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Robust German engineering

September 6, 2012

Germany's engineering industry appears robust enough to weather the current European slowdown. Although domestic orders have been declining, the slump on the home front has been compensated by business abroad.

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Germany's umbrella organization for engineering companies, VDMA, on Thursday reported a 4-percent rise in production volumes for the first half of 2012, compared to levels reached in the same period last year.

"We had a better-than expected start into the current year," VDMA Chief Economist Ralph Wiechers said in a statement. "That's going to push up results throughout 2012."

Wiechers noted that while domestic business had been sluggish for months, orders from abroad, including emerging nations, had been able to make up for the decline at home.

Solid outlook

The German engineering sector expects 2-percent growth this year and another 2-percent jump in 2013, based on widespread optimism that global cyclical developments will become more favorable again.

The industry currently employs 900,000 workers and is seen to be the backbone of the German economy. It's mainly driven by small and medium-sized companies, but also includes market-listed blue chips such as Siemens and ThyssenKrupp.

A study by the Institute for the German Economy indicated that some 80 percent of German engineering firms are highly uncertain about how they will be impacted by the country's current energy policy changes and the expected rise in costs for energy-intensive companies.

hg/msh (Reuters, dpa)