Dr. Hueck, global growth has remained below its long-term average for seven years. Are we currently witnessing a gradual decline in prosperity due to stagnation, or is this merely a prolonged pause for the global economy?
Dr. Thomas Hueck: I am not a proponent of the theory of secular stagnation. What we are currently witnessing is a technological upheaval, the kind that has occurred repeatedly in the history of the modern economy in the form of what are known as Kondratiev cycles. These long waves, however, describe not only technological leaps but also global developments that encompass profound changes in society, the organization of work, and geopolitics.
Transitions of this kind never go smoothly. Over the next 15 to 20 years, we will face disruptions and rather disappointing growth before the global economy returns to strong economic development. It is understandable that this feels like stagnation to individuals, but looking ahead, we will see a completely different dynamic again starting in the mid-2030s..
In your keynote remarks, you mention rising adaptation costs resulting from a changing world order. Given the transformation of the automotive industry, what role will China play in the future?
Dr. Thomas Hueck: China is a player that is returning to its former greatness and strength and actively leveraging this position. However, this goes hand in hand with a reshaping of global economic relations. The result is a rise in protectionism worldwide, which is, on the one hand, a reaction to the massive pressure to adapt that many industries are facing, and, on the other hand, a direct response to this new, powerful player. We are experiencing a phase in which countries are defending their own positions because there is a growing sense that the old rules no longer apply. These developments are making the transformation more costly, as political disruptions are added to the purely technological challenges.
In addition to geopolitics, another issue is shaping many current discussions: demographic change. The labor force is shrinking in Europe and China. Can technological innovation compensate for this?
Dr. Thomas Hueck: That is the crucial question for the coming decades. In the past, the population in major industrialized nations grew in tandem with technological progress. Today, we are facing a historically unprecedented situation and must offset the decline in the labor force through massive innovation and productivity gains.
That said, I am confident: innovation often arises in response to bottlenecks. The shortage of minds and hands will therefore force us to become more efficient than we can imagine today. The technological innovations that lie ahead – for example, in the field of AI-based systems – could lead to unprecedented improvements in productivity.
Let’s take a look at Germany as a business location. Many entrepreneurs complain about excessive bureaucracy and regulation. Is our regulatory framework turning into a competitive disadvantage?
Dr. Thomas Hueck: A certain regulatory framework is essential, not least to help cushion the social impact of transformation processes. However, one cannot help but feel that in Europe we are focusing too much on risk mitigation rather than on the opportunities presented by transformation. Today’s regulatory framework is tailored to the traditional industrial society of the 20th century, with fixed working hours and repetitive processes. However, this does not fully meet the demands of a digitally driven economy.
In my view, it is necessary to modernize social security systems and regulatory requirements without compromising the core of social cohesion. This also entails greater personal responsibility, as the state cannot fully cover every risk in life, particularly in an aging society.
Another key focus of your keynote address will be the decarbonization of transportation. Is the path to climate neutrality more of a burden or a guarantee of survival for Europe as a business location?
Dr. Thomas Hueck: Decarbonization is the right path if we want to preserve our way of life. However, it is important that this path be shaped by pragmatism, not ideology. Mechanisms such as the Carbon Border Adjustment Mechanism (CBAM) are necessary to mitigate competitive disadvantages. With a smart strategy, decarbonization presents an enormous opportunity for the domestic automotive industry. There are plenty of historical examples: Consider, for instance, the switch to unleaded gasoline or the introduction of catalytic converters for exhaust treatment. Back then, too, there were voices claiming this would spell the end of the industry. In fact, the industry adapted successfully, and the most fuel-efficient and “cleanest” engines came from Germany.
A term that comes up time and again in the automotive industry is “China speed.” What do Chinese engineers do fundamentally differently in vehicle development?
Dr. Thomas Hueck: Chinese automakers take a very agile approach and actually bring products to market faster. In doing so, the products may initially be only 85 or 90 percent ready for the market. This does not mean that these products are unsafe, but they may exhibit minor, non-critical performance shortcomings that are then quickly addressed during ongoing operation. In China, there is a different level of willingness to experiment, even on the part of customers.
This requires a nuanced approach: When it comes to safety-critical components such as brakes, perfection is, of course, a must, but in other areas we can and must move faster. A key to achieving this is the so-called “software-defined vehicle.” If we view the vehicle primarily as a digital model into which components are integrated, this greatly accelerates development time.
How is this shift toward software changing the way manufacturers and suppliers work together?
Dr. Thomas Hueck: Models of collaboration will inevitably continue to evolve; that is the nature of technological upheavals. I very much doubt that the Chinese model will be copied exactly, as our economic system is structured entirely differently and has developed historically in its own way. European industry will certainly find its own path in the collaboration between OEMs and suppliers.
Finally, we would like to ask for your personal assessment: Where will the automotive industry be in 2040?
Dr. Thomas Hueck: Call it pragmatic optimism, but I firmly believe in a strong industrial base in Germany. The automotive industry is of central strategic importance and has an enormous ripple effect on the chemical, mechanical engineering, and other sectors. Furthermore, Europe is and remains the world’s second-strongest economic region with high purchasing power. This makes these markets so attractive to international companies that in 20 years’ time we will still find a vital, albeit transformed, industry here. What’s more, there is a palpable willingness throughout the industry to tackle challenges and reinvent itself – which makes me optimistic about the future.
