(Dec 9): Germany’s machinery industry is headed for its longest production downturn in over three decades, exposing the broader vulnerabilities weighing on Europe’s biggest economy.
German machinery output is expected to drop for a 12th consecutive quarter in the current period, extending the decline to a full three years, the VDMA engineering lobby said on Tuesday. That would be the longest slump since the early 1990s, when the country grappled with the structural upheaval of reunification.
Machine engineering is Germany’s second-biggest industry by revenue. Long powered by “hidden champions” in niches from airport baggage systems to food-processing machinery, its decline is adding fresh strain to an already ailing industrial economy. Volkswagen AG and Robert Bosch GmbH are among companies cutting output and staff. Last month, the country’s chemicals makers reported a production drop to a level roughly in line with that of 1995.
“In the past, we always had one, two factors that were going well,” VDMA president Bertram Kawlath said during a call. “Now we have this overlapping of crises.”
The slump is raising pressure on the government of Chancellor Friedrich Merz, which has struggled to spark a meaningful recovery. German industry has been cutting more than 10,000 jobs a month this year, according to federal statistics agency Destatis, deepening concerns about the country’s trajectory. Employment in the machinery sector declined 2.4% compared to last year, according to VDMA data.
A key concern for the sector is the impact of President Donald Trump’s tariffs. Machinery shipments to the US, the industry’s largest single export market, fell 9.4% between January and September compared with the year-earlier period, according to VDMA data. Two thirds of companies expect their revenues to decline because of the US levies, the lobby said, citing its survey of around 400 firms.
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The 15% blanket duties on exports to the US from the European Union represent “a major challenge for us in the machinery sector”, Kawlath told reporters during a briefing in Frankfurt. The tariffs “weigh on margins and market shares.”
The group expects German machinery production to recover next year, but only by 1%.
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