Constructing a Better Future: SMEs' Frustrations and Expectations in Germany
Small and Medium Enterprises (SMEs) in Germany critique the nation's performance - Lowest ranking in the Community for Germany
Small and Medium-sized Enterprises (SMEs) in Germany's construction sector are voicing their concerns about bureaucratic obstacles and high energy costs, often leaving them feeling less than enthusiastic about Germany's business climate. In a recent Forsa survey conducted for Commerzbank, Germany ranks 9th among economic nations—even behind Italy and Vietnam.
Only 10% of the 1,525 polled companies viewed the business conditions in Germany favorably, with 60% rating them as just satisfactory or adequate. Nearly a third (29%) descriptor them as inadequate or insufficient. A whopping 71% of these businesses believe that the "Made in Germany" seal of quality has significantly diminished in value. They are hoping that the new federal government will provide fresh impetus.
Commercial Tensions fuel uncertainty
The trade dispute with the United States is adding to an already uneasy atmosphere. Multiple firms are reportedly seeking out new markets for their products and considering price hikes to offset higher tariffs.
According to a DZ Bank survey, companies in the metal, automotive, and machinery sectors are particularly apprehensive about the impact of US tariffs and counter-tariffs on their businesses. In total, 15% of the 1,007 SMEs surveyed see themselves directly affected by escalating US tariffs, and 50% fear indirect repercussions through increased supplier costs.
Potential EU counter-tariffs could potentially harm the SME sector even more. If introduced, nearly a third (29%) of companies could face higher purchase prices, while 46% are worried about the effects on their suppliers.
The data for the DZ Bank survey was gathered in March, prior to US President Donald Trump's unveiling of his massive tariff package. However, it was already known that the US would impose 25% tariffs on various imports, including cars and steel. In early April, Trump threatened the EU with additional 20% surcharges on imports into the US. These threats currently remain on hold. The EU has also temporarily halted planned counter-tariffs on US goods and is optimistic about a negotiated solution.
SMEs, Germany, and the Construction Industry
The construction sector in particular faces unique challenges. While addressing these challenges may not be a simple task, SMEs have expressed several expectations for the new federal government.
Digitalization and Bureaucracy
- Digital Transformation: SMEs are eager for support in their digital transformation efforts. This may involve financial investments in digital tools and training for workers, ensuring they remain competitive in an evolving market.
- Streamlined Processes: The new government's focus on bureaucratic reduction could mean simpler, more efficient processes, especially beneficial for SMEs struggling with complex regulatory environments.
Energy Costs
- Cost Reductions: Energy-intensive industries, including construction, are concerned about rising energy costs. SMEs might expect policies that lower energy costs, such as increased investment in renewable energy sources or incentives for energy-efficient practices.
- Sustainable Practices: Replacing the German Supply Chain Act with EU-aligned legislation could lead to more sustainable practices while easing administrative burdens. SMEs might expect clearer guidelines to comply with sustainability standards without unnecessary bureaucracy.
Specific Policy Expectations
- Labor and Employment Laws: The coalition agreement between the CDU and SPD proposes measures aimed at labor and employment laws, potentially impacting SMEs in the construction sector. Policies such as promoting skilled worker immigration could alleviate labor shortages, a common concern in the sector.
- Energy and Digitalization Policies: The new government is likely to focus on digitalization and energy policies designed to support SMEs. This may include incentives for digital innovation and energy efficiency, vital for the construction sector's transition towards sustainable and efficient practices.
Ultimately, SMEs in the construction sector are looking for policies that simplify bureaucratic complexity, support digital transformation, and address energy costs to remain competitive in a rapidly changing market.
- Vocational training programs may be crucial for the successful digital transformation of Small and Medium-sized Enterprises (SMEs) in the construction sector, as they seek training for workers to remain competitive in an evolving market and adapt to new digital tools.
- The new government's commitment to streamline processes and decrease bureaucracy, alongside specific policies such as incentives for energy-efficient practices and digital innovation, could aid SMEs in the construction sector by lowering energy costs and simplifying regulatory environments, potentially helping them maintain a competitive edge.
