German machinery federation VDMA says government reform delays threaten industrial base

In brief

• The VDMA machinery federation accused Germany's coalition government of blocking urgently needed reforms at the Berlin Machinery Summit.
• It cited stalled labor market reform, excessive bureaucracy, a high tax burden and unfair Chinese competition.
• Employment in firms with more than 50 staff has fallen to just over 970,000.
• The sector is also turning to artificial intelligence as part of its response to a fourth year of crisis.

Federation accuses coalition of stalling reforms

The machinery and plant engineering federation VDMA said on Monday that the federal government is moving far too slowly on reforms. Its president, Bertram Kawlath, opened the Machinery Summit in Berlin by saying the association was appalled by internal disputes within the coalition that, in his view, keep pressing reforms from moving forward (Maschinenbauer "fassungslos" über Bundesregierung – tagesschau.de). He also criticized what he called a rosy presentation of the government's policy statements and a visible decline of Germany as an industrial location (Maschinenbau-Gipfel in Berlin - VDMA "fassungslos" über Bundesregierung – Deutschlandfunk).

Investment and costs

Kawlath said investment is failing to materialize, bureaucracy keeps growing and social security costs are rising. Many companies are asking whether they should still invest in Germany, he told the summit, adding that each postponed investment and each reform left undone weakens the location further (Maschinenbauer werfen Bundesregierung vor, Reformen zu blockieren – DER SPIEGEL).

Specific demands

The federation named three areas. It accused the Christian Democrat-Social Democrat coalition of blocking a labor market reform, pointed to excessive bureaucracy and said the tax burden is too high. Kawlath also called for a tougher response to what he described as unfair competition from China. He said the government must deliver and called for bold reforms of the labor market and corporate taxation.

Employment decline

The federation describes machinery and plant engineering as the largest industrial employer in Germany. Yet the number of staff in firms with more than 50 employees has fallen to just over 970,000. The sector is in its fourth year of crisis, according to reporting on the summit, with high energy costs and bureaucracy cited as the main burdens (Maschinenbau will mit Künstlicher Intelligenz aus der Krise – tagesschau.de).

Industry turns to AI

At the same event, the sector emphasized digitalization and artificial intelligence as a route out of the downturn. One manufacturer of water treatment equipment said digital skills are becoming indispensable, and it is training apprentices to program its own AI tools.