Hannover Messe focuses on today's crises

Berlin, May 31: A choir sang Fleetwood Mac's "Don't stop" at the 2022 Hannover Messe opening ceremony. Perhaps that's because the present is demanding so much more of businesses that they may forget they need to be "thinking about tomorrow" too. Nothing here feels like pre-pandemic times. "Yesterday's gone."

More than 1,000 Chinese organizations are absent at the 2022 trade show due to the COVID-19 pandemic and their country's strict zero-COVID strategy. The fair is only half its pre-pandemic size.

Many European and German companies are among the 2,500 exhibitors that have returned. Businesses have pivoted their messages to focus on energy amid soaring prices and uncertainty due to the ongoing war in Ukraine. Their pitches show how their products can help with energy, using it efficiently and sometimes more sustainably.

The current focus on energy isn't taking away from dealing with other challenges companies were confronted with while making themselves fit for the future, according to Jochen Köckler of Deutsche Messe, which organizes the event.

"Without energy you cannot run a factory," he explained. "It's a precondition ... you have a sustainable and reliable way to use energy 24 hours, seven days a week in the new situation."

Challenges on multiple fronts

While digitalization, automation and AI are being touted as solutions that could help companies deal with energy efficiency and supply disruptions amid the pandemic, technology has its limits.

"You need to have the physical layer," says Georg Kube, who heads software giant SAP's industrial manufacturing unit.

"Digitalization is a mirror of the physical layer. Of course you have to have transportation," he explained. "You need to have production, you need to have sources."

Businesses are facing major challenges on multiple fronts. The "new situation" isn't just about energy, it's about how they run their businesses literally.

"Export-oriented companies have to rethink their strategy," said Thilo Brodtmann, executive director of the German Engineering Federation (VDMA).

Supply chain disruptions amid the pandemic had led many companies to reexamine their reliance on Chinese suppliers, he added. And human rights and democracy were increasingly playing a role in decisions on who they wanted to do business with, because the war in Ukraine had demonstrated that nondemocratic countries like Russia were unreliable trade partners, Brodtmann argued.

A pivot to new markets?

It's a new world where European governments and firms will need to face what German Chancellor Olaf Scholz calls "the multipolar reality of the 21st century."

"We need to bring along with us the emerging and developing countries, whose demographic and economic dynamics are turning them into new centers of power," Scholz told Hannover Messe attendees at the opening ceremony on Sunday.

The solution is to invest in production and research in other regions "to become independent and to have a completely different value chain," says Brodtmann.

So German companies will be looking to countries in other parts of Asia, Latin America and Africa to diversify their value chains. Something other industry representatives would agree with.

"I'm quite sure that [German] companies are ready to invest in any of these countries," said Wolfgang Weber of the Association of the Electrical and Electronics Industry (ZVEI).

But companies will need the support of policymakers to do that, he adds, because that is their responsibility. They need to ensure firms have the ideal conditions to do business elsewhere.

"It's very important that policymakers and industry team up to open new markets across the world," Weber said.

The "new markets" are not that well-represented at the Hannover Messe. That is the case for much of Asia, Latin America and Africa. More work will be needed by policymakers and businesses to bring them along in "the multipolar reality of the 21st century."

Source: DW