Luxembourg industry faces uncertainty and slowing investment

Luxembourg's industry is facing serious challenges due to uncertainty, declining activity and lack of major investment. In an interview with Paperjam, Economy Minister Lex Delles and Fedil CEO René Winkin revealed the key challenges facing the sector and possible solutions.

The main challenge is the lack of confidence. According to René Winkin, companies are operating at only 60 per cent of their capacity, and many companies are waiting for stability in energy policy, the global economy and the situation in the US. Lex Delles notes that the "wait and see" strategy carries a double danger: a lack of investment today could jeopardise competitiveness tomorrow.

The issue of decarbonisation is of particular concern. Some companies will be able to adapt easily, but for others the transition will prove too difficult and expensive. Uncertainty around the cost of hydrogen and the stability of electricity supplies is forcing companies to postpone decisions.

Impact of the US and China. Donald Trump's possible return to power in the US and his intentions to impose 100 per cent tariffs on goods from China, India, Russia and Brazil could seriously affect European markets. This creates a new wave of instability as cheap Chinese goods could flood Europe.

Lex Delles believes that the EU should respond not with protectionism, but by joining forces. The question is not whether Europe should focus on the US or Asia - it is more important to form a unified industrial strategy at the global level.

The future of energy in Luxembourg. The government is focusing on hydrogen energy. A memorandum of co-operation has been signed with Belgium and the Saarland in Germany. Work is underway to simplify the rules for installing wind farms, as previously their construction near motorways was prohibited.

However, hydrogen is still too expensive and requires high production costs. René Winkin emphasises that Europe's energy supply system is becoming increasingly unstable. With the demise of coal and nuclear power, the "baseload generation" that provides a constant flow of electricity is disappearing, creating risks of price spikes and energy shortages.

Will Luxembourg reconsider its position on nuclear energy? Lex Delles is categorical: "No". The main arguments are the high risks of accidents and the unresolved issue of nuclear waste storage. However, René Winkin believes that it is too early to abandon research in this area. Many European countries have underestimated the consequences in their efforts to exit nuclear power, leading to energy shortages and rising prices.

Industry must adapt. According to Winkin, Luxembourg has always benefited from diversification, and industry must find new niches. The country is too expensive for mass production, but it can focus on high-tech products with high added value.

Lex Delles emphasises that Luxembourg's competitiveness is reduced due to excessive regulation. It is important to get rid of unnecessary administrative barriers to make it easier for companies to operate.

China's role. China is becoming not just a competitor, but an innovative leader in a number of sectors, including solar energy. Lex Delles believes that Europe should learn from China, not shut itself off from it.

René Winkin adds that in the last 20 years China has overtaken both Europe and the US in industrial production. This is a natural process associated with economic growth, but if the EU fails to create fair competition conditions, it risks falling behind permanently.