Lobbyist Overload

Germany's Voice of Industry Gets a Sore Throat

BDI DPA
Part of the BDI's problem is that it has to represent various types of industries, like the steel one shown here.
  • Why it matters

    Why it matters

    Should the influence of BDI, the traditional lobby for German industry, continue to wane, the country’s political agenda may become fragmented and splintered by special interests.

  • Facts

    Facts

    • There are an estimated 5,000 lobbyists in Berlin and 520 offices representing associations, non-governmental organizations and trade unions.
    • In a new image campaign, Federation of German Industries, or BDI, aims to reconnect with the public and its member organizations.
    • It faces competition from smaller organizations such as the Association of Family Enterprises.
  • Audio

    Audio

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Everything seemed to be in place for Ulrich Grillo’s welcoming address to political and business leaders at an annual event on Tuesday dubbed the “Day of German Industry.” Chancellor Angela Merkel, head of the center-right Christian Democratic Union, and Economics Minister Sigmar Gabriel, who directs the center-left Social Democratic Party, were giving speeches. French Prime Minister Manuel Valls and Economics Minister Emmanuel Macron had also accepted the invitation to attend the event, hosted by the Federation of German Industries, or BDI, and its president, Mr. Grillo.

But behind the glamorous facade, the event’s influence is crumbling. The once-powerful lobbying group has been losing influence in Berlin’s political community for years. The organization’s leadership has recognized the dangers of a gradual loss of importance and is already preparing countermeasures.

BDI representatives face increasingly daunting competition. The non-profit group Lobbycontrol estimates that there are about 5,000 lobbyists vying for the attention of lawmakers and ministry officials alike in Berlin. The journal politics and communication counts 520 associations, non-governmental organizations and trade unions with headquarters in Berlin.

In other words, the BDI is now only one voice among many, and to make matters worse, it is a voice that is not seen as particularly friendly. Because of its powerful position in past decades, the BDI is still viewed as a somewhat sinister group wary of the general public.

This dinosaur-like image is a clear disadvantage for the BDI as it competes with other associations. The organization’s chief executive, Markus Kerber, and Mr. Grillo have apparently recognized this problem and now intend to launch a transparency campaign starting early next year.

Beginning in 2015, the federation will publish an annual report. Like any standard business’s financial statement, it will include precise details of the group’s revenues and expenditures, along with BDI executives’ salaries and contributions from member organizations.

The new annual report is an attempt to shed the BDI’s image as an opaque organization, and to apply pressure to competing lobbyists. The BDI finally wants to become a role model for other associations.

For decades, the BDI was indispensible as the voice of German industry. But that has changed.

The transparency initiative has already begun on a small scale. The federation is tentatively trying to create an impression of openness and a willingness to engage in dialogue. For instance, when deciding how to position itself in the controversy over conflict minerals, which are elements mined in conditions of armed conflict and human rights abuses, the BDI sought the advice of the Institute for Applied Ecology, which traditionally champions the values of the environmental movement.

“Both sides benefit from constructive dialogue with civil society. It helps us to make society more aware of our concerns. This recognition can also be applied to other subjects and relationships,” says Matthias Wachter, a department head at the BDI charged with addressing the issue.

The plan is working, and it is even having the desired effect on the Green Party, which is traditionally skeptical of the BDI.

“We have noticed that the BDI is undergoing a cautious process of becoming more open,” said Barbara Unmüssig, an executive board member at the Heinrich Böll Foundation, which is affiliated with the Greens. She also notes that this is a new trend, and that it points to a strategic goal the BDI is pursuing. “They have learned that it’s better to listen first,” Ms. Unmüssig said. “It enables the federation to see which way the wind is blowing and position itself more effectively.”

For decades, the BDI was indispensible as the voice of German industry. But that has changed. One of the reasons for its growing loss of importance in ministries and at the Chancellery is that individual sectors, major companies and even mid-sized companies are increasingly sending their own lobbyists to Berlin.

bdi grillo dpa
BDI chief Ulrich Grillo is right to look concerned. His organization continues to lose influence. Source: DPA

 

According to surveys by politics and communication, 150 companies now have their own office in the German capital. If a business believes its interests are in jeopardy, it no longer uses the BDI as a go-between to reach political decision-makers, but instead addresses them directly through its own lobbyists. “They don’t need the BDI anymore,” a senior ministry offical told Handelsblatt.

“Nowadays, companies only use the BDI when it’s still useful for them and they can manage within its environment. As soon as things get serious, they strike out on their own,” said one veteran director of a BDI member association, who declined to be named. “We have noticed that solidarity is beginning to deteriorate.”

This became especially apparent during the most heated phase of the highly controversial green energy reform between January and the end of June. During this period alone, there were 60 meetings between energy sector representatives and the chancellor, Ms. Merkel’s chief of staff  Peter Altmaier, ministers and senior ministry officials. One company, Essen-based energy giant RWE, had 11 meetings, most of them attended by its chief executive, Peter Terium. Hildegard Müller, a former senior official in the Chancellery and now the head of the German Association of Energy and Water Industries, met with senior government officials eight times.

The automobile industry is even more aggressive, with the chief executives of car companies often seen coming and going at the Chancellery. Politicians have long complained about what they call a “corporate cacophony.” Smaller and often hard-hitting competitors have also entered the arena, such as the Association of Family Enterprises, and are giving the BDI a run for its money.

“I would question whether industry is doing itself a favor in this regard,” said Hans Michelbach, a lawmaker with the conservative Christian Social Union, Bavarian sister party to Ms. Merkel’s Christian Democrats. Mr. Michelbach noted that it is important to have a federation “that brings together interests and serves as the lead organization.”

The only problem is that the interests the BDI is supposed to bring together among its member associations are now more disparate than ever. This is especially apparent when it comes to the federal government’s shift away from nuclear power and toward green energy, also known as the Energiewende.

The multi-billion euro project is immensely important to the German economy, and it is dividing it into winners and losers. The biggest industrial consumers of energy, like the steel, chemical, aluminum and cement industries, are groaning under the weight of rising electricity costs. Machine builders and the electrical engineering business, on the other hand, are raking in profits from the construction of wind turbines and new power lines being installed across Germany. For them, the Energiewende couldn’t be progressing quickly enough.

The BDI has trouble taking these opposing interests and distilling them into a shared position that satisfies all of its members. The internal debate over sanctions against Russia showed just how strongly interests diverge within the federation. While Eckhard Cordes, chairman of the BDI’s Eastern Europe committee, was raging against sanctions, the BDI leadership experienced a change of heart. The shooting down of the Malaysian airliner with 298 people on board marked a turning point and prompted the BDI to stand fully behind the government’s policy. Like it or not, Mr. Cordes had to toe the line.

At the moment, the BDI’s main objective is to concede as few goals as possible, but this won’t be enough in the long run. To avoid losing even more ground in the political game, Mr. Grillo and Mr. Kerber will have to go on the offensive and score once again.

Jan Hildebrand is Handelsblatt’s assistant Berlin bureau chief and writes about financial policy. Thomas Sigmund is Berlin bureau chief and directs political coverage. Klaus Stratmann specializes in energy policy coverage. To contact the authors respectively: hildebrand@handelsblatt.com, sigmund@handelsblatt.com and stratmann@handelsblatt.com

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