"Electrification, automation and digitalization will represent a long-term and stable megatrend for the electrical and digital industry," said the President of the industry association ZVEI, Dr Gunther Kegel, at the press conference in Frankfurt on Monday (29 January). The industry will therefore benefit in the long term. Nevertheless, the electrical and digital industry is facing challenging times. "2023 was a pretty good year for the German electrical and digital industry overall," said Kegel. "For the third time in a row, real, price-adjusted production increased - by 1.4% based on figures up to and including November." The industry has thus proven to be robust in a difficult environment. "However, it is also true that companies were still able to work off historically high order backlogs when new orders were already declining from the second quarter at the latest." The industry's nominal revenue reached a new record of 242 billion euros last year, which corresponds to an increase of 8 percent.

2023: Different growth depending on the division

However, growth will vary from sector to sector. For example, batteries recorded the highest production growth in 2023 with an increase of 7%, followed by electronic components with an increase of 6% and energy technology (+4%). The production of consumer goods, on the other hand, recorded a decline of -13%.

Automation was still growing at +3.2% in real terms - the sector still benefited from a high order backlog in 2023 - but a significant decline in incoming orders can be seen. The ZVEI expects a negative trend for the next six months.

In view of the current difficult economic environment with inflation, comparatively high interest rates and high energy prices, the ZVEI is cautious for 2024. Dr. Kegel: "The industry is facing a dip in growth. Over the course of the year, we expect real production to fall by two percent."

"It is encouraging that employment has increased again," says Kegel. In Germany alone, the industry recently employed 910,000 people (+12,000 compared to 2022). However, the slowing business climate means that around 17,000 employees are currently on short-time work. Other companies have registered for short-time work or are preparing to do so.

Kegel warns of "regulatory tsunami"

The electrical and digital industry is more globally positioned than almost any other sector. Exports (including re-exports) increased again in 2023, by four percent to 256 billion euros. More than half - 133 billion euros - remained in the European Union.

"In view of growing geopolitical tensions, the European single market is becoming increasingly important," explains the ZVEI President. "If the EU wants to continue to play an independent role between the USA and China, it must focus the internal market more consistently on growth and refrain from non-industry regulation such as the EU Supply Chain Act." The next EU Commission must stop the regulatory tsunami and a bureaucracy that has been virtually unleashed in some areas and is weakening the competitiveness of companies. According to Kegel, small and medium-sized companies in particular are facing a regulatory burden that is no longer manageable.

Wolfgang Weber, ZVEI

© ZVEI

In a world increasingly shaped by geopolitical considerations, Europe and Germany will have to adjust to a harsher economic climate. The ZVEI is calling for more courage from the EU and a much more open attitude towards innovation overall. "Our impression is that the EU is currently forging ahead with the use of artificial intelligence, especially in terms of regulation, and is not being precise enough. The current AI regulation threatens to become a massive brake on innovation, accompanied by unnecessary bureaucratic costs and a high degree of legal uncertainty for the industry," says Wolfgang Weber, Chairman of the ZVEI Executive Board. The association considers it positive that the EU is emphasizing the strategic importance of key technologies in order to strengthen its technological sovereignty. It is important to act more in ecosystems. "A high-performance chip industry, for example, needs connection technology and electronics production," says Weber. The global market share of these technologies has fallen sharply since 2000 and is now only three percent for connection technology. "There are now too many dependencies. The production of such components must be classified as eligible under the Net-Zero Industry Act."

"We now need a European Union that focuses on industrial value creation," demands Kegel. The ZVEI President clearly rejects a "dexit": "Anyone who thinks that Germany could do better on its own reveals a dangerous lack of economic policy knowledge."

Clear position against the right

In terms of social policy, the ZVEI President had clear words: "We firmly reject racism, anti-Semitism, xenophobia and every facet of right-wing ideology! Right-wing extremist parties damage the business location and therefore prosperity. This also applies to the AFD."

It is good that the center of society is taking a stand against right-wing extremism. The political parties must follow suit and quickly present convincing political solutions to the challenges that have led to the rise of right-wing extremism. The ZVEI appeals to citizens to oppose right-wing extremism by voting in elections. The ZVEI will launch its own campaign to motivate people to vote in the European elections.