Crum­bling in­fra­struc­ture threat­ens Ger­man growth

In­fra­struc­ture woes are slow­ing Ger­man eco­nomic growth Shoddy roads make “Ger­many a less at­trac­tive place to in­vest”

Bloomberg Businessweek (Asia) - - CONTENTS - −Stefan Ni­cola

On a typ­i­cal week­day, hun­dreds of heavy trucks ar­rive at Chempark Lev­erkusen, a sprawl­ing com­plex of re­finer­ies near the Rhine River in western Ger­many. For the past two years, the trucks have been forced to make long de­tours to avoid a crum­bling Au­to­bahn bridge that dates to when the Bea­tles were singing Twist and Shout in Ham­burg. De­signed in the early 1960s to carry 40,000 cars a day, the span to­day sees three times that num­ber—and it’s barely hold­ing up. Af­ter hun­dreds of cracks were dis­cov­ered, au­thor­i­ties closed the bridge to trucks and re­duced the speed limit to 60 kilo­me­ters per hour (37 mph). “It’s stress­ful for our work­ers and dam­ag­ing for all the com­pa­nies in­volved,” says Ernst Gri­gat, who over­sees Chempark and other sites for Cur­renta, a prop­erty man­age­ment com­pany. “And it’s also a growth bar­rier for our econ­omy, which needs good in­fra­struc­ture.”

Ger­man roads, ports, and bridges still look pretty solid com­pared with the U.S.’s, and roads in the east­ern part of Ger­many are in rel­a­tively good shape since be­ing up­dated af­ter the fall of the Ber­lin Wall in 1989. But high­ways and bridges in the west of­ten date to the 1960s and ’70s, and their shoddy state is pre­sent­ing a chal­lenge to the coun­try that cre­ated the Au­to­bahn, a high­way sys­tem that in many places has no speed limit. The con­cerns have been com­pounded by the de­lays and cost over­runs of high-pro­file projects: Stuttgart’s un­der­ground train sta­tion is at least two years be­hind sched­ule, and a new Ber­lin air­port orig­i­nally slated to open in 2011 re­mains years from com­ple­tion. (Some say it will never open.)

Ger­many has dropped to No. 7 in the World Eco­nomic Fo­rum’s in­fra­struc­ture rank­ings, from third in 2013. About 15 per­cent of its 70,000 bridges are in “crit­i­cal” con­di­tion and half are sub­stan­dard, ac­cord­ing to the Ger­man In­sti­tute of Ur­ban Affairs, a pub­licly funded re­searcher. With roads de­te­ri­o­rat­ing, the num­ber of traf­fic jams jumped 20 per­cent last year, to 568,000, ac­cord­ing to auto club ADAC. The govern­ment is un­der­fund­ing the sys­tem by at least €10 bil­lion ($11.2 bil­lion) an­nu­ally, says Mar­cel Fratzscher, pres­i­dent of the DIW In­sti­tute for Eco­nomic Re­search in Ber­lin. “We can see the eco­nomic dam­age” from de­te­ri­o­rat­ing roads and bridges. “Com­pa­nies say bad trans­port in­fra­struc­ture makes Ger­many a less at­trac­tive place to in­vest.”

Trans­port Min­is­ter Alexan­der Do­brindt said in March that he plans to in­vest €264.5 bil­lion in roads, rail­ways, and wa­ter­ways through 2030, with most of the money used just to main­tain cur­rent in­fra­struc­ture. “We know that we have se­ri­ous catch­ing up to do,” he said.

Find­ing the money to pay for those im­prove­ments hasn’t been easy. Ea­ger to bal­ance the bud­get, Chan­cel­lor An­gela Merkel’s govern­ment has kept a lid on in­fra­struc­ture spend­ing. While trucks must pay to use the Au­to­bahn, cars travel its high­ways for free. Tolls to cover main­te­nance—which Aus­tria, France, and Switzer­land charge—are so un­pop­u­lar that the topic is one that many Ger­man politi­cians would rather not touch. And the coun­try faces bil­lions of euros in unan­tic­i­pated spend­ing to cope with the mil­lion refugees who ar­rived last year.

Ger­many may need to re­think how it builds its high­ways, says Wulf-Hol­ger Arndt, a re­searcher at the In­sti­tute of Ur­ban Affairs. Many Ger­man roads weren’t de­signed to han­dle the weight of to­day’s big com­mer­cial ve­hi­cles, and the govern­ment should craft poli­cies that en­cour­age com­pa­nies to move more goods by train, he says. “A 24-ton truck does as much dam­age to a road as 10,000 cars.”

For now, there’s no fix­ing struc­tures like the A1 bridge near Cologne. The span is in such dire shape that au­thor­i­ties have to build a new one, which may not be done for a decade. Con­struc­tion de­lays will likely slow traf­fic for years in the Cologne re­gion, home to 3.5 mil­lion peo­ple, says Ulrich Soénius, deputy head of the lo­cal cham­ber of com­merce. “Traf­fic will only in­crease, so we need more in­vest­ment to keep our econ­omy grow­ing,” he says. “The prob­lem will be with us for a long time.” The bot­tom line While the govern­ment has kept spend­ing in check, Ger­many’s roads and bridges have suf­fered, threat­en­ing eco­nomic growth.

“We know that we have se­ri­ous catch­ing up to do.” ——Alexan­der Do­brindt, trans­port min­is­ter

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