Metal Firms Grumble about Location Conditions in Germany
The Bavarian metal and electrical sector is looking at cutting back on investments and jobs, according to a survey from the employers' associations Bayme and VBM. Revealed on Tuesday, the findings show that two-thirds of businesses believe the current environment is disadvantageous, citing budget policies, energy, labor costs, and red tape as primary concerns.
Just under a quarter of the companieselltled the present business situation as favorable. Projections for the coming year are dismal, especially for domestic ventures. Companies' investment plans have continued to shrink, with half of them eager to venture overseas rather than stay at home. "If things don't change soon and politicians don't secure planning certainty and stability, we fear a rise in deindustrialization," warned Managing Director Bertram Brossardt.
Despite the labor market crunch, metal and electrical firms forecast lower employment in the upcoming year. They have created around 11,000 jobs this year, but expect a decline of around 5,000 individuals by next year. "If we don't alter course, we'll witness an increase in unemployment," said Brossardt.
More to Ponder:
The Electrical Industry Association in Munich shares the anxieties of its counterpart in Bavarian metal industry, as both sectors are impacted by Germany's economic policy. The federal government's budget policy, energy costs, labor costs, and excessive bureaucracy are pinpointed as major hurdles. The metal industry's economic assessment reveals that six out of ten companies find the location unfavorable. Despite the labor market scarcity, the metal and electrical industries plan to trim employment by approximately 5,000 individuals next year. The Electrical Industry Association in Munich, like the Bavarian metal industry, implores the Federal Government to enhance the framework conditions, ensure long-term planning, and prevent deindustrialization. The Metal Industry Association in Bavaria and the Electrical Industry Association in Munich both advocate for improved economic circumstances, which is essential for job creation and growth in the metal and electrical industries in Bavaria and beyond.
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Principal Obstacles Inforting on Metal and Electrical Industries:
- High Electricity Prices: German companies pay an average of 20.3 euro cents per kilowatt-hour for industrial electricity, making them less competitive on the global stage, compared to the US (8.4 euro cents) and China (8 euro cents) per kilowatt-hour.
- Energy Crisis: The halt of natural gas supplies from Russia has resulted in a surge in energy costs, a further financial strain on energy-intensive industries.
- Chinese Competition: China has become both a significant customer and formidable competitor for German industries, particularly for the automotive sector.
- Lack of Infrastructure Investment: Germany is lagging behind in critical infrastructure development, with issues such as outdated rail systems and insufficient high-speed internet deployment in rural areas.
- Workforce Shortage: A shortage of skilled labor has plagued Germany, exacerbated by an aging population and limited childcare options, which is particularly challenging for larger companies.
- Bureaucratic Hurdles: Excessive paperwork and bureaucratic barriers make doing business in Germany a drag on prosperity and innovation.
Taken together, these challenges account for the economic downturn in Germany's metal and electrical industries, causing production levels to stay low and investment in emerging technology to take a back seat.
