Hot metal, cold economics - the unravelling of German steel

Dear Reader,

It’s something of a cliché to call the car industry the backbone of the German economy. But is that really true? One could argue that another sector is even more fundamental.

Without steel, Germany could not build houses, cars, or the machines — from cranes to turbines — that it exports across the world. Around four million people work in steel-intensive industries, roughly two-thirds of the country’s industrial workforce. And now, as Germany rearms in response to Russian expansionism, steel is again a vital ingredient — this time in the tanks and armoured vehicles needed for modern defence.

Companies such as ThyssenKrupp in Duisburg and Salzgitter AG have supplied high-grade steel to German industry for over a century. For decades they managed to produce some of the cleanest steel in the world at competitive prices.

Today, however, the industry — like much of German heavy manufacturing — faces a deep crisis that threatens its existence, illustrating how sector-specific shock…