Fortune 500 German companies in Europe have announced more than 60,000 layoffs this year, a sign of the country’s continuing economic woes that have left manufacturers reeling.
Germany’s major employers, including Bosch, Thyssenkrupp, Deutsche Bahn and Siemens, have announced plans to lay off thousands of workers this year to combat falling profits following a rocky post-Covid economic outlook.
Businesses that form the backbone of Europe’s largest economy, Germany, have been struggling to weather macroeconomic headwinds related to rising energy prices and falling foreign demand, a particular problem in Germany’s export-dependent economy. The country will experience negative economic growth for the second consecutive year in 2024.
The German production PMI, a survey of major manufacturers, indicates that the sector has been in recession since early 2022. That’s when the inflationary pressures of rising energy prices began to take their toll on producers. In Germany, manufacturing’s share of GDP is much higher than in other European countries, such as the UK and France, and this influence is amplified.
“In a world where China has become the ‘new Germany,’ at least in manufacturing, the old macro business model of cheap German energy and easily accessible large export markets no longer works,” wrote Carsten Brzeski, head of global macro at ING. in a note
German companies suffer the consequences
of luck according to analysis, Fortune 500 German companies in Europe have announced plans to lay off more than 60,000 workers, most of them from the country’s manufacturing sector. The figures are based on this year’s forecasts and may be higher.
In early November, it said it planned to lay off German industrial and auto supplier Bosch 7,000 employees as the company warned of the “difficult economic situation”. This comes after the group announced in October that it would cut its workforce by 5,500 after Bosch chairman Stefan Hartung warned it would not meet its financial targets for 2024.
Thousands more workers reduced their workweek from 38-40 hours to 35 hours for less pay, effectively unionizing. an unwanted four-day week. The company is one of Germany’s largest employers.
That month, the engineering and steel production group Thyssenkrupp he said he would lay off 11,000 steel workers, 40% of that division’s workforce. The company cited China’s well-known hostility to cheap imports as motivation for reducing its workforce.
Truck maker Daimler said in August it would impose a job freeze reduce the working hours of employeesespecially affecting its German plants.
The pain has not been limited to the German manufacturing sector. in november Siemens technology conglomerate said it may cut 5,000 jobs in its automation business after profits almost halved at its flagship digital industries business.
Deutsche Bank, on the other hand, said in February that it would lay off 3,500 workers in order to increase profitability. The bank also announced plans in November to lay off 111 senior executives from its retail and private banking unit.
Is Volkswagen next?
However, Germany’s biggest and perhaps most dangerous company appears in the layoffs data: Volkswagen. The 330,000 million euro carmaker is on a terrible path reduced by 10,000 million euros amid declining sales as part of an efficiency drive.
Volkswagen, Germany’s largest private employer, is laying the groundwork to include increased job cuts as part of these cost cuts.
Until now, Volkswagen has used the demographic curve to reduce its workforce by lowering the retirement age and offering generous severance packages to older workers.
However, in recent months the company has acted more decisively, canceling the 30-year employment agreement that guaranteed the job security of its workers, while confirming its earlier plans. Closing the German factory in its 87-year history.
in September, Jefferies analysts predicted Volkswagen may lay off 15,000 workers in a cost-cutting drive, in what would be Germany’s biggest round of layoffs. However, the layoffs have stalled negotiations with Volkswagen’s powerful works council.
Other German automakers have so far also held back on layoffs. In November, Mercedes-Benz said it planned to do so cut annual costs several million euros in the following years and refused to exclude the reduction of employees as part of this strategy.
