- *
Decreased Demand for Machine Dampers in April - Decline in Mechanical Engineering Orders: April Experiences a Drop-off
The bustling machinery sector of Germany, once a bedrock of the nation's export-driven economy, is feeling the heat from the ongoing global trade spat. The latest statistics reveal a dismal April, as new orders plummeted in the face of intensifying trade tensions.
According to industry association VDMA, although a marginal one-percent increase in orders was registered for the first four months of 2025 compared to the previous year, the overall picture remains bleak. The month of April saw a 6 percent decrease in new orders compared to the same period last year, after adjusting for price hikes. Domestic orders were 4 percent below the previous year's level, while the decline in business with non-Euro nations was particularly pronounced, standing at a whopping 13 percent.
Johannes Gernandt, the chief economist of the Association of German Machinery and Plant Manufacturers (VDMA), summed up the sentiments, stating, "Given the many trade threats and announcements by US President Donald Trump and the resulting great uncertainty, this was an expected downturn." He emphasized the urgency for swift action from the German government to shore up the domestic industry.
The Global Trade Skirmish
The trade skirmish, with its epicenter in the U.S. and EU, has sent ripples through Germany's machinery sector. A 20 percent drop in machinery exports to Asia during the first quarter of 2025 underscores the industry's vulnerability to global trade tensions. US tariffs on German industrial machinery and steel, recently doubled to 50 percent, have added fuel to the fire, considering these sectors account for nearly 10 percent of Germany’s GDP.
Challenges Ahead
The manufacturing sector, including the machinery sector, continues to struggle. Germany's Manufacturing PMI remained in contraction at 48.3 in May 2025, marking the 14th consecutive month below 50, signaling persistent weakness in factory output. Adding to the woes are excessive bureaucracy and lengthy approval procedures that impose high costs on firms, exacerbating the slowdown in machinery and industrial sectors.
VDMA: the Voice Amid the Storm
The VDMA, representing over 3,500 companies in the engineering industry, has likely been actively advocating for supportive trade policies, working to mitigate tariff impacts, and helping member companies navigate global supply chain disruptions.
Frankfurt am Main: More Than a Financial Hub
Though Frankfurt is not traditionally associated with heavy machinery production, it serves as a critical financial and business center for plant engineering firms headquartered elsewhere. The industry in and around Frankfurt, like elsewhere in Germany, is under pressure to adapt to new trade realities, diversify supply chains, and invest in innovation to maintain global competitiveness.
The Road Ahead
While German equities have shown resilience due to investor optimism and diplomatic progress in EU-U.S. trade negotiations, the machinery sector remains vulnerable to further escalation. The VDMA and companies in plant engineering must continue to evolve and adapt to a rapidly changing global trade environment.
- To stimulate growth in the struggling machinery sector and counter the effects of the global trade skirmish, there could be a need for the German government to consider implementing community policies that encourage vocational training and innovation in the engineering industry, thus fostering a more competitive and resilient business environment.
- Amidst the financial implications of the ongoing trade tensions, industry associations like VDMA play a critical role, not only in advocating for supportive trade policies but also in offering vocational training programs to equip companies in the engineering sector with the skills necessary to navigate global supply chain disruptions and maintain their competitive edge in the ever-changing business landscape.
