Average job losses of 100,000 in German industrial sector within a year
German Industrial Woes: Job Cuts and a Recalibrating Industry
Brace yourself, folks! The German industry has seen a harsh blow in the last year, shedding over 100,000 jobs - a grim snapshot according to EY's analysis, obtained by the German Press Agency. The grim reaper has claimed the most in the automotive sector, with around 45,400 net losses alone.
By the first quarter of the year, the industry counted 5.46 million employees, a 1.8% decrease from the previous year, as per a study based on data from the Federal Statistical Office. Since 2019, the number of workers has dwindled by a significant 3.8%, with 217,000 fewer employees overall.
Jan Brorhilker, Managing Partner at EY, warns of the mounting pressure on industrial companies. "We're dealing with a perfect storm," he says, "Aggressive competitors from China are dragging prices down, key markets are uncertain, Europe's demand is stagnating beneath the surface, and there's a dark cloud descending over the entire US market. To add to the chaos, companies are grappling with soaring costs for energy and labor."
Job Worries Continue
The industry's revenue took a dip at the start of the year following a slump in 2024, with no immediate end in sight for the job cuts, according to Brorhilker. He predicts an additional 70,000 jobs to vanish by year's end. Companies in the machinery and automotive sectors have already initiated cost-saving measures. "The bad news is far from over," he states somberly.
The automotive industry, grappling with a sales slump, stiff Chinese competition, and the shift to electric vehicles, shed around six percent of its jobs in just one year. Employment dipped to about 734,000 people by the end of March. Employment also slid significantly in the metal and textile industries, by over four percent each. On the brighter side, the chemical and pharmaceutical sectors saw negligible job losses (-0.3%).
A Resilient Industrial Base... So Far
Critics have cried foul over the crisis facing the German industry, decrying it as deindustrialization. However, the long-term picture paints a different story - industrial employment has actually grown over the years. According to the Federal Statistical Office, it was 3.5% or 185,000 people higher at the end of 2024 than in 2014.
Brorhilker remains optimistic despite the challenges, "Many have declared the death of the German industrial base - only to be proven wrong. It's adaptable and resilient in the face of adversity." However, he emphasizes that the situation needs improvement. Beyond reduced costs and less bureaucracy, he advocates for strengthening domestic demand to reduce reliance on exports. Here, the federal government's billion-euro investment package might provide a boost.
The Autos Industry Calls for Action
The Association of the Automotive Industry (VDA) points a finger at politics, too. The pressure to act is immense, as the competitiveness of the German location has eroded in recent years, says VDA President Hildegard Müller. "Competitiveness and location appeal must dictate the policy of the new federal government," she insists, "Because the fact is: These factors will determine where and to what extent investments are made, and thus, where the future jobs will be created."
- Companies in the automotive and machinery sectors have launched cost-saving measures due to the job losses and revenue dip, with the former industry shedding around six percent of its workforce in just one year.
- In the midst of mounting pressure from cut-throat competition, uncertain markets, and soaring energy and labor costs, the finance sector might play a crucial role in helping businesses navigate these challenges in the transportation, energy, and industrial sectors.
- Jan Brorhilker, Managing Partner at EY, believes that a strong domestic demand could reduce Germany's dependence on exports, which in turn would generate more employment opportunities in various sectors, including automotive, transportation, and energy.
