Struggling Gears: Auto and Machinery Sectors Falter Despite Thuringia's Turnover Surge
Industries of automotive manufacturing and mechanical infrastructure development persistently struggle or show signs of decline. - Industries specializing in automotive and mechanical engineering are experiencing a steady downturn.
Thuringia kicked off 2025 with a revenue surge, raking in nearly 9.5 billion euros in the first quarter – a 4.6% increase from the previous year. Yet, the joyous celebration was muted, as two crucial industries – the automotive sector and machinery manufacturing – continued to grapple with setbacks. These industries, which were already battling challenges in 2024, couldn't shake off their struggles.
Local sales inched up by 3.9% to 5.9 billion euros, while export growth was slightly steeper at 5.7%. Exports totaled 3.6 billion euros, making up over a third (37.6%) of Thuringia's industrial revenue.
The machinery manufacturing sector took a significant hit, with a near 20% dip in turnover, and the automotive industry followed closely behind with an 11% decrease. Unsurprisingly, this slump translated into job loss, as the industry saw an average drop of nearly 3,000 employees between January and March. This marked the seventh straight month of dwindling employment, with 776 establishments employing at least 50 workers being monitored.
- Thuringia's Turnaround
- Struggling Gears
- Machinery Manufacturing
- Economic Slump
- Erfurt's Double Whammy
- Automotive Industry
Behind this dismal picture lies a host of factors:
- Supply chain bottlenecks and efficiency woes: The machinery and automotive sectors, including electric vehicle (EV) battery assembly and advanced manufacturing, are grappling with intricate technical and logistical obstacles such as transitioning to new battery assembly methods, heat management, and quality control issues. These hurdles can deter efficient scaling and cost reduction, even with increased revenue.[2]
- Global market conditions and floundering exports: While turnover has gone up, exports from related German electro and digital industries have stalled after early 2025's minor declines, reflecting broader economic headwinds affecting German industrial sectors essential for supply chains.[3]
- Delayed sector recovery and investment uncertainties: The semiconductor equipment industry – a critical building block for automotive electronics – has delayed its financial objectives and robust growth expectations to 2026 due to ongoing market uncertainties and resource constraints, indirectly impacting automotive suppliers in regions like Thuringia.[4]
- Intense competition and the urgency of innovation hubs elsewhere: Significant investments in automotive and microelectronics manufacturing are being made in areas like Saxony (e.g., Jenoptik’s new semiconductor micro-optics fabrication in Dresden). These investments highlight regional disparities where other German states are presently better positioned to capitalize on innovation and advanced manufacturing growth, potentially leaving Thuringia at a competitive disadvantage.[5]
- Global reconfiguration of battery manufacturing and EV supply chains: The automotive industry is undergoing a sea change, with a push towards EV production and battery supply chains. For instance, Chinese battery maker CATL is aggressively investing in new gigafactories abroad, such as in Hungary, potentially diverting investment and supply chain momentum away from traditional German automotive hubs like Thuringia.[1]
In essence, despite revenue growth signaling some positive movement, Thuringia’s machinery manufacturing and automotive sectors are still grappling with supply chain complexities, export market weaknesses, delayed sector recovery, competitive regional dynamics, and transformative shifts in the automotive value chain propelled by EV technologies and battery manufacture investments. These factors coalesce to explain why ongoing struggles persist amidst revenue increases in early 2025.
The ongoing struggles in Thuringia's automotive and machinery sectors, despite a revenue surge, can be attributed to complex supply chain challenges, efficiency issues, global market conditions, delayed sector recovery, and intense competition, particularly in regions like Saxony. Furthermore, the global reconfiguration of battery manufacturing and EV supply chains, such as investments by Chinese battery maker CATL, may divert investment and supply chain momentum away from traditional German hubs like Thuringia, compounding the problem. In response, it may be necessary for Thuringia to review and implement supportive community and employment policies to attract investment, foster innovation, and improve competitiveness.
