and supposedly improved offer, Deutsche Bahn has once again shown that it is continuing to pursue its previous course of refusal and confrontation — with no sign of a willingness to reach an agreement,” said the union’s chairman Claus Weselsky.
Germany’s supply chains are already struggling because of attacks on ships in the Red Sea. Earlier this month, Tesla said it would pause production at its huge factory near Berlin for two weeks from January 29 because assaults on container ships along the vital trade route had delayed the delivery of components.
In the worst-case scenario, the damage from the rail strike could amount to €1 billion ($1.09 billion), or less than 1% of German GDP, taking into consideration existing pressure on supply chains, said Michael Groemling, head of macroeconomic research at the Cologne Institute for Economic Research.
— CutC by cnn.com
