Germany’s mechanical engineering industry is enduring one of its longest periods of contraction, with production forecast to fall 5 percent in 2025, the country’s leading industry association said Tuesday.
The VDMA, representing 3,600 German and European mechanical and plant engineering firms, said output has been shrinking since early 2023 and is likely to mark 12 consecutive quarters of decline by the end of next year. VDMA President Bertram Kawlath compared the situation to the severe recession of the early 1990s, when the sector contracted for 13 straight quarters.
Economists expect a modest 1 percent increase in 2026, but Kawlath warned that a stronger rebound is needed to signal real growth momentum.
A recent VDMA survey found U.S. tariffs on steel and aluminum are weighing heavily on Germany’s export‑reliant industry. Nearly half of 400 surveyed companies reported a drop in U.S. orders since April, when Washington imposed the measures. Two‑thirds expect revenue losses, with almost half estimating declines of more than 10 percent.
“The U.S. punitive tariffs on steel and aluminum, which are likely to affect around 56 percent of our machinery exports to the U.S. in the near future, are poison for both trading partners. They must be renegotiated quickly,” Kawlath said.
The association warned the prolonged downturn is undermining Germany’s appeal as an innovation hub and urged “genuine, far‑reaching reforms” to safeguard the industry’s competitiveness.