Struggling Giants: Thuringia's Auto and Machinery Sectors Take a Hit, Despite Overall Revenue Boost
Indoor activities experience ongoing slump for automobile and manufacturing sectors - Industries focused on automotive and mechanical engineering persist in a downward trend.
Thuringia kicked off 2025 on a positive note, with companies raking in a revenue of approximately 9.5 billion euros in the first three months - a 4.6% increase from the same period last year. But among the cheer, two key sectors remain in turbulence - the automotive and machinery sectors. These industries have been battling obstacles since 2024.
Domestically, sales shot up by 3.9%, reaching 5.9 billion euros, and exports spiked by 5.7%, bringing the total to an impressive 3.6 billion euros. This impressive export figure amounts to more than a third (37.6%) of Thuringia's industrial revenue.
Interestingly, service providers associated with machine and equipment repairs, and the machinery sector itself, recorded decent revenue growth compared to the previous year. However, the machinery sector took a revenue hit of around 20%, and the automotive industry saw a revenue fall of roughly 11%.
Unfortunately, this downward trend had its ripples in the employment sector. An average of 141,000 employees were employed from January to March, marking a decrease of nearly 3,000 compared to the same period last year. This unfortunate trend represents the seventh consecutive job loss in the industry. The survey gathered data from 776 companies with at least 50 employees located in the region.
A Closer Look at Thuringia:
While the rest of the sectors prosper, the machinery and automotive industries bear the brunt of economic pressures stemming from various factors:
Global Economic Landscape:
- Recessionary Influences: A looming recession in the global economy can have detrimental effects on sectors like machinery and automotive. Take Germany, for example, which is grappling with economic hardships, such as a recession, that could indirectly impact regional economies like Thuringia.
- Supply Chain Disruptions: Unpredictable disruptions in global supply chains can wreak havoc on the automotive and machinery sectors, given their dependence on international components and raw materials.
Industry-Specific Concerns:
- Automotive Industry Evolution: The automotive sector is undergoing a major transformation as it transitions to electric vehicles (EVs). This shift brings hefty investments in new technology and manufacturing capabilities, posing hurdles for some regions.
- Machinery Sector Complexity: The machinery industry is characterized by intricate manufacturing processes and high production costs. These factors make it challenging for companies to maintain profitability, especially in areas with limited resources and infrastructure.
Regional Challenges:
- Brain Drain: There are reports suggesting that Germany is experiencing a "brain drain" - skilled workers moving from the region to other areas. This brain drain can aggravate the struggle for sectors with specialized labor requirements, like the machinery and automotive industries.
- Investment and Funding: Attracting and securing investment are key ingredients for growth. If other sectors are capturing more investment, it leaves the machinery and automotive industries comparatively starved of resources.
In a nutshell, even though some sectors may enjoy growth, Thuringia's machinery and automotive industries face challenges from the global economic landscape, industry-specific transformations, and regional factors such as the availability of skilled labor and investment dynamics.
The community and employment policies in Thuringia should address the ongoing struggles of the automotive and machinery sectors, particularly considering the negative impacts of a potential global recession, supply chain disruptions, and the industries' transition to electric vehicles and complex manufacturing processes. Additionally, regional challenges such as brain drain and insufficient investment require specialized attention in order to attract and retain skilled workers and resources within these sectors.
