Germany has a long history of industry and manufacturing that reaches back to their nationalist roots in the 1800s. They’ve always been an example of economic stability, management, and innovation, not only Europe, but the rest of the world, has followed. When it comes to manufacturing, automotive companies like BMW and Mercedes-Benz or electronics companies like Siemens come to mind. These enterprises, like most, have shown great stamina and endurance in the past years, especially after the 2008 global economic drop.
Changes in the Market
The past six years of German PMI only show gains. But we may see signs of this changing. A steady slowing of production and labor market transition away from manufacturing jobs has recently stunned the market. In January, a quarterly report released information on the current state of European manufacturing. This report contained Germany’s PMI index which registered a 3% loss. While some economists aren’t too worried about the recent report, this shift suggests that there may be some larger, more robust changes coming to German manufacturing.
Changes in Policy
There may be some deeper problems that could come through the guise of political shifts, both nationally and internationally. Namely, the general unemployment rates are a noted concern. Coupled with a drop in interest in German manufacturing jobs by the German labor market, a slowing of exportation, and a new administration leading their American allies, there could be drastic changes over the next few years.
A new administration’s era comes to the global economic scheme and has turned the previous administration’s globalization initiative upside down. The new US administration’s protectionist policy promises to have German businesses, including manufacturers, entirely concerned with the future of their production and profits. Clearly, with 115 billion dollars a year coming from their States-side customers, they should be. Even the CEOs of Germany’s biggest manufacturers have tried to speak with Trump and deliver one big message: we are not your enemies. BMW, for instance, has sought to emphasize the fact that their largest production plant is nestled in the good ole US of A, right in South Carolina. German manufacturing lobbyists have been working hard to paint a prettier picture of economic ties between the U.S. and Germany. But the US administration’s response has is unyielding.
Recently they even refused to make a statement using the language of continuing free market ties with any European country. While this all seems relatively positive for US manufacturing, it is causing a major global shift. These characteristics prove gloomy for the future of a German market.
Brexit is also another challenge. The once economic powerhouse of the European Union seems to be losing its stability, with many countries considering leaving or recusing themselves from the political and economic table. Some have even cited reports that Germany has committed currency rate manipulation with the euro, although they have provided no evidence. Surely these problems will come to define and determine the future of the German industrial market. However, despite being a bit alarming, German Manufacturing has always proven to be resilient and pushed through.
This article brought to you by the edge prep experts at Mutschler Edge Tech/MET. To learn more about our custom edge prep work, contact MET today and speak with our experts about creating an edge-prep solution for you.