North's Mining and Electronics Sector Hits a Standstill - Northern Manufacturing Sector Specializing in Metal and Electrical Products
In the spring of 2025, a survey conducted by northern German employers' associations revealed concerns about the stagnation in the region's metal and electronics industry. The industry, comprising approximately 650 member companies with 170,000 employees in Hamburg, Schleswig-Holstein, Bremen, Mecklenburg-Vorpommern, and northwest Lower Saxony, is not expecting immediate improvements.
The stagnation is particularly concerning given the current national and international framework conditions, as stated by Folkmar Ukena, President of Nordmetall. A real sense of optimism has yet to emerge among the companies, according to Ukena.
The survey revealed that 44% of companies across all sectors expect fewer orders, despite the 500-billion-euro fund for infrastructure and climate neutrality. In the metal industry, one-third of companies still rate their business situation as poor or unsatisfactory. However, the aerospace industry is the only sector where order volumes are considered high or adequate, with 91% of companies reporting positive order volumes.
The challenges faced by companies in the metal and electronics industry are manifold. Weak domestic and export markets, supply chain disruptions, oversupply, rising production costs, the need for technological adaptation, and labor market adjustments are all contributing to the industry's stagnation.
Weak demand, particularly in export markets, is a significant issue. The global demand for manufactured goods has weakened, impacting metal and electronics sectors. Companies face oversupply issues, especially in battery raw materials and electronics components, leading to price declines and reduced profitability.
Trade risks and policy uncertainty are also causing problems. Escalating trade risks, such as increased tariffs affecting auto and EV imports, disrupt supply chains and export markets, making it harder for companies to maintain production volumes.
Rising production costs, due to raw material price volatility and spikes in key metals like cobalt, are squeezing margins and limiting capacity expansion. The rise of competing manufacturing bases, especially in China and Southeast Asia, has led to a loss of market share for traditional northern industrial clusters, making export-oriented sectors particularly vulnerable.
Staying competitive requires significant investment in advanced production technologies and automation, which is challenging for traditional firms facing financial pressures. Firms are forced to reduce hiring, cut staff, and manage inventories more tightly in response to falling orders and production volumes.
In conclusion, stagnation in the northern metal and electronics industry is primarily due to weak global demand, rising production costs, trade risks, and oversupply in key markets. Companies face challenges including disrupted supply chains, price erosion, and the need for costly technological upgrades to remain competitive. The survey also revealed that Bremen companies are the most pessimistic, with only 44% expecting improvement, while Hamburg companies are the most optimistic, with 26% expecting improvement. As the new federal government takes office, companies are in a holding pattern, waiting for their expectations to be met.
In light of the survey findings, the steel industry within the metal and electronics sector, situated in Hamburg, Schleswig-Holstein, Bremen, Mecklenburg-Vorpommern, and northwest Lower Saxony, is seeking financial assistance to offset the impact of stagnation due to the multitude of challenges encountered, such as weak demand, supply chain disruptions, oversupply, rising production costs, and the need for technological adaptation. The ongoing dictum among companies remains that optimism has yet to surface.
Albeit the existence of a 500-billion-euro fund for infrastructure and climate neutrality, many companies across all sectors believe that they will receive fewer orders, with one-third of metal industry companies still rating their business situation as poor or unsatisfactory. The aerospace industry is an exception, with 91% of companies reporting positive order volumes, demonstrating a demand compared to other sectors.
