"The economic momentum in our country is currently still extremely low," said BDI President Siegfried Russwurm on Monday at the start of the Hannover Messe. The Federation of German Industries expects exports to grow by just 2% in the current year. Although this is twice as much as in the BDI forecast at the start of the year, it is lower growth than in 2021 and 2022. Last year, there was an increase of just under 3%.

At 2.5%, global trade will grow faster than German exports this year. "Once again, we are losing global market share because global trade is growing faster than our exports - Germany's competitiveness is dwindling," emphasized Russwurm. "Innovation was and is German industry's strongest trump card in global competition," Russwurm emphasized. The innovation engine is working. "Politicians must do their part to keep this engine running here in Germany: for decarbonization, which we urgently need to achieve climate protection targets, for the digital transformation, where we need to catch up, and fundamentally for the growth of our economy in order to continue to be a serious player in global competition."

The investment behavior of companies serves as an early indicator of the state of German industry and the economic future of the country. It depends on the long-term prospects and framework conditions for companies during the transformation. Russwurm: "The industry, which wants to invest massively, needs a reduction in bureaucracy, noticeable tax cuts and a reliable and affordable energy supply in order to invest more."

VDMA calls for expansion of digital infrastructure

VDMA President Karl Haeusgen at the Hannover Messe 2023.

© WEKA Trade Media

VDMA President Karl Haeusgen also called for more bureaucracy reduction. In order to keep Germany and Europe attractive as an industrial location, the industry association believes that certain adjustments need to be made. In addition to the reduction of bureaucracy, simpler administrative processes and a sustainable acceleration of approval procedures, the VDMA is also calling for an internationally competitive, innovation and investment-friendly tax system. This is because the average income tax burden for corporations is 23.5% on average in the OECD and 29.9% in Germany.

A further point on the list of levers: digital infrastructure. Many medium-sized mechanical engineering companies are located in rural areas and the expansion of the digital infrastructure in these areas in particular is sometimes inadequate. However, good location conditions also include free trade. The VDMA is calling for export markets in third countries to be kept open and for existing trade barriers in markets to be dismantled.

The mechanical and plant engineering industry sees the shortage of skilled workers as the greatest risk in the coming years. "We are still the largest industrial employer in the country. Many companies would have liked to hire even more staff, but are being held back by bottlenecks on the labor market," says VDMA President Haeusgen. 97% of companies are currently experiencing bottlenecks, 85% for engineers. On average, 5% of vacancies for skilled workers cannot currently be filled. Only 5% of companies expect the situation to ease.

ZVEI raises forecast

ZVEI President Gunther Kegel at the Hannover Messe 2023.

© WEKA Trade Media

Germany's competitiveness was also the focus of the ZVEI. Here, too, there were calls for less bureaucracy. ZVEI President Gunther Kegel: "Instead of constantly creating new bureaucratic monsters, the federal government should concentrate on its actual tasks and ensure competitive framework conditions." Above all, Kegel criticized the policy of slowing down entrepreneurial freedom by dragging out approval procedures and excessive documentation and reporting obligations. "The over-bureaucratization and the unleashed regulatory zeal in some areas are paralyzing competition and innovation," said the ZVEI President, calling for Germany to finally get serious about the pace of change.

Looking ahead to 2023, the German Electrical and Digital Manufacturers' Association has raised its annual forecast for real production from 0% to 1 to 2%. The increase in the forecast is due to real production growth of 6% in the first two months of the current year. "The continued increase in employment is particularly pleasing," says Kegel. The industry employs almost 920,000 people in Germany alone. The association places the continued positive development in the context of the megatrends of electrification and digitalization.