The German electrical and digital industry continues to see growth despite the current weakness in orders. “We have three megatrends that will drive our industry forward in the long term: electrification, automation and digitalization,” said Gunther Kegel, President of the ZVEI industry association, to the German Press Agency. “These megatrends will clearly bring growth to our industry in the coming years.”

He expects tailwind from the Hanover Trade Fair, which begins on Monday (April 22nd to 26th). This year, the world’s largest industrial show is focusing on these trends: “The Hannover Messe has also geared itself to this triad – electrification, automation and digitalization.”

Growth dip in the current year

Looking ahead to the current year, Kegel was less optimistic. It is still assumed that the industry’s production will shrink by two percent compared to 2023. “At the moment we are still slightly below that. But we assume that incoming orders and then production figures will level off at this level by the end of the year,” he said.

There are big differences within the industry. “All companies involved in the expansion of the power grids still have a booming economy, some with delivery times of several years, while the classic industrial equipment suppliers, especially automation technology, are currently feeling the reluctance to invest,” said Kegel.

A clear reluctance can be felt, especially in Germany and China. But Kegel was convinced that this would not change the long-term upward trend. “Of course there will also be weaker phases such as the current economic downturn. But these will be followed by years that will bring us significantly greater growth.”

Praise for settlement policy

Kegel viewed the new settlements of chip manufacturers such as Intel in Magdeburg and TSMC in Dresden as a great success. “It is right that the federal government is bringing the key players in the semiconductor industry to Germany. We need this key technology locally in order to be able to keep up internationally.” The fact that high subsidies are paid for this is not particularly encouraging, but it is unavoidable. “Otherwise it won’t work.” Finally, others also competed for new settlements with high subsidies. “We have no choice but to do the same – or we will lose another cutting-edge technology in Europe. Those are the rules of the game.”

Kegel expressed criticism of the energy prices. Despite noticeable relaxation, these are still too high for energy-intensive companies. “For general industry, where energy accounts for perhaps two to five percent of total costs, the prices are still high. That hurts, but it doesn’t threaten the existence of people.” This looks different for energy-intensive companies, such as the chemical industry. “The price level currently envisaged is not enough. There is a risk of losing parts of these industries.” Politics must take countermeasures here. “In the short term this can certainly be done through subsidies, but in the long term not.”

Warning against excessive speed in climate protection

Kegel called for more sense of proportion in climate policy. “When it comes to climate protection, I warn against increasing the pace any further. It is of no use to us if we are the first and only ones in Germany to have solved our climate protection tasks. The world climate will not be impressed by this,” said the association head. “The goal cannot be that we finish as best in class and then have to use all possible compensatory mechanisms, such as tariffs, to compensate for competitive disadvantages.”

It would be better to coordinate more closely with other countries on climate protection. “It is much more important that we do this in step with other large regions of the world,” said Kegel. “If we slow down our pace for five years and the Chinese accelerate their pace for five years, then the global climate will benefit significantly more.”