Countries of the World/COUNTRYS.BIN/dp/0407/04074.txt

Text File | 1991-06-25 | 33KB | 532 lines

$Unique_ID{COW04074}
$Pretitle{373}
$Title{Federal Republic of Germany (West Germany)
Chapter 6B.   Engineering}
$Subtitle{}
$Author{Warrick E. Elrod, Jr.}
$Affiliation{HQ, Department of the Army}
$Subject{industry
industrial
percent
board
oil
west
company
supervisory
associations
billion}
$Date{1982}
$Log{Oil Consumption*0407401.scf
Energy Consumption*0407402.scf
Figure 14.*0407405.scf
}
Country:     Federal Republic of Germany (West Germany)
Book:        Federal Republic of Germany, A Country Study
Author:      Warrick E. Elrod, Jr.
Affiliation: HQ, Department of the Army
Date:        1982

Chapter 6B.   Engineering

     The mechanical engineering industry (machine-building) may well be the
most important pillar overall of the industrial economy, accounting in 1980
for 20 percent of manufacturing gross domestic product (GDP). In 1980 the
industry recorded a turnover of almost DM122 billion, about 11 percent of
total industrial production. The industry was of particular importance in the
export sector, accounting in 1980 for almost 20 percent of total exports.
The industry was a significant contributor to the overall foreign trade
surplus. In 1980 sales abroad increased by 7 percent over the previous year to
a total of DM63.1 billion. Although imports went up by 12 percent, the total
was only DM22.4 billion, which meant that the industry had an overall export
surplus of more than DM40 billion. The contribution was all the more
remarkable because the overall surplus in foreign trade was about DM9 billion.

     The decline in demand in the domestic market, where orders fell 10
percent in the first quarter of 1981, has made the machine builders all the
more attentive to markets abroad, even though they were already exporting more
than 60 percent of their production. The industry confronted challenges
beginning to be posed by manufacturers in Japan and the United States.
Although the industry had an export advantage as a result of declines in the
exchange value of the deutsche mark, the industry continued to emphasize the
need to keep production costs down in order to remain internationally
competitive, especially with Japanese manufacturers who were taking increasing
shares of foreign markets, particularly in the Far East. As of 1981 Japanese
advances had been achieved mainly at the expense of American, British, and
French manufacturers, but West German manufacturers had not been unaffected,
even though market share losses had been minimal.

     An area where West German firms continued to register growth was in
turnkey industrial plants. Successful operations of the late 1970s-early
1980s included the completion of a polyester fibers plant in Indonesia by
Lurgi, a subsidiary of Metallgesellschaft; a steel mill in the Soviet Union
by Schloemann-Siemag; and a power plant in Algeria by Siemens and its
subsidiary. Total orders in 1980 for this category of production were almost
DM14 billion. Orders from Saudi Arabia reached DM1.5 billion. Other countries
placing orders for large-scale plant equipment included China (DM904 million),
the Soviet Union (DM822 million), Libya (DM659 million), South Africa (DM654
million), and Indonesia (DM612 million).

     The mechanical engineering industry, like the steel industry, has
expressed concern over advantages that some foreign competitors hold as a
result of being able to offer state-subsidized financing. West German firms
seeking contracts abroad for major industrial turnkey projects have reported
foreign competitors offering concessional financing. In early 1982 industry,
banks, and the government continued to voice their objections to such
policies in international forums.

Energy

[See Oil Consumption: Courtesy Embassy of Germany, Washington DC.]

[See Energy Consumption: Courtesy Embassy of Germany, Washington DC.]

     In 1981 primary energy production was the equivalent of about 2.4 million
barrels per day (bpd) of oil. Production had been within a narrow range of
this level for the preceding eight years. Of the 2.4 million bpd oil
equivalent, 1.7 million bpd were accounted for by coal, 0.3 million bpd by
natural gas, 0.3 million bpd by hydroelectric and nuclear power, and only 0.1
million bpd by crude oil. Production of crude oil, excluding natural gas
liquids, declined continuously after 1977 when production was 108,000 bpd.
In terms of proved reserves, the country had negligible amounts of oil, 6
trillion cubic feet of natural gas, and almost 35 billion tons of coal;
the coal reserve, however, was estimated at 70 billion tons.

     In the early 1980s the country had a crude oil refining capacity of
3 million bpd, a little above its average daily consumption of 2.7 million
bpd in 1979, which was slightly above the average of the preceding three
years. Consumption fell significantly in 1980, declining to a daily average
of 2.4 million bpd. Reports covering the first six months of 1981 indicated
a further decline over 1980. Given the negligible domestic crude oil
production, imports of crude oil supplied most of the oil for refining. West
Germany is a major importer of oil-importing more oil than any industrial
noncommunist nation other than the United States and Japan. Import dependence
for energy production is a little under 50 percent, well below the dependence
of France (70 percent) and Italy (82 percent).

     The Federal Republic had well-distributed sources of oil; Saudi Arabia
supplied 25 percent and Libya, Nigeria, and Britain each accounted for about
10 percent of total imports. Other significant suppliers were Algeria, the
United Arab Emirates, and until early 1980, Iran. As of the end of 1980 the
country had oil stocks exceeding 310 million barrels.

     Natural gas production has increased rapidly from only 98 billion cubic
feet in 1965 to 670 billion cubic feet in 1980. To supplement domestic
production and meet domestic requirements, natural gas has been imported from
the Netherlands and from the Soviet Union.

     In late November 1981 officials of Ruhrgas AG agreed to buy about US $45
billion of natural gas from the Soviet Union over a twenty-five year period.
The transaction represented the largest East-West business agreement of all
time. Although no single price for the gas was announced, it was expected to
be "tied to the overall trend of heating oil prices" rather than to the price
of higher quality crude oil. The Federal Republic will receive 370 billion
cubic feet annually, in addition to current deliveries, but Soviet deliveries
also to be made to France, the Netherlands, Belgium, Italy, Austria, and
Switzerland will bring the annual total of deliveries to Western Europe to
1.4 trillion cubic feet, an energy equivalent of about 700,000 bpd. The gas
will be delivered through a 5,760-kilometer pipeline to be built between the
Soviet gas fields around Urengoy, in northwestern Siberia, and delivery points
along the borders between Czechoslovakia and Austria and the Federal Republic
(see fig. 13). The agreement provides for deliveries to begin in 1984.

     As of mid-1981 the Soviets were delivering about 425 billion cubic
feet of gas annually to West Germany, accounting for about 17 percent of the
country's gas supplies and about 3 percent of its primary energy needs. The
17 percent figure will rise to 30 percent and the 3 percent figure to 5
percent when the Siberian pipeline begins delivery. The transaction reflected
the underlying philosophy in West Germany, and indeed throughout Western
Europe, that East-West trade was business and was not to be politicized.
Concern over increased dependency on the Soviet Union as a source of supply
was secondary to the economic benefits to be gained. The pipeline, by various
estimates costing between US $10 and US $15 billion, will mean jobs and profits
for West German workers and industry, as well as benefits for the other West
European countries involved. Orders for the components of the pipeline have
been placed with major contractors and subcontractors throughout Europe. The
Mann