- 22 hours ago
From carmakers and manufacturers to farmers and logistics firms, businesses are grappling with weak demand, climate risks, and global uncertainty.
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00:07Electric cars are gaining ground worldwide, most of them now come from China.
00:12European manufacturers have lost significant ground.
00:17Europe's largest automaker, VW, is in crisis and has now terminated wage agreements for about 100,000 employees.
00:24Entire plants could also close.
00:28Once a VW employee, always a VW employee, that was true for decades.
00:32But that is now in question, even at the Emdin plant.
00:46If the plant were to close entirely, they might as well open the dikes and flood the whole region,
00:51because nothing would make sense anymore since we all depend on those jobs.
00:56There is a mortgage tied to it, financial obligations.
00:59This is our life here in Istfriger region.
01:04If VW were to close, the impact on the town and the region would be catastrophic.
01:12They are scared.
01:14They are truly, deeply scared.
01:16Will they still be able to go to work in the morning?
01:18Or will the whole place be shut down?
01:19Others do that, it means queremos thank God tay dark for years!
01:20Should we return from the Venice Peak light?
01:22Honda staff, street light light!
01:25They are disappointed, and angry.
01:28Volkswagen workers in Emdin, East Frisja.
01:31On Germany's North Sea Coast.
01:34And just before the planned summer break in July, they learned that their facility was on a list of four
01:38VW sites,
01:40facing potential closure.
01:41They found out not from their employer, but from the media.
01:45Today Volkswagen CEO Oliver Blume is scheduled to speak at a staff meeting.
01:51Don't talk to the press, talk to us, reads a large banner.
01:56As the CEO's motorcade speeds past, they hope he will at least notice them.
02:02And their concerns.
02:06We expect clear statements and clear declarations regarding what's happening to the Emden
02:10plant.
02:11What are their plans?
02:12What is their strategy?
02:14And we expect them to finally come out with concrete answers, instead of just the usual
02:18empty phrases.
02:20Michael de Vries has been assembling cars at Volkswagen for 17 years.
02:25The 48-year-old says morale is extremely low, and not just among the 7,700 employees.
02:34Fear, fear uncertainty.
02:36What's going to happen to us?
02:37What's going to happen to our families?
02:38Many of our family members work in other sectors, but they all depend on us.
02:43So there's a great deal of fear.
02:44And everywhere you go, at the bakery or the butchers, people ask, what's the situation?
02:48Will things continue?
02:52Emden's mayor has come to the factory gates.
02:55He says it's shameful and completely unacceptable that the people affected have so far learned
03:00about Volkswagen's management plans, primarily through the media.
03:05A global player has to live up to the responsibilities of a global player, and leaving people in
03:09the dark for so long, that's not okay.
03:12It's underhanded, and that's why Volkswagen's communication needs to change urgently.
03:18VW is the most important employer in the region.
03:21In fact, the Emden plant is one of the group's most modern facilities.
03:26The last internal combustion engine vehicle rolled off the assembly line here two years
03:31ago.
03:32Since then, they've only made electric cars.
03:34However, Volkswagen's electric cars are selling poorly, especially in the crucial Chinese market.
03:41They are too expensive and often don't appeal to local customers' tastes.
03:48As the workers' meeting gets underway, we head into town.
03:54Taxi driver Stefan Wisser says the crisis at VW is the number one topic of conversation
04:00here, as everyone is affected in some way.
04:03It's the suppliers and the companies based in Emden that rely on the employees' purchasing
04:10power.
04:13And in my opinion, if that purchasing power disappears, everyone can close up shop.
04:19A sentiment frequently heard here in the quiet town.
04:24Many shops here are already noticing people tightening their purse strings.
04:29Thinking twice about what to buy.
04:35People set priorities.
04:36Do I spend my money on a vacation or clothes, on jewellery, on drugstore items?
04:42At some point they draw a line and say, I don't need that.
04:48Well, if the plant were to close, we would certainly see a drop in sales of at least 40%.
04:55At that point, the whole operation here simply wouldn't be viable anymore.
05:03From the VW plant to suppliers, dealerships and the port of Emden, where many of the cars
05:10are shipped out, some 40,000 to 50,000 jobs in the region depend on Volkswagen, according
05:16to estimates by both politicians and unions.
