Industry in the EU is at a crossroads. Although conversations surrounding de-industrialisation are often exaggerated, the region nonetheless faces significant challenges in its manufacturing sectors that are reshaping its industrial landscape.
A case in point is the story of Intel. In 2022, Intel chose Magdeburg, Germany, over an expansion of its long-established site in Leixlip, Ireland – in part due to concerns over planning and electricity supply. However, the German fabrication facility, or ‘fab’, subsequently faced a string of challenges including land preparation delays, permitting hurdles and uncertainty over grant approvals, and was ultimately scrapped in July 2025.
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Below, we identify four bottlenecks holding industry back – high energy costs, slow permitting, labour shortages and limited land availability – and how governments can address them.
Europe’s energy costs are among the highest in the world
Industrial electricity and gas prices in much of the EU remain well above those in the US, the Gulf and several Asian economies. In the second half of 2024, the average industrial electricity price in the EU reached just under €0.19 per kilowatt-hour, more than double the US average of approximately €0.7. This means European industrial users are paying more than twice as much for electricity as their US counterparts, creating a structural disadvantage for energy-intensive sectors such as steel, chemicals and data centres.
The consequences are already visible. In 2024, ArcelorMittal cancelled its planned hydrogen-based steel project in Bremen, Germany, citing high energy costs and uncertainty over future electricity supply. Other green steel ventures in Europe are facing similar headwinds. Projects by ThyssenKrupp Steel (Duisburg, Germany) and SSAB (Luleå, Sweden) have been postponed due to ongoing market and policy uncertainties, reflecting how energy price volatility continues to undermine investment confidence in decarbonised steel production. Similar concerns are echoed by battery and green hydrogen investors, who note that fluctuating wholesale prices and limited access to long-term, fixed-rate contracts make Europe a challenging base for capital-intensive, continuous-use facilities.
Compounding the price gap is Europe’s grid structure. While renewables now dominate new capacity additions, variability and limited baseload generation in some markets increase risks for continuous industrial operations. Several US states and Gulf countries, by contrast, combine lower fuel costs with guaranteed grid stability and rapid capacity expansion. For investors, this highlights the importance of factoring long-term energy costs and supplying reliability into site and project planning.
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By GlobalDataSlow permitting, slower growth
In a 2024 survey, 83% of companies said that lengthy and complex permitting processes hinder investment. In the renewable sector, the challenge is particularly severe: roughly 81% of the EU’s planned onshore wind projects are stalled in approval procedures – far more than in the US or China. Projects frequently take seven to nine years to clear, inflating capital costs by an estimated 10–35%. Companies cite overlapping EU, national and local regulations, weak coordination between authorities, and fragmented procedures across 27 member states, all contributing to costly uncertainty.
Some governments in the region are taking action. Lithuania’s new Investment Highway (approved in 2025) replaces a system where basic site permits took up to three years with strict deadlines and simplified rules, cutting timelines to just a few months. Similarly, Denmark’s Red Carpet programme, introduced by the Danish Business Authority, provides fast-track support for major international investments, coordinating across ministries to reduce administrative friction.
Worldwide, governments are adopting other fixes. In Canada, the Building Canada Act aims to streamline the approval process for “national interest projects”, granting the Cabinet power to give big infrastructure projects all necessary permits, licences or approvals.
Skilled labour shortages
Europe is facing chronic talent shortages in technical, digital and advanced manufacturing roles. The European Commission reports persistent gaps across occupations – especially in ICT, engineering and other science, technology, engineering and mathematics (STEM) fields. European demographics worsen this: the working age population has already fallen from 272 million in 2009 to 265 million by 2022, and many baby boomers are retiring. Four in five EU companies now say they “struggle to find workers” with the right skills. In Germany’s renewables sector, filling key engineering and tech vacancies now takes more than 100 days on average.
These issues aren’t specific to Europe; however, the continent can look to global competitors for inspiration. For example, Canada’s new immigration plan explicitly includes a “talent strategy” to attract tech workers (even diverting those affected by US H-1B limits). Asia’s vast populations and education systems produce millions of STEM graduates each year, while Gulf states staff big projects with expatriates (Qatar and the United Arab Emirates are roughly 90% foreign-born). As one analyst notes, China, India and Arab nations are “offering huge salaries” to lure workers.
For investors, reliable labour pipelines (or the lack thereof) sway site decisions when capital and energy costs are otherwise comparable.
Site and land availability is an increasing constraint for large-scale projects
Policies such as the EU’s “no net land take by 2050” and tighter environmental regulations are limiting new greenfield development in many European markets. Large contiguous plots near ports, power connections and transport hubs are becoming scarce and costly, while available brownfield sites often require lengthy remediation or regulatory approvals. According to a 2024 Statista survey of real estate developers, 72% highlighted land scarcity as a major challenge in industrial and logistics site development across Europe, reflecting the widespread impact of these constraints.
By comparison, several US states and counties designate large industrial parcels with integrated utilities, often exceeding 50 hectares. Meanwhile, many industrial parks in Asia provide ready-to-build sites with pre-approved permits and integrated services, reducing site assembly time and accelerating project delivery.
These constraints underline the importance of early site identification, careful land-use planning and consideration of brownfield redevelopment.
Addressing barriers and regaining competitiveness
The outlook for European industry now hinges on how effectively the region addresses its structural barriers. The EU offers deep technical expertise, remains among the global leaders in R&D and high value manufacturing, and hosts a large share of green innovation. However, these advantages are increasingly offset by structural bottlenecks that add friction, cost and uncertainty to investment decisions, prompting companies to consider alternatives.
Governments need to act with coordination and urgency to streamline approvals and processes, ensuring predictable long-term energy costs and availability, and expanding training and upskilling pipelines for critical skills. Strategic land use and planning and infrastructure readiness will also be essential to attract large-scale projects in critical sectors such as battery and semiconductor manufacturing, as well as data centre development.
There is no ‘one-size-fits-all’ strategy, and detailed, country-level analysis remains essential. However, one thing is certain – as the global race for industrial investments continues to accelerate, Europe needs to compete on project delivery. By removing investment barriers that slow down or entirely stop investments, Europe can restore confidence among investors and future-proof its industrial base and resilience to secure long-term competitiveness.
Conor Finnegan and Andreas Schindler are senior consultants at Location Decisions, a site selection consultancy based in Berlin, Germany.
