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The German economy is weakening and has even shrunk slightly recently. This is also felt by mechanical engineers such as the gearbox manufacturer Neugart from Baden-Württemberg, which had to send its employees on short-time work. But there is a ray of hope.
In the production hall of Plant 2 there is humming and humming from all directions. Robotic arms place metal parts on a plate, a second robot drills a hole, and the third cools the drill hole with water. Everything is observed by employees who then check and measure the robots’ work. At first glance, everything seems to be going as usual at the gear manufacturer Neugart in Baden-Württemberg. But only on the first four days of the week.
On Fridays everything comes to a standstill
“The hall is closed on Fridays. Then everything is dark and not a soul is here,” says managing director Matthias Herr. 450 production employees have been on short-time work on Fridays since July. Since the beginning of November, the 230 employees from the commercial sector have also had to stay at home on Fridays. The company lacks orders.
“After the Corona period, things would start to improve rapidly again,” says Herr. The company has built up a decent order backlog. But then the slump came: “Since the end of the third quarter, fourth quarter of 2022, we have again been in the situation where we are seeing declining order backlogs.” The Neugart company is not alone in this. According to figures from the employment agency, 122,000 employees were on short-time work across Germany in August 2023 – in the same month of the previous year, 2022, there were still 76,000.
Made in Germany at risk?
Not an easy situation for the employees of the Neugart company. They do receive 60 to 67 percent of the lost wages from the employment office. Employees like Nicole Vogel are primarily concerned with uncertainty because there is no end in sight to short-time work: “It’s very difficult at the moment, probably for a lot of people. Also because inflation is so high, everything has become more expensive. Man I have to make a lot of compromises.”
It’s also a challenge for managing director Herr, because he has to keep his employees happy despite the uncertain outlook. Because in times of a shortage of skilled workers, he doesn’t want to lose anyone. Although many steps have already been automated, production cannot function without the workforce.
The company cannot maintain short-time work forever. Matthias Herr would like to see relief from politics in another way. “A not insignificant factor is the strong regulation from the federal government,” he says. He even sees the Made in Germany brand at risk. “I believe that this will weaken Germany as a business location in the long term and that we will gradually be left behind in international competition.”
Everything should get better again in 2024
The Association of German Mechanical and Plant Manufacturers (VDMA) blames global crises primarily for weakening demand: “The consequences of high inflation and uncertainty caused by wars and other geopolitical upheavals are evident more or less clearly in all markets,” states the VDMA and reports a 13 percent decline in incoming orders for September compared to the same month last year.
Despite the weak economy, the Neugart company is investing in a new production hall on the German-French border and would like to employ even more people after the short-time work phase. Because the management sees the end of the dry spell has come. For 2024 they expect more orders and an end to short-time work.