German Industry Faces Deepening Crisis, Outperforming European Peers in Decline
BERLIN – germany’s industrial sector is experiencing a uniquely severe downturn, despite facing the same global headwinds as other European nations, according to recent analysis. While challenges like competition from China and American tariffs are impacting economies across the continent, the scale of the crisis in Germany is “exceptional,” as noted by Financial Times columnist Martin Sandbu.
A key argument for mitigating job losses in the automotive industry through increased defense spending is proving illusory. Despite a boom in the German arms industry,it accounts for only two percent of all jobs within the metal sector. Production increases have led to a rise of 29 percent in employment – to 8,159 employees – as 2022,a figure still smaller than the 8,420 people employed in the German toy industry.
The German economy is simultaneously battling cheaper,comparable goods from China and tariffs imposed by the United States.Thilo Köppe of consulting firm Vindelici observes that “Chinese companies can do most of what German medium-sized companies produce today just as well.” Philipp Bayat of the Bauer Kompressoren Group cited an example of a German machine tool priced at €130,000 being offered by a Chinese competitor for under €28,000.
American tariffs are also taking a toll. Bernard Krone, owner of the Krone Group, which produces agricultural machinery, reported that a baler previously costing $170,000 became $25,000 more expensive overnight due to the 15 percent tariff. “We have become more cautious when it comes to the USA,” Krone stated.
Though,Sandbu emphasizes that these factors alone don’t fully explain the depth of Germany’s struggles,stating,”There is no crisis in European industry,only a German one.” The situation is particularly acute for the automotive industry, with Frank Sieren noting that core technology for e-mobility and networking in new German electric cars is largely sourced from China. He adds, “They are now doing the same thing with us as we used to do with them in the joint ventures.They don’t give us the latest developments.”
