REGIONAL REPORT
“ The forecast growth will not , however , be able to compensate for the losses from the last two years ,” explained Markus Heering . Previous peak values are still far from being matched . Overseas markets are almost back up to the 2018 levels in nominal terms , but domestic markets have lost ground for structural reasons , concluded the VDW Executive Director .
“ Sluggish new orders and the dwindling levels of orders on hand mean that producers should resign themselves to significant reductions in the current year . A fall of eight per cent is forecast ,” concluded the VDW .
Mechanical engineering in focus
Production in the mechanical and plant engineering sector in Germany fell short of expectations in the first seven months of the current year with a real decline of 6.8 %, according to the VDMA ( Machinery and Equipment Manufacturers Association ) in Germany .
“ The economy was rather disappointing in this period . Although we had not expected a moderate recovery , we had expected sustained stabilisation at a low level . This failed to materialise ; moreover , incoming orders and numerous business climate indicators suffered significant setbacks ,” outlined VDMA Chief Economist , Dr . Ralph Wiechers . The VDMA economists have therefore reduced their production forecast for the current year from -4 to -8 per cent compared to the previous year .
“ According to the ifo Institute , machine capacity utilisation in companies was 79.4 % in July — a figure that is significantly below the average range ( 84.4 % to 89.1 %) and therefore well below the ‘ comfort zone ’. Almost half of mechanical engineering companies ( 44 %) had too much technical production capacity in July . Only five per cent of companies reported capacity bottlenecks . Companies that currently have too much personnel capacity are mostly compensating for this by reducing working time accounts and increasing short-time working . The number of employees is therefore being kept largely stable . Almost half ( 47 %) of companies complained about production bottlenecks due to a lack of orders ,” added the VDMA .
A noticeable improvement in the situation is currently not expected . In the first half of 2024 , machinery exports from Germany fell by a nominal 4.8 % to 100.6 billion euros , said the VDMA .
“ Looking ahead , there is hope that inflation will continue to fall almost worldwide . The first central banks have already started the cycle
Image : Shutterstock . com .
Hartmut Rauen , Deputy Managing Director , VDMA .
of interest rate cuts , and others will follow . There is therefore a legitimate chance that positive monetary policy stimuli will be provided for the economy at the end of the year and over the course of 2025 ,” outlined Dr . Wiechers .
“ Assuming that incoming orders will bottom out towards the end of this year , we will have to prepare for downturns in downstream production compared to the previous year for at least the first half of 2025 . In addition , we are starting the new year with a statistical shortfall , meaning we need growth over the course of the year to match the previous year ’ s result . That is ambitious . We therefore estimate that real production in the mechanical and plant engineering sector in 2025 will be another 2 % below the previous year . In nominal terms , this could amount to stagnation ,” he added .
According to a new VDMA survey , there is no shortage of training places in the mechanical engineering sector , but there is a shortage of applicants .
“ Our latest survey shows that only around half of the companies in the mechanical and plant
VDMA Executive Director , Thilo Brodtmann .
engineering sector were able to fill all of their training places at the start of the new training year . One in four companies stated that they would offer more apprenticeships if there were more qualified applicants . In view of the shortage of skilled workers in our industry , companies and politicians must continue to strengthen our training system , even in difficult economic times . Vocational and study orientation programmes at schools must be expanded and intensified ,” said Hartmut Rauen , Deputy Executive Director of the VDMA .
Commenting on the monthly report published by the Federal Employment Agency for August 2024 , VDMA Executive Director Thilo Brodtmann said : “ Employment in the industry is declining significantly . This also affects the mechanical and plant engineering sector as the largest industrial employer .
“ Our member companies are faced with the challenge of securing employment despite the tense economic situation , if only to compensate for the pension losses . We now expect clear signals from the federal government to tackle the necessary reforms . Only five of the 49 measures in the growth initiative have been approved by the cabinet so far . That is not enough for the economic turnaround ,” he concluded . n
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