Mechanical engineering companies in Germany are experiencing an even more difficult year than expected. In addition to the burdens that have already been felt for some time - trade conflicts, global economic weakness, structural change in the automotive industry - the coronavirus is now adding to this with its unforeseeable consequences for the economy as a whole. As announced by the VDMA, an unexpectedly weak final quarter (minus seven percent) caused production in the mechanical engineering sector to fall by 2.8 percentage points in real terms in 2019 as a whole. Incoming orders remained nine percent below the previous year's figure last year.

"The spread of the coronavirus has set us back noticeably. Even assuming that the situation eases in the second half of the year and business picks up again, we will not be able to make up for the additional declines this year. As far as can be predicted today, we expect a real decline in production of five percent for 2020," says VDMA President Carl Martin Welcker.

In the current difficult situation, the government's swift action is essential. The VDMA believes it is right and important that short-time work can now be introduced much more quickly in companies and that social contributions for lost working hours can be paid in full by the Federal Employment Agency without any further conditions. "But the new short-time working regulations must of course apply to all companies. The mechanical engineering sector has been forgotten so far. Many companies have been struggling with underutilization for months and urgently need a practicable solution for an extension of short-time work, which is necessary not least because of the pandemic," demands VDMA President Welcker.

Accordingly, the "Work of Tomorrow Act" should not link short-time work to comprehensive further training. "We have completely different concerns at the moment. Forcing people to undergo formalistic further training completely ignores reality," emphasizes Welcker. The medium-sized mechanical engineering companies themselves are interested in continuous further training for their approximately 1.3 million employees.

Further measures
Furthermore, the VDMA shares the fears of leading economists that the aid for companies that has now been initiated will not be sufficient. The following measures, which could be implemented within the constitutional debt limits, are urgently needed: an interest-free deferral of payments due for income tax, corporation tax and VAT, an extension of the loss carry-back and significant depreciation relief.

In addition, it is now high time to implement the repeatedly promised relief for SMEs. "The restructuring of our economy is not being prevented in the short and medium term by financing problems. Rather, we are suffering from a policy that keeps proclaiming new goals without having a clear implementation strategy," warns Welcker.

In addition: "The Posting of Workers Directive, trade barriers and perhaps even a supply chain law - legislators are constantly imposing new bureaucratic burdens on SMEs, which reduce our international competitiveness and increasingly overburden smaller companies in particular," he says. In contrast, incentives for innovation are needed, such as an expansion of tax incentives for research. "The pandemic will pass, but the fundamental tasks remain," summarizes the VDMA President. as