Anticipate increased use of temporary employment among manufacturing companies - Anticipate increased instances of temporary layoffs among machinery constructors
Machinery Manufacturers Anticipate Rise in Temporary Layoffs in Southwest Germany
Amidst a sliver of optimism, manufacturers of machinery in the southwestern region anticipate a surge in temporary layoffs, as per recent estimates from the Association of German Mechanical Engineering (VDMA) in Baden-Württemberg.
In the VDMA's business climate survey, nearly a third of companies in the state foresee a significant increase in demand over the next six months. The survey, which polled approximately 200 manufacturers in March, paints a dire picture of the industry's current state, with low production utilization leading to job cuts at various companies.
German laser specialist Trumpf in Ditzingen near Stuttgart, a member of VDMA, plans to cut around 1,000 jobs in the coming months, with around 430 positions at risk in Germany. In 2024, approximately 331,500 people were employed in the industry across the state.
The increase in temporary layoffs is seen as a strategy to preserve the core workforce and address the impending labor market shortage due to demographic changes. VDMA reported that more than 3,200 industry employees were registered for short-term work in March.
Short-term work allows companies facing challenges to reducing the hours worked by their employees, while the government provides financial support. This arrangement helps businesses avoid layoffs and maintain a skilled workforce, particularly in industries such as machinery and plant engineering.
The southwestern region is home to numerous well-known manufacturing companies, including Trumpf, Voith, Dürr, Festo, Hermle, and Bosch. While the sector is characterized by medium-sized firms, it remains one of the most significant in the region's economy.
Manufacturers in the state have been grappling with challenging market conditions and uncertainty for the fourth consecutive year. However, Mathias Kammüller, chairman of the VDMA in Baden-Württemberg, remains cautiously optimistic, stating that the industry may gradually regain momentum in the second half of the year.
Despite the increase in orders in the first quarter of 2025 by 2% in real terms, the orders received in 2024 fell by 9%, with sales dropping by 5% to €83.6 billion. The majority of companies surveyed by VDMA do not anticipate a significant increase in sales in 2025, with more than 60% expecting stagnating or declining profits. The primary concerns for manufacturers continue to be bureaucracy, high taxes, and international tensions such as trade disputes.
- To mitigate the impact of temporary layoffs and prepare for the impending labor market shortage due to demographic changes, the vocational training programs in the community may need to be enhanced to produce a skilled workforce for the machinery industry.
- As the machinery industry in Southwest Germany navigates challenging market conditions, it is crucial to foster partnerships between manufacturers and local financial institutions that provide support for vocational training and business growth, fostering long-term success.
