The Prospects for the Metal and Electrical Industry in Baden-Württemberg: A Bleak Outlook for 2025
Declining Production and Employment
The metal and electrical industry in Baden-Württemberg, a key economic sector in the region, is facing a grim outlook. According to Oliver Barta, CEO of Südwestmetall, the industry association representing the sector, "We cannot expect growth this year either, but rather must reckon with a further decline."
The industry has been plagued by a sharp decline in production in 2024, falling by 8.2% compared to the previous year. This exceeds the national decline of 7.1%. The automotive sector, a significant contributor to the region’s economy, witnessed a particularly steep drop of 13.5%. Mechanical engineering and electrical engineering also saw declines of 8.8% and 6.4%, respectively.
Compounding the production woes, the industry has also experienced a drop in incoming orders, with a 5.7% decline in the southwest region. This contrasts with the national average of a mere 3.2% decline.
The dwindling activity has had severe consequences for employment. The industry shed 13,705 jobs in 2024, bringing the total decline since the peak in July 2019 to approximately 38,000 jobs. Despite this reduction, the sector still employs roughly 140,000 more people than at the end of the financial crisis in early 2010.
Structural Crisis and Policy Concerns
Barta identifies the reasons for this bleak performance as multifaceted. "We are not only talking about an economic downturn, but about a tangible structural crisis," he emphasized. The industry leader urged policymakers to take immediate action to improve the region’s business climate, which has deteriorated in recent years.
According to Barta, economic considerations must take precedence, and every effort must be made to enhance the region’s competitiveness. "This is the fundamental prerequisite for the industry to regain momentum," he stressed.
Automotive Industry in Turmoil
The automotive industry, a cornerstone of Baden-Württemberg’s economy, is facing particularly severe challenges. The decline in production and employment in this sector has been substantial, and there are concerns that the transition to electric vehicles may further exacerbate the situation in the coming years.
Automakers and suppliers are facing mounting competitive pressures from global players. Additionally, the disruptions caused by the COVID-19 pandemic and the ongoing semiconductor shortage have significantly impacted production and supply chains.
Outlook and Policy Recommendations
The prospects for the metal and electrical industry in Baden-Württemberg remain uncertain. The global economic outlook, the ongoing transition in the automotive sector, and the geopolitical uncertainties all pose challenges to the industry’s recovery.
To mitigate these challenges, policymakers are urged to implement measures that improve the business climate, encourage innovation, and support the industry’s transition to a more sustainable future. This includes measures to attract and retain skilled workers, invest in research and development, and promote digitalization and automation.
By addressing these concerns, the government can help create a more competitive and resilient metal and electrical industry in Baden-Württemberg, ensuring its continued role as a key economic driver for the region.
