Struggling Gears: the Auto & Machinery Sectors in Thuringia's Rollercoaster Year
Struggles persist in the realms of automotive production and mechanical engineering. - Industries specializing in automotive and mechanical engineering persistently experience a downturn
In the kick-off of 2025, industry revenue in Thuringia - a state in eastern Germany - picked up, with a 4.6% jump in the initial three months compared to the previous year. Yet, two critical sectors - the automotive industry and machinery manufacturing, remain on shaky ground. These sectors faced hurdles even in the year prior.
Domestic sales surged by 3.9%, reaching 5.9 billion euros, while exports doubled, rising by 5.7%. The export figure amounted to 3.6 billion euros, accounting for over a third of Thuringia's industrial turnover.
However, the workforce took a hit. Employment levels dipped by nearly 3,000 individuals in the first quarter compared to the same period last year. Between January and March, approximately 141,000 people were employed, marking the seventh consecutive month of job losses, as revealed by 776 establishments with at least 50 employees.
Despite the overall revenue increase, electrical equipment manufacturers and service providers for machine and equipment repair and installation enjoyed a noticeable bump in revenues. Conversely, machinery manufacturing revenues shrunk by around 20%, and the automotive industry faced a decline of approximately 11%.
Understanding Thuringia
Thuringia is nestled within eastern Germany, where economic growth falls shorter than its western counterparts, and businesses exhibit more skepticism about the economy's health [3]. Key hurdles include high energy costs and a skills shortage [3]. The political scene, influenced by the rise of the far-right AfD party in the 2024 elections, also contributes to doubts about the federal government's economic stimulus abilities [3].
The Struggling Automotive Sector
Nationally, the German automotive industry encounters headwinds because of waning industrial output and low capacity utilization, deterring investment [1]. Germany-wide, the machinery and capital goods sectors, including automotive manufacturing, experienced a decline in production during the early months of 2025 [1]. Major German automotive and industrial firms have announced significant workforce reductions, such as Bosch, a leading manufacturer likely impacting Thuringia, planning to slash around 7,000 jobs in late 2024 [2].
Export markets, crucial for automotive manufacturers, have been unstable due to international trade tensions, particularly concerning U.S. tariffs, casting a shadow over export-driven industries [1][2].
Ailing Machinery Manufacturing
Like automotive, machinery manufacturing in Germany has seen a decline in output and investment recently, reflecting broader industrial struggles of weak demand and geopolitical uncertainties [1]. The machinery sector grapples with the same overarching issues of high energy costs and a skilled labor shortage in eastern states like Thuringia, hampering potential growth and innovation [3].
Prospects Ahead
Despite the challenges, eastern Germany's burgeoning interest in renewable energy and green technology offers a glimmer of hope for potential diversification opportunities for Thuringia’s industrial base in the future [3]. The overall German economy showed signs of industrial output improvement during the early months of 2025, but the outlook remains uncertain, with setbacks anticipated in the coming quarters [1].
- The employment policy in Thuringia must address the ongoing job losses in the automotive industry and machinery manufacturing sectors, which not only poses a challenge to the state's economy but also risks further decline as major firms like Bosch plan significant workforce reductions.
- The community policy in Thuringia should address the skills shortage, high energy costs, and the skepticism businesses have about the economy's health to foster growth and attract investors in the manufacturing sectors.
- In addition to addressing industry-specific challenges, Thuringia's industry, finance, and transportation policies should take advantage of the potential diversification opportunities in renewable energy and green technology to secure a sustainable economic future.
