German Manufacturers Warn Of A "Formidable Crash"

Germany’s manufacturing sector faces a deep crisis, with some describing it as one of the most severe economic downturns in decades, Carrie King reported for BBC News.

The Mittelstand is now grappling with challenges such as steep energy price hikes following Russia’s 2022 invasion of Ukraine, rising inflation, and increased competition from China. I Photo: Beckhoff

Hans Beckhoff, founder of Beckhoff Automation, which produces control systems for manufacturing and energy industries, said, “Crises usually come every five to eight years. This time, it’s a formidable crash, a really deep one.”

Beckhoff Automation is part of Germany’s Mittelstand—specialized small and medium-sized enterprises that account for 99% of German companies, provide 59% of jobs, and are often dubbed the "hidden champions" of the economy.

Traditionally resilient, the Mittelstand is now grappling with challenges such as steep energy price hikes following Russia’s 2022 invasion of Ukraine, rising inflation, and increased competition from China.

“We’re still performing well, but the economic slowdown is significant,” said Frederike Beckhoff, corporate development manager and Hans Beckhoff’s daughter.

“This year’s results will fall far short of the past three years.”

Experts warn that the sector’s ability to weather economic storms will be tested as the global economic landscape shifts dramatically.