• Germany edition
 
German firms brace for tough 2013
Photo: DPA

German firms brace for tough 2013

Published: 11 Nov 2012 11:20 GMT+01:00
Updated: 11 Nov 2012 11:20 GMT+01:00

Nevertheless, the clouds are gathering above Germany too, and the chill winds from the global downturn are set to blow even harder here next year, causing companies to tighten their belts for what promises to be a difficult year.

While their strong overseas presence has helped shield German companies from the worst of the downturn in Europe so far, the prospect of an economic slowdown in China and an only tepid recovery in the United States is sending shivers through export-orientated German industry.

"The decline in output and revenues is going to be substantial in the fourth quarter and German companies know this," said Heino Ruland, market strategist at Ruland Research.

Last week, industrial giant Siemens, one of Germany's biggest companies, unveiled plans to slash costs by €6.0 billion over the next two years.

Chief executive Peter Löscher warned that the austerity drive would "have an impact on the workforce," but declined to reveal any details just yet. Other companies are also trying to reduce overheads.

At the end of October, auto giant Daimler said it would aim to slash costs in its car division by €2.0 billion between now and the end of 2014.

In the banking sector, which is feeling the financial freeze more than most as low interest rates and tougher banking rules eat into profits, the winds blowing through the corridors of the country's two biggest lenders, Deutsche Bank and Commerzbank, are also raw.

Deutsche Bank is planning to cut costs by an annual €4.5 billion by 2015 and 1,900 jobs in the investment banking division are already facing the chop.

Media reports say Commerzbank, too, which is planning to focus on its core retail banking business, could be readying to axe around 10 percent of its workforce.

Airline Lufthansa is similarly stepping up its cost-cutting after already announcing the loss of 3,500 administrative jobs.

BASF, the world's biggest chemicals maker, is looking to save €1.0 billion by the end of 2015. And industrial gas specialist Linde, which turned in an excellent third quarter, is likewise hoping to lop €750-900 million off its annual bills.

"This will help to reinforce our high level of profitability even in a challenging environment," said chief executive Wolfgang Reitzle.

German companies are no strangers to cost-cutting and "they know they have to continually adapt to changing economic conditions as they compete globally," and with US, Japanese and Chinese companies in particular, said analyst Heino Ruland.

Portfolio rationalisation, streamlining purchasing and a more flexible workforce are the chosen options.

But boosting efficiency is not always about job cuts. "The biggest job cuts are taking place in Germany's banking sector, not more cyclical industries, where companies want to keep hold of their specialised workforces," said Baader Bank strategist Robert Halver.

So companies such as carmaker Opel or heavy industry giant ThyssenKrupp resort to measures such as short-time work.

It is thanks to instruments such as these that there is no wide-scale blood-letting in terms of jobs in Germany at the moment, said Halver.

A survey of insolvency and restructuring experts conducted by Ernst & Young found that 77 percent of those polled are expecting the number of restructuring cases to rise in the coming 12 months, with the shipping and auto industries the most likely to be affected.

Even as growth slows, unemployment in Germany is at its lowest since unification 20 years ago, at least in raw or unadjusted terms, even if the seasonally adjusted numbers are beginning to inch upwards.

AFP/bk

The Local (news@thelocal.de)

Don't miss...X
Left Right

Your comments about this article

12:16 November 11, 2012 by grazhdanin
There's no "downturn" at all. It's all made up by politicians and journalists.
19:21 November 11, 2012 by smart2012
well headlines seems a litlle too optimistic and drivem by pre-election propaganda. Opel started alraedy kurtzarbeite, Opel announced the closure of Bochum plant, MAN has started kurtzarbeite, Siemens has already fired app 2K people, Lufthansa, DeutscheBank already announced a plan to cut people, not to forget bankrupcy of Schlecker, Q cell etc etc etc..

Down turn already started 6 months ago, but BILD press has kept hiding it, to support Verkel strategy and keep building deutschland uber alles feeling (and keeping attacking the greek guys who has an influence on economy of 0.00000000000000001%)

what is is making me happy is that finally downturn cannot be hiddne anymore, as all companies stopped hiring and started to cut.