05:19And Emden's mayor says the region would not be able to recover from the potential loss
05:24of the Volkswagen plant for decades.
05:30I'm hearing from our clubs, from the football teams, that young people are moving elsewhere,
05:35to pursue vocational training outside of East Frisia.
05:39And that is of course disastrous for a region like ours.
05:43Because the local community changes, young people are leaving.
05:47All in all, that poses a serious threat to us.
05:54Michael de Vries has returned from the staff meeting with the Volkswagen CEO.
05:59But the boss never answered pressing questions regarding the plant's future.
06:05That drew booze, says the VW employee.
06:09The trust is almost gone.
06:14We just won't accept that anymore.
06:18I think they have to work very hard to rebuild that trust because it's been completely destroyed.
06:25It won't be an easy task to rebuild it.
06:34On days like these, Michael de Vries tries to clear his head between the dike and the
06:40harbour.
06:41The constant anxiety, he says, takes a toll on people.
06:47Yeah, what does the future hold?
06:49What does this mean for our children and our grandchildren?
06:52Will they have a perspective of leaving here in East Frisia?
06:57Will they be able to?
06:58That worries all of us.
06:59We all have children.
07:01I have a young son myself.
07:02Naturally, I'd love for him to follow in my footsteps.
07:06And that is why he wants to fight.
07:08To keep building cars.
07:10For his job.
07:11For a future.
07:13And for the VW plant in Emden.
07:19And here are our other topics.
07:22Destroyed crops.
07:24Mounting strain on agriculture.
07:27Sky Stormer.
07:29Germany's first rocket in orbit.
07:30And Xi'an under pressure.
07:34Share a slide after IPO.
07:37But first, let's turn to another national symbol that's under pressure.
07:41The River Rhine.
07:42Germany's cultural heart and soul, which flows from the Alps to the North Sea.
07:48Myths like the Lorelei.
07:50The Rhine owes its reputation to castles and palaces.
07:53But a water shortage is now causing the economic engine to sputter and the German spirit is starting to crack.
08:00The Rhine is one of Europe's major rivers, the subject of myths and legends, and modern history coveted by both
08:07Germany and France.
08:08And it's an artery along which many of Europe's biggest businesses have settled.
08:12In Germany alone, it accounts for the vast majority of commercial river traffic.
08:16Follow its course downstream and you'll find everything from chemical factories, including BASF,
08:21to medicine producers like Bayer, or steel manufacturers such as ThyssenKrupp, and oil and gas hub operators like Rotterdam-based
08:28Vopac.
08:29All rely on the river for raw material deliveries, and in many cases to ship their final products to overseas
08:35markets.
08:35For all of those reasons, what's happened to the river in recent years represents a break with the past.
08:40And for those businesses affected, it's opening up a lot of new questions.
08:44What does the future look like?
08:46Of course, we're talking about an extreme year, the likes of which we've never seen before.
08:52That's Robert Lammers. He runs a grain mill on the Rhine in Dusseldorf.
08:56We had the chance to speak with him recently about his business and its vulnerability to low water levels.
09:01Lammers' mill cuts rolled oats, oatmeal, which he trucks to distributors across Germany.
09:06The business has been around for almost 100 years, so it's seen a lot of different water levels.
09:10But nothing like this.
09:12The average level in Dusseldorf across the year is 257 centimeters.
09:16That's the measurement from the shore.
09:18The channel is much deeper.
09:19The previous low water record was 23 centimeters, set in 2018.
09:24Earlier this month, it went below that, reaching minus 4 centimeters.
09:28That means the water level fell below the measuring line on shore.
09:31The channel was still there, but at just over one and a half meters depth.
09:35Now, for Lammers, those numbers have consequences for his bottom line.
09:38Every week, he receives a delivery of oats from his Scandinavian suppliers, via Rotterdam.
09:44Typically, he'd receive 3,000 tons on one ship.
09:47Recently, he's been receiving five to six smaller ships, he says, depending on the water level.
09:52But that translates into extra costs.
09:55Lammers says his shipping contract includes a low water fee.
09:58That's a 10% surcharge for every 10 centimeters below the reference point in nearby Cologne.
10:03Beyond a certain level, it runs to 20%, he said, with recent water levels turning negative.
10:09Lammers now says he's been paying a surcharge of over 300% over the past month.
