German Manufacturers Warn of the Sector’s ‘Formidable Crash’

The BBC is reporting that in the 44 years since Beckhoff Automation opened for business, owner Hans Beckhoff says he hasn’t seen an economic crisis like this one.

According to Mr Beckhoff you can usually expect a crisis about once every five to eight years, but he says this time it’s a formidable crash, a really deep one.

A German company, Beckhoff Automation makes automated control systems for a wide range of industries, including manufacturing and the energy sector.

It belongs to Germany’s famous Mittelstand, the often highly specialised small and medium-sized enterprises that make up 99 percent of German companies, provide around 59 percent of German jobs, and are considered the “hidden champions” of the German economy.

The Mittelstand’s ability to take a long view on business performance rather than scrambling for annual dividends is part of what has made German manufacturing so robust.

However, the global economy is shifting rapidly, and pressure is mounting.

Corporate development manager at Beckhoff Automation and Hans’ daughter, Frederike Beckhoff, says they’re still doing well, though the economic situation has really slowed down.

She says this year’s results won’t be anywhere close to what they achieved over the past three years.

German firms have been hit by a number of problems in recent years.

These include the steep energy price hikes that followed Russia’s invasion of Ukraine in 2022, rising general inflation, and increased competition from China.