Competitiveness of German Manufacturers of Machinery and Equipment Deteriorates
In the competition for market share, German manufacturers of machinery and equipment find themselves in a worse position, finds an ifo Institute survey. “In sales markets outside the EU, German manufacturers of machinery and equipment are facing fiercer competition, especially from China,” says Nicolas Bunde, an industry expert at the ifo Institute. The survey score for competitiveness fell to -14.3 points, down from -7.3 in April.
This is its lowest level since collection of these figures began in July 1994. The last time the value fell to a similarly low level (-10.6) was during the financial crisis in January 2009. In the EU markets, competitiveness fell to -8.5 points; in the German domestic market, it slipped to -4.1.
A lack of suitable skilled workers and a shortage of important intermediate products often limit the manufacturing of machinery and equipment. This is what some 40% of the companies surveyed said. “The shortage of skilled workers is a particular challenge in the machinery and equipment industry, which in Germany is dominated by medium-sized enterprises,” Bunde says. Many of the employees in production are older, while younger colleagues are rarely keen on shift work. In addition, manufacturers of machinery and equipment are located in rural areas. Here, companies must become even more attractive as employers if they want to attract suitable staff from the big cities. “Improving this situation is a job for policymakers and society,” Bunde says.
What is more, it is much harder now to add the increased cost of energy and raw materials to the sales price. The indicator for price expectations fell to 10.3 points; it reached its peak of 69.6 points in April 2022. “These factors have long been a disadvantage for Germany as a business location,” Bunde says. Some companies have already moved their production abroad. But it is too early to speak of deindustrialization: German manufacturers of machinery and equipment are evolving into highly specialized service providers.