10:13He's projecting a six-figure sum of surcharges for this year alone.
10:17If you bear in mind that these are just extra costs that aren't calculated into your expenses,
10:22then a small six-figure sum is quite a lot.
10:25And he's not alone. Other businesses have told us they've been scrambling for alternatives.
10:30Steel producer ThyssenKrupp said last week it had set aside its own shipping fleet
10:33and rented special flat-keel ships to supply its factories in Duisburg.
10:37Plastics manufacturer Covestro in Leverkusen has switched to train and trucks where possible.
10:43And it's likewise also turning to low-water ships.
10:46Now, this is happening at a time when the business environment is already under pressure in Germany.
10:50Growth is low, prices are still on the high side, and high fuel costs are eating into bottom lines.
10:56And passing along these new costs to the customer is difficult.
11:01That doesn't work because they're not very tangible and you can't calculate them in advance into the price.
11:07Because I don't know when finalizing my contracts for next year if we'll have a low-water situation or not.
11:14In other words, businesses have only a few immediate alternatives.
11:17But they're not very attractive because they're costly and limited, and companies have to eat those costs.
11:23Now, the good news is some rain has returned in recent days.
11:26In Dusseldorf, the water levels have risen, though they're still below average.
11:29But the question going forward is turning more towards the bigger picture.
11:33The long-term adjustments needed.
11:35Droughts are occurring more frequently in Germany, according to experts.
11:37The last major one was in 2018, but 2022 also saw low-water problems.
11:43Meanwhile, the long-term outlook is not favorable for river transport.
11:46Europe is the world's fastest heating continent.
11:49With declining rainfall and higher heat, drying rivers are expected to be a recurrent problem.
11:54The businesses and trade associations we've been speaking to mention a slate of measures
11:58pitched by the German government in 2018, the last big dry spell, but that they've been slow to enact.
12:03They include better forecasts and warning systems, more support for more low-water ships, including funding.
12:09The same strategy also accelerated a planned deepening of channels in the middle and lower sections of the Rhine, in
12:15Germany.
12:16The idea was to have three different projects finished by 2030, but that's now unlikely.
12:21Legal challenges have already slowed down the initiative.
12:24Those projects are still in the planning phase, despite fresh calls to speed them up.
12:28The project is still likely to face a determined challenge from environmentalists.
12:32Some researchers also say that they're skeptical about its utility, but businesses say something has to be done.
12:37Robert Lammers is also in favor of new work on the channels, in select areas.
12:42And there's another measure he's considering for his own business, an expansion of his grain storage.
12:47One that would allow him to hold, say, two weeks of inventory,
12:50giving him flexibility when the river is no longer navigable.
12:53That would be a big investment.
12:55But Lammers believes the problem is only going to become more frequent.
12:58And the larger scale solutions from digging channels deeper or restructuring fleets of ships
13:02to sail in low water will still take time.
13:07Low water levels on the Rhine are nothing new.
13:11What is new is that they're becoming more frequent, longer in duration and more extreme.
13:20It's a challenge that all the industrial enterprises located on the river will have to deal with.
13:28So what do you do when nature becomes more unpredictable?
13:32For Germany, for Europe and for businesses along the Rhine,
13:35or other major arteries experiencing similar pressures,
13:38it means investing heavily to adapt to new realities.
13:45Farmers too are suffering from heat, drought and extreme weather.
13:50The consequences, destroyed fields, unusable grain, crop failure.
13:58And there's uncertainty on international grain markets.
14:02The war in Ukraine and tensions in the Middle East are making prices volatile.
14:06High diesel and fertilizer costs are putting more pressure on farmers.
14:12A hail storm destroyed about two-thirds of the harvest at the von Treuenfels family farm in northern Germany.
14:19This video was filmed just a few minutes after the storm.
14:23This field of wheat was hit especially hard.
14:27No one had ever seen hail stones this big before.
14:33In the 48 years I've run this farm, I've seen pretty much everything there is.
14:38But I've never experienced hail this extreme before.
14:42It could be a one-time phenomenon, but it could also happen again.
14:46A few days later, the farmer and his employee assess the situation.
14:50The wheat in this field was ripe and ready to be harvested.
14:54All 65 hectares were destroyed.
14:56The wheat kernels were knocked off the stalks and are now lying on the ground.
