• 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

Europe is in recession, but the majority of companies in Germany, the region's top economy, are continuing to defy the crisis, with strong and often better-than-expected results in the third quarter.

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
Ex-minister jailed over F1 race track scandal
Ingolf Deubel in court on Wednesday. Photo: DPA

Ex-minister jailed over F1 race track scandal

A former state finance minister was sentenced to three-and-a-half years in prison on Wednesday, having been found guilty of embezzling money in the scandal around the failed sale of the Nürburgring Formula One race track. READ () »

Upper Bavaria boasts lowest EU unemployment
A Bavarian worker works hard Photo: DPA

Upper Bavaria boasts lowest EU unemployment

Southern and central Bavaria have the lowest unemployment in the EU, according to figures released on Tuesday, with one business leader boasting the area has “de facto full employment”. READ () »

Thousands of tax evaders come forward to declare
Uli Hoeneß was jailed last month for tax evasion. Photo: DPA

Thousands of tax evaders come forward to declare

The number of German tax evaders who have self-declared to avoid prosecution trebled in the first quarter of 2014, figures published on Wednesday showed, with the rise put down to the "Uli Hoeneß effect". READ () »

Petition fails to remove WWII Russian tanks
One of the WWII Russian tanks near the Brandenburg Gate. Photo: DPA

Petition fails to remove WWII Russian tanks

The German government rejected on Wednesday a call by two newspapers to remove Russian tanks from a World War II memorial in central Berlin in protest against spiralling tensions in Ukraine. READ () »

Germany warns Ukraine talks must not fail
A Ukrainian policeman at a checkpoint in the eastern city of Kharkiv on Tuesday. Photo: DPA

Germany warns Ukraine talks must not fail

Foreign Minister Frank-Walter Steinmeier said on Wednesday that scheduled four-way talks on the Ukraine crisis must not fail, warning of "the threat of more dead and injured". READ () »

Olympic stadium could be giant polling station
Berlin's Olympic Stadium. Photo: DPA

Olympic stadium could be giant polling station

Berlin's Olympic stadium could become the world's biggest polling station if the Turkish community gets the go-ahead to vote there in Turkey’s general elections. READ () »

The Local List
Nine ways to celebrate Easter like a German
Photo: DPA

Nine ways to celebrate Easter like a German

From rolling wheels filled with burning hay down a hill, to waiting for a fox to bring eggs, The Local List this week looks at the nine best German Easter traditions. READ () »

Biology pupils find horse in kebab meat test
Horse? Photo: DPA

Biology pupils find horse in kebab meat test

Schoolchildren in western Germany came across horse meat while testing doner kebabs in a biology experiment. It comes a year after the horse meat scandal which showed much meat on sale in Europe had been mislabelled. READ () »

Private health insurance not worth it for workers
Photo: DPA

Private health insurance not worth it for workers

Thousands of employees paying into private health insurance in Germany get poor value for money, according to consumer experts - who recommend going private for just one group of workers. READ () »

'Free range' chicken farmer tricks customers
Free range? Photo: DPA

'Free range' chicken farmer tricks customers

UPDATE: A major producer of ethically certifified meat has admitted to defrauding thousands of customers for years by passing off conventional chicken as free range. But the brand said it took swift action to deal with the case. READ () »

RECEIVE OUR NEWSLETTER AND ALERTS
Photo: Galerie Bilderwelt
Gallery
World War I in colour photos
Photo: DPA
Society
'The mafia has infiltrated every sector in Germany'
Photo: DPA
Society
JobTalk: Why you should teach English in Germany
Photo: DPA
National
330,000 sign up against TV licence fee
Photo: DPA
Hamburg
School kids hospitalized after 'porno' party
Photo: Submitted
Frankfurt
'I'll get even with my old pal Schwarzenegger'
Photo: DPA
Gallery
The week in pictures: April 5th - April 11th
Photo: DPA
Gallery
Ten great inventions you (probably) didn't know were German
Photo: J. Arthur White
Berlin
Clashes in Berlin as refugees tear down their own camp
Photo: DPA
Gallery
Munich's baby polar bears are finally named
Photo: DPA
Gallery
The 10 best German employers to work for
CurrencyFair
Sponsored Article
Why it pays to avoid banks when making overseas transfers
Advertisement:
Mr. Lodge
Sponsored Article
How to find a furnished rental in Munich
Sponsored Article
How to make a lasting impression in business
Hult International Business School
Sponsored Article
What they don't teach you at Business School
Photo: DPA
Society
Nine jobs you can only do in Germany
Photo:ESL
Sponsored Article
How to integrate successfully in Germany
Photo: DPA
Business & Money
JobTalk: All you need to know about working in Germany
Photo: DPA
Features
The Local List Archive - Your guide to all things German
National
Share news tips with The Local Germany
Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

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

3,109
jobs available
Toytown Germany
Germany's English-speaking crowd