German manufacturers warn of a 'severe downturn' in the sector.

Over the 44 years since Beckhoff Automation first opened its doors, owner Hans Beckhoff says he has never experienced an economic crisis as severe as the current one.  

“Typically, you can expect a crisis every five to eight years,” Beckhoff explains. “But this time, it’s a formidable crash—a really deep one.”  

Based in Germany, Beckhoff Automation produces automated control systems for various industries, including manufacturing and energy. It is part of Germany’s renowned Mittelstand—highly specialized small and medium-sized enterprises that account for 99% of German companies, provide about 59% of jobs, and are often seen as the “hidden champions” of the nation’s economy.  

The Mittelstand’s long-term business perspective, prioritizing sustained growth over short-term profits, has historically been a cornerstone of German manufacturing strength. However, with the global economy evolving rapidly, these businesses face increasing pressure.  

“We’re still performing well, but the economic climate has slowed considerably,” says Frederike Beckhoff, corporate development manager at Beckhoff Automation and Hans’ daughter. “This year’s results will fall far short of the achievements of the past three years.”  

German companies have faced a series of significant challenges in recent years. These include soaring energy costs following Russia’s invasion of Ukraine in 2022, rising inflation, and increasing competition from China.  

Many firms also point to Germany’s deteriorating infrastructure as a major issue. The country’s rail network, roads, and bridges—described by state broadcaster Deutsche Welle as “aging and crumbling”—are frequent targets of criticism.  

Additionally, businesses cite a heavy bureaucratic load at national and EU levels, inconsistent policymaking from Berlin, higher labor costs, and ongoing staff shortages as further obstacles.  

“The past three years have been far from easy in Germany,” says Joachim Ley, CEO of Ziehl-Abegg, a ventilation, air conditioning, and engineering systems manufacturer.  

“We urgently need reliable government decision-making instead of constant 180-degree shifts. Even if a decision isn’t favorable, businesses can plan and adapt if it’s consistent. This back-and-forth approach is placing an enormous strain on companies in Germany.”