Report Warns Germany's Mechanical Engineering Sector Faces Longest Slump in Decades
Germany's mechanical engineering industry is experiencing one of its longest periods of contraction, due in part to US tariffs, the country's industry association announced on Tuesday.
Economists at VDMA, an association representing 3,600 German and European mechanical and plant engineering companies, forecast that real production in Germany's mechanical engineering sector will decline by 5 percent in 2025, Xinhua news agency reported."This means that production in our industry has been shrinking since the beginning of 2023, and the fourth quarter of 2025 is likely to mark the twelfth consecutive quarter of decline," said VDMA President Bertram Kawlath. "This makes the situation comparable to the severe recession of the early 1990s, when there were 13 consecutive quarters of contraction," Kawlath added.Although VDMA economists expect production to increase by 1 percent in 2026, Kawlath noted that a much stronger rebound would be necessary to signal genuine growth momentum.A recent VDMA survey found that US tariffs have been weighing heavily on Germany's export-reliant industry. Up to 47 percent of nearly 400 surveyed companies reported a decline in orders from the United States since April, when Washington imposed punitive tariffs on steel and aluminum.Two-thirds of companies expect a drop in revenue due to the tariffs, with almost half estimating losses exceeding 10 percent, according to a VDMA press release.
"The US punitive tariffs on steel and aluminum, which are likely to affect around 56 percent of our machinery exports to the US in the near future, are poison for both trading partners. They must be renegotiated quickly," Kawlath said.The industry's prolonged downturn is undermining Germany's attractiveness as an innovation hub, said the association, calling for "genuine, far-reaching reforms" to ensure the country remains a leading location for the industry's future competitiveness.
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