Industrial crisis in Germany paralyzes mechanical engineering

This also has an impact on the outlook for the future: In the current year, around 35% of companies expect a nominal decline in turnover, 27% see stagnation as realistic and 38% expect turnover to grow. Many companies are somewhat more optimistic again for 2026. Here, 55% see nominal sales growth as possible.

"The environment in which mechanical and plant engineering companies have to navigate remains extremely challenging. In addition to the customs conflict with the USA and the growing competition from China, the ongoing weakness in key customer industries is increasingly impacting the mechanical and plant engineering sector. For a year now, more than 75% of the companies surveyed have reported a poor or even very poor situation with regard to the automotive industry. It is therefore hardly surprising that automotive-related sectors such as machine tools, robotics + automation or precision tools have given a particularly poor assessment of the situation and the outlook there is subdued," comments VDMA Chief Economist Dr. Johannes Gernandt on the results.

No bright spots in key customer industries

The situation is not only tense in the automotive industry, but also in other important customer sectors. The construction industry in particular stands out negatively here. Around 67% of the mechanical engineering companies surveyed rate the current situation there as "poor" or "very poor", while only 6% feel that the situation is positive. However, the assessment of the chemical industry and the electrical and electronics industry is also mixed. In the chemical industry, 36% see a poor or very poor situation and only 14% draw a positive conclusion; in the electrical and electronics industry, 32% are negative and 17% positive. Around half of the companies in these two sectors draw a "satisfactory" conclusion. Looking ahead to the next 6 months, the majority of mechanical engineering companies in all of these sectors do not expect the situation to improve and most expect it to remain the same.

The situation is more positive in selected other customer sectors. The defense, shipbuilding, pharmaceuticals, aerospace and medical technology sectors are performing well. In defense, around 68% rate the situation as good or very good. In shipbuilding, the figure is just over half of companies (51%), in pharmaceuticals 44%, aerospace 41% and medical technology 39%. The outlook for these sectors is also consistently better.

Staff reductions continue

Staff cuts are likely to continue in the coming months in view of the difficult and uncertain conditions. Although more than half of the companies (55%) expect the core workforce to remain the same over the next 6 months, more than one in four companies (26%) see themselves forced to reduce their workforce. Less than one in five companies are planning to increase their workforce (19%). In view of the prevailing shortage of skilled workers, companies are likely to fill the positions of departing employees less frequently and initially reduce flexible workers such as temporary workers. "However, this will not be enough to cushion the lower demand for labor," says Dr. Gernandt. Companies' reluctance to hire is also reflected in the number of vacancies. Around 46% of companies expect a decrease in vacancies in the next six months and only 17% expect an increase.

"The cost burden in Germany is too high. The federal government must now act quickly and decisively and initiate reforms without delay. Implementation must not be slowed down by excessive bureaucracy. Companies need reliable framework conditions for more planning security and improved site conditions across the board for greater competitiveness - and as quickly as possible!" demands the VDMA Chief Economist.