"FRANKFURT. Bertram Kawlath, the new president of the VDMA, has one big advantage: The top German mechanical engineer always seems so cheerful and fundamentally optimistic that even bad news sounds bearable when the news come out of his mouth.
In this sense, he is the ideal man at the top for this battered German core sector, because a substantial 8 percent drop in production in 2024 and a further 2 percent drop that the association expects next year could also have a more visible impact on the mood.
But Kawlath said quite relaxedly on Tuesday at the VDMA's annual press conference in Frankfurt: "The industrial medium-sized sector in Germany is not a dying breed." Unlike many skeptics in this country, he cannot see any deindustrialization of the country.
The fact that such a classification is needed says a lot about the state of German mechanical engineering. It is used to cycles and ups and downs in figures, but its order books are full and stable employment in his more than three thousand companies always gave him support even in turbulent times.
Both are now more unstable than before: the drop in incoming orders was also minus 8 percent in the first ten months of 2024, and capacity utilization fell to 79.1 percent in October.
This is a "significant underutilization," said Kawlath. More and more companies are "no longer able to adequately cushion production with their order backlogs in the face of sharply falling orders." The industry has not experienced this for a long time.
He announced that German mechanical engineering will still have around one million employees at the end of next year, as is currently the case.
But new hardships are also to be expected in this regard. At least, more and more companies are assuming this. In a survey of around 500 members of the VDMA, around 61 percent of respondents expect job cuts in the next twelve months, only 20 percent can imagine job creation. Large companies in particular are pessimistic. "The bottom line is that we are expecting a slight reduction in jobs next year," said Kawlath.
That sounds moderate, but it hits the industry at its core. Which is why the president also became forceful and called out to the political decision-makers: "Stop over-regulation, stop tight technological requirements, stop the far too high cost burden in Germany!" It was a familiar cry for help. Because the demands have not changed under the new leadership.
He does not expect any quick relief either way, because as a late-cyclical industry, the consequences of political course corrections in German mechanical engineering would be delayed anyway. Nevertheless, Kawlath and Co. expect a political turnaround from both Berlin and Brussels. It is therefore to be welcomed that the new EU Commission has announced the strengthening of European industry. Small caveat: "But now we also want to see results." The Mercosur agreement - if it clears the last hurdles - is one such result. It could provide a "big boost" because German mechanical engineering companies are already exporting goods worth three billion euros to the region." [1]
1. Ein Hilferuf der Maschinenbauer: Die industrielle Kernbranche schrumpft weiter. Frankfurter Allgemeine Zeitung; Frankfurt. 11 Dec 2024: 18.
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