Traditional companies in crisis: The industry is in a state of upheaval: experts are calling for new concepts

The list of industrial companies in Germany that have pulled out the red pen this year and want to save with all their might is long: Volkswagen, Bosch, ZF, Continental, Bosch and now also Ford as well as the steel division of Thyssenkrupp. In the case of Ford Germany, whose Cologne workforce is expected to shrink by a quarter within three years, IG Metall warns of “dying in installments,” and employees at Thyssenkrupp Steel also fear for the future of their company.

The examples of well-known companies make it clear: Germany’s industry is in a state of upheaval – it’s not just about a temporary weakening of demand due to the sluggish economy, but about structural changes, scientists largely agree on this. The situation is serious, but by no means hopeless – that could roughly sum up the opinion of the group of experts.

A defensive battle that cannot be won

Enzo Weber from the Institute for Labor Market and Occupational Research (IAB) sees Germany’s industry in a critical phase. “We lose around 10,000 jobs in industry every month in Germany, and production is now 15 percent below pre-Corona levels.” A change in itself is not problematic, especially since Germany’s industry continues to have great potential and other industrial sectors have good prospects – such as renewable energies, the hydrogen industry and the production of innovative replacement products for conventional goods that have so far been made from oil components.

“The problem, however, is that this innovative new side of the industry is not really getting off the ground – while the more traditional industry is cutting jobs, far too few jobs are being created in the new areas, and overall the job balance in the industry is deeply red.” The new industrial areas need to be stimulated so that more jobs are created there. “So far we have been waging too much of a defensive battle in the industry that we cannot win,” says Weber.

Demand for innovative ways

But what happens to all the industrial workers when their current employer no longer wants them? From Weber’s perspective, many of these employees are needed in other areas and companies for the transformation. “We don’t need large retraining programs, but rather skills development programs.”

The expert also advocates a “transformation competition” in which the state promotes the founding and scaling of start-ups more than before and stimulates innovation. “We need a push forward: deindustrialization is not inevitable, Germany’s industry has great potential – but we also have to activate this potential.”

Call for government investment

Sebastian Dullien from the Hans Böckler Foundation’s Institute for Macroeconomics and Business Cycle Research (IMK) also has worry lines. “The risk of deindustrialization in Germany has increased,” says the economic researcher. Germany is threatened with a fate similar to that of the USA, which has massively cut industrial jobs since the turn of the millennium.

While the number of industrial jobs in the USA fell from 17.7 to 13.3 million from 2000 to 2024, the number in Germany remained almost constant from 2000 to 2019. Since the corona pandemic, the number has fallen from 7.5 to 7.2 million – this downward trend could intensify, warns Dullien.

The scientist sees the state as having a duty: Strong investments in the construction of roads, bridges and energy networks would lead to construction companies getting more orders and hiring more people. “In other industrial sectors there are many craftsmen and other skilled workers who originally come from the construction industry and could now go back there.” Germany would also benefit economically from such investments as it would become more competitive.

Role of the skills shortage

But supposedly there is a shortage of skilled workers in Germany – won’t the employees whose jobs are now in jeopardy be taken elsewhere? “There may be a lack of IT experts and nursing staff, but that doesn’t help the employees who are on the assembly line at car manufacturers and who will soon need a new job,” says Dullien. It is all the more important that these sectors develop future prospects and not simply reduce them.

Paula Risius from the German Economic Institute (IW) sees it as a challenge to accommodate employees of an industrial group elsewhere; after all, both the type of qualification and the regional needs must be met. “Companies have to be open to career changers, but career changers also have to invest in this process,” says the researcher.

Switchers do not always have the necessary skills. “For employers, this means that career changers may initially be considered for fewer tasks or that they need more time for them than existing skilled workers.” That’s why wage cuts are “not unlikely”.

Wage subsidies after changing jobs could help

IAB researcher Weber says that many employees are reluctant to move away from their previous employer, the classic industrial group, for financial reasons – their old collectively agreed jobs are often better paid than jobs in energy start-ups and other young, up-and-coming companies industrial areas.

“Pay security” could help here, says Weber: The old employer, together with politicians, should temporarily pay part of the new employer’s wages, says Weber. “This avoids high severance payments and the employee’s know-how would not be lost.”