The alarm signals in the German mechanical and plant engineering sector are becoming impossible to ignore. Decision-makers in the industry are concerned about the economic development in Germany. Only one in ten believes in an economic recovery. The consequence: For the first time since the COVID-19 pandemic, decision-makers expect a decline in their company's turnover. This is the result of the latest Mechanical Engineering Barometer by the auditing and consulting firm PwC Germany.
The vast majority of German mechanical engineers do not expect an improvement in the economic situation this year. More than half of the respondents (56%) are even pessimistic about the development of the German economy in 2024 - a record high compared to previous surveys. Only one in ten remains optimistic about a positive development.
“Our survey is more than just a snapshot”, notes Bernd Jung, Head of the Industrial Manufacturing Practice Group at PwC Germany. “The industry is deeply unsettled. Not even during the times of the COVID-19 pandemic was the mood in mechanical engineering characterized by so much pessimism.” This is evident especially in the forecast for the overall industry's turnover development as well as for their own companies. Decision-makers expect an average turnover development of -5.1% for the entire mechanical and plant engineering sector. Compared to the previous year, this represents a decrease of over 6 percentage points and marks the lowest level since 2020.
Fluctuations in orders and bureaucracy burden companies
The poor economic conditions and prospects are also being felt concretely in the day-to-day operations of companies. The average capacity utilization in mechanical engineering stands at 85.1%. This figure is 3 percentage points below the average of the survey waves of the last six years and represents a record low, excluding the extreme values during the lockdown of the pandemic.
Only every third company is still operating at the upper capacity limit, whereas in the previous quarter it was almost half of the surveyed companies. This significant decrease is not only attributable to the economic weakness period, as indicated by the growth obstacles mentioned by the respondents themselves.
“The concern about a downturn in German mechanical engineering is absolutely justified”, comments Jung. “A combination of unfavorable locational factors, fluctuations in orders, and increasing bureaucracy weighs heavily on the companies and ties up the attention of decision-makers. Yet, especially to tackle the major challenges, they need leeway for creative solutions and entrepreneurial courage.”
