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06-11-2023 | Companies + Institutions | Infographic | Article

Mechanical Engineering is Pessimistic about Economic Development

Author: Thomas Siebel

2 min reading time

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According to PwC, the majority of mechanical and plant engineering companies are pessimistic about economic development. Cost pressure, a shortage of skilled workers and regulation are slowing things down, while sustainability is not recognized as an opportunity.

The mood in the German mechanical and plant engineering sector is deteriorating. This is the conclusion reached by PwC Germany in its recently published mechanical engineering barometer, for which the auditing and consulting firm surveys managers in the industry on a quarterly basis. According to the survey, more than half of the companies anticipate a negative economic trend in the country and a sector-wide decline in turnover of 1.6% in the current year.

Nevertheless, the survey also provides two more positive assessments: Only less than a third of entrepreneurs believe in a global economic downturn; and for their own company, respondents expect average growth of 2.6%. However, only 15% of those surveyed expect profits to rise. 80% cite increasing cost pressure and the shortage of skilled workers as the biggest obstacles to growth.

Maintaining the Status Quo Instead of Innovation

Around one in four companies would like to increase the number of full-time employees in the next twelve months, whereby employees with experience in digital technologies and software development are more in demand, while companies in the areas of sales and production planning tend to focus on training their own staff. The PwC report identifies the shortage of skilled workers as the biggest threat to sales growth. According to Bernd Jung, Head of the Industrial Manufacturing practice group at PwC Germany, it cannot be solved with digitalization and automation alone.

According to Jung, the difficult regulatory environment frequently mentioned in the survey should also give pause for thought. "If entrepreneurs feel too restricted in their freedom of action, many of their measures are primarily aimed at securing the status quo. We need more confidence, innovation and a hands-on approach in our country again."

Companies Unsure about Sustainability

Another finding of the survey is that companies often pursue sustainability goals on their own initiative instead of using objective reference frameworks such as science-based targets. Only a third of companies have a formulated roadmap with concrete measures and defined responsibilities. Even fewer publish a sustainability report.

According to Jung, companies appear insecure when it comes to sustainability. "Many companies are [...] primarily concerned with fulfilling reporting requirements. The danger is that measures to transform the value chain and important product innovation fall by the wayside."

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