Recent news indicates that the German machinery manufacturing industry is facing severe challenges and is in a period of sluggish development. A survey conducted by the German Metalworkers’ Union (IG Metall) across all companies in the industry shows that order volumes will be at a low point in the next 12 months, investment is declining, progress towards climate neutrality is slow, and more and more companies are choosing to relocate production overseas. The German Engineering Federation (VDMA) predicts that German machinery production will decline significantly in 2024. Looking at order volumes at the beginning of the year, the downward trend continues. In January, actual orders for German machinery decreased by 10% year-on-year, with domestic orders down 11% and foreign orders down 9%. It is worth noting that orders from Eurozone countries fell by 19% year-on-year, significantly higher than the 5% decline in non-Eurozone countries. Faced with this situation, Johannes Schmidt, CEO of the German industrial investment company Indus, predicts: “We will see structural changes in the coming years.” Weak order volumes are likely to drag down the turnover of German machine tool manufacturers in the coming months, and investment is increasingly shifting overseas. However, Jürgen Kerner, Chairman of IG Metall, warns that overseas investment and restructuring will not help machine tool manufacturers, but will instead weaken the industry’s own strength. Surveys show a huge deficit in the industry, indicating that too many companies have not yet recognized the signs of the times. Jürgen Kerner believes that companies should use profits gained during periods of economic prosperity to address the backlog of investments. But according to IG Metall’s survey, there are no signs of an investment offensive in the German machine tool manufacturing industry; current and expected R&D investment remains at the level of the 2020 COVID-19 crisis. Survey data shows that only 13% of surveyed companies plan to increase investment, while 32% expect to reduce investment, and 55% believe the situation will remain at the current level. Furthermore, IG Metall called on the German federal states and government to provide financial support for the transition to green mechanical engineering, as well as site and employment guarantees, while emphasizing the need to strengthen European value chains. The future development of the German mechanical engineering industry is fraught with uncertainty. How to cope with the current predicament and achieve sustainable development is a crucial issue facing both companies and the government. Against the backdrop of increasingly fierce global economic competition, the German mechanical engineering industry needs to adjust its strategies as soon as possible, increase innovation and investment, and enhance its competitiveness to adapt to the ever-changing market environment.
Germany’s machinery manufacturing industry is sluggish and faces the risk of production relocation.
Surveys indicate that the German mechanical engineering industry is currently in a slump, characterized by declining orders and reduced investment; an increasing number of companies are relocating production abroad, and the sector faces numerous challenges.
