German Mechanical Engineering Sector Sees Orders Fall 12 Percent in 2023

"Looking at the trend curve, there are signs that foreign orders are bottoming out," VDMA chief economist Ralph Wiechers said. However, as domestic orders are "still on a downward trajectory," it is "clearly too early to sound the all-clear," he added.

This year, the industry's business is expected to be "still significantly burdened," Wiechers said. "We simply need a better mood, which will then be reflected in incoming orders and possibly also in sales in the second half of the year at the earliest."

Due to high energy costs and rising labor costs, Germany's industry is increasingly concerned about the country's international competitiveness as a business location.

According to a recent survey by consulting firm Deloitte and the Federation of German Industries, one in three manufacturing companies is already planning or considering the relocation of its production abroad. Germany's two leading industries, automotive and mechanical engineering, are particularly affected.

Bosch, one of Germany's largest mechanical engineering companies, which is also active in automotive supply, has already relocated production in recent years. "We need a turnaround in industrial policy," Bosch CEO Stefan Hartung urged in September.

The current discussion about deindustrialization is "not very helpful," said Hartung. Germany must ensure that it remains competitive in areas where it has been strong, and improve performances in other sectors such as the semiconductor industry. "If we succeed in this, we will continue to be an important exporter," he said.

4155/v