Last unemployement started to increase again, bearing in mind that the number of germany is faked by 400 Euros and temporary agency jobs
19:38 November 11, 2012 by ddiddly
smart2012 - you forget that all that money owed by these indebted countries is now on the tax payers bill. I would not at all be surprised to learn that the high interest risky investments involved peoples pensions. The bailout money was likely to fill in the holes when the well off investors wanted out. The last couple years has likely just been to give people time to take their money out of these crisis ridden countries and plug the hole with tax payer funds.
22:56 November 11, 2012 by zeddriver
Say what! I thought the world and especially the German people. Said that if America would just reelect Obama. All the worlds problems would be instantly solved due to his being the Messiah. Then we could all go back to the freewheeling 60's and whip out the bong pipes and eat all the Doritos (Manna) that will start falling from heaven. As prophesied by Obama and his PR staff.
Today's headlines
Court rules against child porn suspect Edathy
Former SPD MP Sebastian Edathy photographed at a press conference in February. Photo: DPA

Court rules against child porn suspect Edathy

The Constitutional Court on Friday rejected an attempt by former Social Democratic (SPD) MP Sebastian Edathy to have evidence against him thrown out in his trial for possession of child pornography. READ  

Student busted in case of misdelivered hash
Photo: DPA

Student busted in case of misdelivered hash

A Bavarian student expecting a cannabis delivery was collared by "Commissioner Fluke" after acting surprised in front of policemen when he saw his letter box was empty. READ  

Security fears block Germany-Israel match
German and Israeli fans cheer in the stands during a friendly in Leipzig in 2012. Photo: DPA

Security fears block Germany-Israel match

A friendly soccer match against Israel marking 50 years of diplomatic ties has been called off amid security concerns and the escalation of the Middle East conflict, the German Football Federation (DFB) said on Friday. READ  

Germany's brain drain is Europe's gain
Inside the terminal at the Frankfurt International Airport. Photo: Shutterstock

Germany's brain drain is Europe's gain

Figures from the European Union show that while many German professionals are able to find work abroad with their well-recognised qualifications, Germany doesn't always extend the same courtesy to foreigners. READ  

S-Bahn arson in support of refugees, group claims
Passengers at Berlin's Ostkreuz station yesterday as information screens relay news of the disruption. Photo: DPA

S-Bahn arson in support of refugees, group claims

A radical left-wing group claimed responsibility on Friday for an arson attack that cut power to several S-Bahn lines and caused transport chaos in Berlin, saying it was intended to awaken people to the plight of refugees. READ  

Pilots' strike over, but disruption continues
Passengers in Hannover check departure boards showing cancelled Germanwings flights. Photo: DPA

Pilots' strike over, but disruption continues

UPDATE: Germanwings pilots have ended their six-hour strike which grounded 116 flights and up to 15,000 passengers of Lufthansa subsidiary Germanwings on Friday. READ  

Man narrowly escapes unwelcome drop-in
Emergency services use a crane to lift the fallen crane in Cologne. Photo: DPA

Man narrowly escapes unwelcome drop-in

A Cologne resident was pinned to his bed after a 40-metre construction crane toppled onto his home early on Friday. READ  

'Further sanctions' could hit Russia, says Merkel
Merkel looking grave at Thursday's West Balkan conference in Berlin. Photo: DPA

'Further sanctions' could hit Russia, says Merkel

German Chancellor Angela Merkel said on Thursday that European leaders will discuss the worsening Ukraine crisis and possible further sanctions against Russia at a weekend summit. READ  

UK-Germany rivalries live again in Champs League
Bayern Munich captain Philipp Lahm with fellow World Cup champion Bastian Schweinsteiger. Photo: DPA

UK-Germany rivalries live again in Champs League

The 2014-15 Champions League draw yesterday brought déjà-vu for English and German clubs as old opponents found themselves facing off once again. READ  

German of the Week
Animal activist fights off murder threats
Photo: DPA

Animal activist fights off murder threats

Friedrich Mülln has been dragged through the courts and threatened with murder during his years of animal rights activism. His latest court case was in Munich this week but he tells The Local he has no plans to give up the fight. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Photo: Shutterstock
Gallery
Ten of the oddest things found by German border control
Photo: Gerkan, Marg and Partners/Tegel Projekt GmbH/J. Mayer
Berlin
How will Berlin look in five years' time?
Photo: DPA
Culture
Sprechen Sie Deutsch? 10 reasons why you should
Photo: DPA
Gallery
The best of Berlin's mayor Klaus Wowereit in 14 pictures
Photo: DPA
Politics
Germany sends burgers and sausages to Kurds
Photo: Matthias Kock
National
Tribes, ties and a movie: A German's Afghan life
Photo: DPA
Gallery
10 things to do before summer in Germany is really over
Photo: DPA
Gallery
The mysteries of Berlin's abandoned theme park
Photo: Europeana.de 1914 - 1918
Gallery
A German soldier's life behind WWI lines
Photo: DPA
Business & Money
JobTalk: All you need to know about working in Germany
National
Share news tips with The Local Germany
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

3,706
jobs available
Toytown Germany
Germany's English-speaking crowd