German industry looks back on an exhausting year – as clearly demonstrated by the annual conference of the German Chemical Industry Association (VCI). The situation for chemical and pharmaceutical companies has continued to worsen. "Our industry is sending out a clear SOS. 2025 was another extremely difficult year, and the outlook remains bleak," warned VCI President Markus Steilemann.
In view of the severe economic crisis, Steilemann is calling for solidarity within the country and a consistent focus on the future: "Germany still has a great deal of potential. Now everything must be done to prevent further losses. The efforts of companies to ensure a bright future for Germany as a business location must pay off. To achieve this, we finally need the right, reliable framework conditions. Above all, fewer rules and lower costs."
A look at the annual figures for the chemical and pharmaceutical industry reveals the challenging situation: production and producer prices in the sector are slightly down (-0.5%) compared to the previous year. Turnover has fallen by one percentage point. In the chemical industry, production is down 2.5%. The decline in turnover at home and abroad is 3%.
Production facilities are only operating at 70% capacity – a historic low and far from profitability. Every second company has too few orders. These have slumped by more than 20% at home and abroad since 2021.
Pharma is showing a 3% increase in production and more than 4% increase in turnover this year. However, the current business situation has also deteriorated significantly here and is now in negative territory.
No improvement in sight for 2026 either
The crisis is reflected in the employment figures: a decline of 0.5% means 2,400 fewer people working in the chemical and pharmaceutical industry this year. Plant closures or production relocations that have already been announced will lead to further job cuts.
The VCI expects production in the chemical and pharmaceutical industry as a whole to stagnate next year, with a decline of 1% in the chemical sector. With falling prices and stagnating output, this means a drop in turnover of around 2% – both domestically and in exports.
The negative mood is also confirmed by a representative VCI survey of member companies: 20% of those surveyed plan to relocate or completely shut down their production. One in ten companies plans to close entire sites. More than 40% expect domestic sales to decline again. Almost half of all companies anticipate a further deterioration in earnings.
VCI develops six-point plan for Germany's future viability
The pessimistic expectations are due to the general conditions in Germany: uncompetitive production costs, high regulatory uncertainty and slow approval procedures. In addition, the industry is struggling with bureaucracy, high energy prices and emissions and raw material costs. The expensive euro, Chinese overcapacity, high US tariff barriers and geo-economic uncertainty are placing additional strain on business.
Markus Steilemann calls on Berlin and Brussels: "We can no longer afford confrontation. We must face up to unpleasant truths and look ahead. The transformation of our economy into a competitive and prosperous future will demand a lot from us. It will be a difficult path, but we must take it. With the combined forces of politics, business and society."
In order for Germany and Europe to become fit for the future again, the VCI believes that these six points must be implemented:
- Secure production sites in strategically important sectors such as chemicals and pharmaceuticals: This will enable Germany to achieve independence, resilience and security of supply in Europe. This requires lower costs, fewer hurdles and faster decisions.
- Strengthen innovation: Anyone who wants to remain competitive, takes climate protection seriously and wants to take advantage of the opportunities offered by digitalisation must invest in research and development. Currently, there is no political framework that does not stifle innovation.
- Prioritise spending: Investing in the future means investing in education, research, infrastructure, digitalisation and future technologies. This is the basis of a modern industrial policy.
- Bold reforms: These are necessary for energy and climate policy, public administration and social security systems. This will restore the competitiveness of the location and enable the transition to climate neutrality.
- A credible overall strategy: Germany needs clear priorities and a long-term plan. Our country needs an industrial policy that creates reliable framework conditions, promotes new technologies and modernises infrastructure.
- Rethinking Europe: The European Community can reach the same level as the US and China. This requires a common industrial policy and defence, a capital markets union and a completed single market.
Further information is available at www.vci.de.
