{"id":128022,"date":"2024-12-05T11:13:53","date_gmt":"2024-12-05T10:13:53","guid":{"rendered":"https:\/\/www.esteri.it\/sala_stampa\/archivionotizie\/\/2024\/12\/germania-la-meccanica-tedesca-rallenta\/"},"modified":"2024-12-05T11:45:44","modified_gmt":"2024-12-05T10:45:44","slug":"germania-la-meccanica-tedesca-rallenta","status":"publish","type":"post","link":"https:\/\/www.esteri.it\/en\/sala_stampa\/archivionotizie\/diplomazia-economica\/2024\/12\/germania-la-meccanica-tedesca-rallenta\/","title":{"rendered":"Germany: slow growth in the country\u2019s mechanical engineering industry"},"content":{"rendered":"

The mechanical engineering and plant industry is seeing growing concern over the reduced competitiveness of Germany and its cutting-edge sectors.<\/strong>\u00a0<\/strong><\/p>\n

As also confirmed by the latest Report on the economy by Deutsche Industrie \u2013 und Handelskammer (the German Chamber of Commerce and Industry), German exporters are <\/strong>facing growing challenges connected to geopolitical tensions <\/strong>and stiffer commercial demands, <\/strong>with a consequent loss of competitiveness in exporting.<\/p>\n

During the first half of 2024, machinery exports from Germany<\/strong> fell by 7% <\/strong>in real terms from 2023, for a value of EUR\u00a0100.6 billion. Exporting recorded declines above all towards the countries of the European Union (-8.4% overall), with very marked downturns in Italy (-15.7%)<\/strong>, in the Czech Republic (-12.2%), and in Austria (-11%). Likewise, during the first half of 2024, exports to China weakened <\/strong>(-5.3%); on the other hand, exports held steady towards the United States (+0.7%) which \u2013 with an export volume of \u20ac\u00a013.9 billion and a 13.8% export share \u2013 is by far the most important foreign market for the German mechanical engineering industry.<\/p>\n

At the same time, total production has also fallen far short of expectations: <\/strong>during the first seven months of 2024, it fell, in real terms, by -6.8% from 2023. For this reason, the Machinery and Equipment Manufacturers Association (VDMA) \u2013 the main trade association in the mechanical engineering industry \u2013 has downgraded the total production forecasts for 2024<\/strong>, which fell from -4% to -8% in comparison with <\/strong>2023. German firms themselves recorded a double-digit drop in orders<\/strong>. Based on the data provided by IFO (Leibniz Institute for Economic Research at the University of Munich), production capacity utilization now equals only 79.4%, down from 88.8% in 2023.<\/p>\n

According to VDMA, nearly one half of mechanical engineering firms currently have excess production capacity<\/strong>, also in terms of personnel. Due to the decline in incoming orders, the Atradius Group, one of the world leaders in credit insurance, surety and collections services with operations on every continent, reports that the number of overdue invoices in the mechanical engineering sector rose by 45% between January and May 2024, and predicts insolvencies in the sector increasing by more than 10%<\/strong>.<\/p>\n

Smaller companies with fewer financial resources are the first to be affected. But large corporations are not immune to economic and financial risks either, and the current phase of weakness is also having an impact on the use of the work force. Again according to a VDMA study, nearly one half of companies <\/strong>foresee reducing the number of temp workers over the next six months, and increasingly large numbers of companies are shifting their personnel to <\/strong>shorter hours.<\/p>\n

Given the crisis in the sector, trade associations are asking <\/strong>political decision-makers for more streamlined administrative processes and less bureaucracy, an internationally competitive tax system <\/strong>(the OECD\u2019s average corporate income tax pressure is 23.5%, against Germany\u2019s 29.9%), unlimited <\/strong>tax incentives for research, lower labour costs, expansion of digital infrastructures <\/strong>(especially in rural areas, where medium-sized mechanical engineering and plant companies are normally located, and new free trade agreements with all the leading commercial partners <\/strong>\u2013 and Mercosur above all.<\/p>\n

The slowed German economy, along with the decline in production, profits, and exports in the mechanical engineering sector, has strong repercussions for Italy as well<\/strong>, given the high degree of interconnection between the two productive fabrics, in addition to the deep \u2013 and deeply-rooted \u2013 sub-supply relationships with German manufacturing.<\/p>\n

In fact, as emphasized both by Anima Confindustria Meccanica and Federmeccanica, the Italian mechanical engineering sector is going through a complicated period marked by declining sales and orders, lower production volumes, and a marked reduction, during the first half of 2024, of exports of almost all engineering<\/strong> products to Germany<\/strong>: vehicle exports falling by -17.7%; metal and metal products by -15.9%; and mechanical machines and equipment by -5.5%.<\/p>\n

 <\/p>\n

Revolution on rails<\/strong><\/p>\n

The Federal Government of Germany will allocate EUR 27 billion through 2027<\/strong> for a complete upgrade of 41 railway lines<\/strong> by 2030, for more than 4,000 total kilometres<\/strong>.<\/p>\n

By 2024, the DB Group foresees upgrading 2,000 kilometres of track<\/strong>, 2,000 railway switches, <\/strong>and 150 bridges<\/strong>. Modernization measures will also be initiated, in addition to new construction of about 1,000 stations<\/strong>, including those in Duisburg, Dresden, Hannover, Ulm, and Munich.<\/p>\n

One of the biggest projects that got started this year is the complete restructuring of the railway line between Frankfurt am Main and Mannheim<\/strong> (Riedbahn). Beginning 2025, other works will follow on the Hamburg-Berlin and Emmerich-Oberhausen<\/strong> lines. Another important initiative is the link with Denmark via the Fehmarn undersea tunnel<\/strong>: a project that, after 2029, will be able to improve rail transport from Northern Europe to Italy.<\/p>\n","protected":false},"excerpt":{"rendered":"The mechanical engineering and plant industry is seeing growing concern over the reduced competitiveness of Germany and its cutting-edge sectors.\u00a0 As also confirmed by the latest Report on the economy by Deutsche Industrie \u2013 und Handelskammer (the German Chamber of Commerce and Industry), German exporters are facing growing challenges connected to geopolitical tensions and stiffer […]","protected":false},"author":5,"featured_media":127712,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[417],"tags":[3,9],"class_list":["post-128022","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-diplomazia-economica","tag-diplomazia-economica","tag-europa"],"_links":{"self":[{"href":"https:\/\/www.esteri.it\/en\/wp-json\/wp\/v2\/posts\/128022","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.esteri.it\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.esteri.it\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.esteri.it\/en\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.esteri.it\/en\/wp-json\/wp\/v2\/comments?post=128022"}],"version-history":[{"count":1,"href":"https:\/\/www.esteri.it\/en\/wp-json\/wp\/v2\/posts\/128022\/revisions"}],"predecessor-version":[{"id":128023,"href":"https:\/\/www.esteri.it\/en\/wp-json\/wp\/v2\/posts\/128022\/revisions\/128023"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.esteri.it\/en\/wp-json\/wp\/v2\/media\/127712"}],"wp:attachment":[{"href":"https:\/\/www.esteri.it\/en\/wp-json\/wp\/v2\/media?parent=128022"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.esteri.it\/en\/wp-json\/wp\/v2\/categories?post=128022"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.esteri.it\/en\/wp-json\/wp\/v2\/tags?post=128022"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}