15:01The hail also entirely destroyed the neighboring rapeseed field.
15:06The harvest is a total loss.
15:08The farm was insured, so hail insurance will cover part of the damage.
15:13The insurer's representative has more and more work to do.
15:18We are noticing very clearly our heavy rain events,
15:22which have increased significantly over the past few years,
15:26meaning we are getting a lot of rain in a very short period of time.
15:30And hailstorms are becoming more frequent and more severe.
15:34Not all crops were damaged by the hailstorm.
15:37And on some fields, the harvest is already underway.
15:40And the weather isn't the only challenge.
15:43Wheat prices are determined by the global market far from here,
15:47on the grain exchanges in Paris and Chicago.
15:50The prices are volatile.
15:52And markets are unsettled.
15:57There's a lot of movement in the markets right now.
16:00Barley and feed wheat are also rising sharply at the moment.
16:04The war in Ukraine is also contributing.
16:07For years, Russia has been destroying grain storage and loading facilities in Ukraine.
16:11And there are reports that Russian farmers don't have the fuel needed for harvesting,
16:17which the Kremlin denies.
16:18But that's not news that goes unnoticed on the global markets.
16:24We keep an eye on the situation and the prospect that the Russians may run out of diesel.
16:29We hope we'll never have to experience something like that.
16:33But if Russians can't harvest their crops, there will be massive repercussions.
16:37And we'll feel the effects too.
16:41Rising grain prices would ease the burden.
16:43But they would also eat into farmers' profits.
16:46Diesel costs more than two euros a litre.
16:49And while it is subsidized for agriculture in Germany,
16:52the farm's four tractors need huge amounts.
16:56We have the heavy farm tractors.
16:59They can easily go through 65 litres an hour.
17:02And then you can watch as the tank empties by the end of the day.
17:07Synthetic fertilizers are very expensive.
17:09Raw materials, including ammonia and urea,
17:12come from the Gulf region and are shipped through the Strait of Hormuz.
17:15The U.S.-Iran war is felt thousands of miles away.
17:19Normally, German farmers purchase their fertilizer for the fall early.
17:22But not this year.
17:23And has von Toienfels ordered fertilizer?
17:27Not yet.
17:28No one is bringing anything to the market right now,
17:31because nothing is getting through the Strait of Hormuz.
17:35Without enough fertilizer, harvests will be smaller.
17:38Experts are warning that Russia's ongoing war in Ukraine and the U.S.-Iran war could turn into a
17:43global agricultural and food crisis.
17:46And Germany's annual 7 million metric tons of wheat exports only play a small role.
17:51Russia and Ukraine are the major players.
17:55Breifeisen is one of Germany's largest agricultural traders.
17:58It's board closely monitors the markets and takes potential price speculation into account.
18:05Markets, to some extent, bet on the future.
18:07At the moment, it seems, the markets are anticipating that Russian and Ukraine grain
18:13won't reach global markets in forecast quantities, meaning we'll face a shortage according to market estimates.
18:21But no one knows if that will actually happen.
18:25This means prices could fall if the grain does end up on global markets.
18:32The von Toienfels store the remaining harvest.
18:35They hope wheat prices will rise.
18:38Prices usually go up after harvest season, and that's when they plan to sell.
18:50Global demand for data is growing.
18:53The Internet needs satellites.
18:55Thousands of them fly at low altitudes to form a seamless network.
18:59So far, the U.S. and China have been making big money in space.
19:04SpaceX and Starlink are making billions, and China hopes to lead.
19:08Now a German startup is getting in on the action.
19:14It's a new chapter for European space exploration.
19:18For the first time ever, a privately funded rocket has reached orbit.
19:25German startup ESA Aerospace now plans to launch satellites into space regularly from Norway.
19:31Until now, rockets have been funded by the European Space Agency, but they've just ushered in the new era.
19:41We are moving away from ESA-developed launchers to privately developed launchers.
19:47We really want to foster competition and a more resilient access to space in Europe.
19:55The German rocket is 28 meters long and can carry a payload of up to 1,000 kilograms.
20:01It is suitable for small and medium-sized satellites.
20:05While larger rockets are more efficient, there is still a market for these so-called micro-launchers.
20:11Small launchers have advantages. You can compare it to taking a taxi or a bus.
