Steady Slide: The Struggling Competitiveness of Germany's Metal Industry
Germany's industry may be slipping in competitiveness, according to the O-Poll. - German Industrial Sector Facing Decline in Competitiveness Based on Recent Survey Findings
Got your attention? The global steel industry is grappling with a fierce competition, and Germany stands right in the thick of it. Klaus Wohlrabe, the president of Ifo surveys, points out that the evolving trade dynamics on world markets are causing quite a stir. In the steel sector, a staggering 43.3% of companies have reported a decline in competitive edge. This percentage skyrocketed from 37.8% in January margins.
It's a different story for the automotive industry, with the number dropping from a worrying 42.5% to 33%. But take a breather, fellow Europeans, as fewer German firms are fretting about losing competitiveness within the EU itself. The fear fell from 20.9% in January to 13.4% in April.
The Proverbial Elephant in the Room: Declining Competitiveness
The colossal steel industry, along with siblings like electrical and mechanical engineering, has been battling a sharp decline in competitiveness.
A Quick Peek at the Key Points from the Ifo Institute:
- Unraveling Competitiveness: April 2025 saw 24.4% of German corporations admitting to a competitiveness setback worldwide[1].
- Sector-Specific Conundrums: The steel production and processing sector has been left particularly reeling, with 43.3% of businesses encountering a slump[1].
- Challenges Galore: The ongoing trade disputes and global economic uncertainties have fueled the intensity of these challenges, redistributing power on world markets[1].
- Dim Outlook for Exports: Export expectations sank to an all-time low of -9.8 points in April 2025[1], suggesting a disheartening outlook for future trade.
A Bird's Eye View of the Wider Economic Climate:
- Sluggish Economic Growth: The Ifo Institute is predicting Germany's price-adjusted GDP growth in 2025 to be just 0.2%. The government projects GDP stagnation in 2025[3].
- Inflation and Global Turmoil: Inflation looms large, with a global rate estimation of 4.0% in 2025, and 2.4% in Germany[2]. Additionally, global trade tensions and economic unpredictability are haunting the vision of German industry.
Here's what that means for the Steel Industry:
- Competing Against the Rising Sun: European companies, including those in Germany, are fighting tooth and nail against the might of Chinese exports, particularly in the machinery and automotive sectors[4].
- Thyssenkrupp's Struggles: Despite scoring profits this quarter, Thyssenkrupp's steel division isn't doing so hot. This seemingly reflects the burden that European steel producers have been carrying[5].
- The disappearing competitiveness of the steel industry, along with sectors such as electrical and mechanical engineering, is significantly influenced by the evolving finance policies within the global business landscape.
- In light of the ongoing struggle of the steel industry, employment policies must be reconsidered to cater to the changing demands, focusing on strengthening competitiveness and adaptability in the global market.