20:18It's always cheaper to take the bus than the taxi. But sometimes you need the taxi.
20:23You need to go now and you need to go to a specific place where there's no bus going.
20:30Security, communication, observation. Space is becoming increasingly important.
20:35But Europe is experiencing bottlenecks in its access to space. Of the 315 successful rocket
20:43launches last year, 61 percent originated in the US. Almost a third came from China. All other
20:50countries combined accounted for only 11 percent. German space company OHB regularly has to resort
20:57to American launchers. So far, this has worked well, but unease is growing.
21:03Of course we are dependent. Let's assume the geopolitical situation changes and America had
21:09a greater short-term need for missiles. Then we would get dropped. That's why it's important to have
21:15our own capacities, especially for strategically relevant satellites, for security and for the German
21:21armed forces. The need for launch capacities will continue to grow. New satellite
21:32constellations are planned for military and for commercial use. OHB hopes that private rocket
21:38companies will revitalize the market. More competition, more launch opportunities,
21:44that's good for the market. It's good for prices. Besides ISA Aerospace, there are other European
21:52startups developing rockets. However, none of them are yet ready to compete with the Americans.
22:06In contrast, the Chinese fast fashion retailer, Xi'an, wields enormous global market power.
22:13Low-cost fashion made ultra-fast, aggressive social media marketing and direct-to-consumer
22:18sales drive record turnover in the billions. But tariffs, criticism of environmental standards
22:24and working conditions and its competitor, Timu, have now dealt Xi'an a blow.
22:31From runway success to reality check, Xi'an's float has finally hit Hong Kong's financial market.
22:38The listing has been years in the making after the fast fashion giant abandoned plans to go public in
22:44New York and London. The company was once valued at as much as US$100 billion. It's now down nearly
22:5275%.
22:54The timing of its debut could hardly have come at a worse moment.
22:58Energy prices rising globally. Shipping costs also remained elevated. So all of this together with the
23:06tariff, it basically means that again profit margin may not be as high as before. But Xi'an's window to
23:13go public was narrowing. Net income plunged 39% last year. And in the first quarter of this year,
23:19it recorded a US$99 million loss. Now investors are asking a bigger question. Where exactly does Xi'an's
23:28growth come from next? The model that made Xi'an a success is now under fierce scrutiny. From how it
23:34operates to the environmental impact of producing so much, so cheaply. Fast fashion critics point to
23:41the mounting cost of its brick neck expansion. Even though Xi'an claims to be producing items that are
23:48on demand, it's actually encouraging the production and consumption of trend-led items that people
23:54are just really going to forget in a few weeks' time and therefore end up in landfill.
24:00Xi'an built its business around producing huge volumes of cheap clothes through a network of suppliers
24:05in China. But that model is being squeezed by tougher trade rules in Western markets.
24:12It took a big hit last year when the US ended tariff-free entry for packages under US$800 from
24:18China and
24:19Hong Kong. In July, the European Union similarly scrapped its exemption for low-value imports to curb
24:26a flood of cheap unregulated goods from Chinese e-commerce platforms. French customs authorities say
24:33small parcel imports from China have already fallen by up to 40%.
24:40Sustainability advocates say tougher rules are a step in the right direction. But the listing is a
24:46double-edged sword, bringing more scrutiny, along with pressure to expand.
24:50On the one side, the process of a private company becoming listed in itself brings with it a much
24:57more regulatory pressure from investors. But on the flip side, the concern that we as advocates would
25:03have is that the increased access to capital and the increased driver to drive revenue growth will
25:09itself create much more pressure on that business to sell more and more clothes.
25:14For Xi'in, Hong Kong may have been the most viable route to the public markets.
25:19And other companies facing similar obstacles in the West could find themselves turning to the
25:23Chinese financial hub too. It's not only about Xi'in. If there are other companies that may face a
25:29similar situation in the future, they may also be forced to adopt the same model.
25:35Xi'in's journey to Hong Kong is a story of retreat as much as arrival. And it could signal a
25:40wider shift
25:41as Chinese companies face growing pushback in Western markets. Hong Kong is a crucial location for raising capital.
25:51That's all from us. The focus on May today was the challenges facing the German economy.
25:56The car industry, shipping and farming are under pressure. But there's hope.
26:00Germany's first rocket in orbit. Enjoy your journey and see you soon.