- Biggest savings in the automotive industry
- Majority plans to (further) relocate abroad
- Southern German manufacturing companies particularly affected
The German economy is facing challenging times. Nearly one in five companies expects a decline in earnings (EBIT), with companies that have an annual turnover of between 500 million and one billion euros and between 1,000 and 5,000 employees being particularly pessimistic. Around a third of top managers expect to cut staff this year. These results are from a survey conducted by the international operating management consultancy Horváth. "There are clear regional differences in the expected development of companies in 2025," says Patrick Heurich, head of the study and partner at Horváth. "The outlook is particularly negative in southern Germany, where many medium-sized manufacturers are based, especially in the mechanical engineering and automotive industries."
Cost pressure can lead to severe cutbacks
In response to the tense economic situation and (announced) tariffs, most companies are focusing on operational restructuring to reduce costs. On average, the savings target is around 16 percent. These cuts are particularly pronounced in the automotive industry, where 68 percent of manufacturers and suppliers are planning layoffs (including socially responsible layoffs), 61 percent want to relocate abroad, and 71 percent want to cut bonuses and flexible salary components.
The most common cost-cutting measures across all sectors include reducing bonuses or flexible salary components (58 percent), offering early retirement schemes to employees (53 percent), foregoing salary increases (53 percent), sites abroad (51 percent), and redundancies, including compulsory redundancies (50 percent). 44 percent of companies are considering short-time work. More than four in ten companies are considering interventions such as closing entire locations, downsizing management, or banning working from home to optimize costs.
Operational adjustments predominate, strategic decisions remain rare
Overall, companies see the greatest potential for savings in production costs (49 percent), materials (47 percent) and administrative staff (39 percent). However, there are industry-specific differences: in the logistics sector, personnel costs in administration are the main focus (54 percent), while in the automotive industry, the majority of companies want to save on production costs, including personnel costs (52 percent). "Companies primarily rely on traditional levers, such as reducing production and material costs," Heurich continues. "The potential of strategic measures, such as targeted portfolio streamlining or adjusting the market position, often remains untapped. To achieve sustainable business success, you must create competitive cost structures and make targeted investments in growth and innovation. This is precisely where a holistic restructuring approach, such as the one we pursue at Horváth, comes in."
About the study
For the Horváth study, 200 top executives from the manufacturing industry, including transportation and logistics, with a turnover of at least 200 million euros and 200 employees were surveyed. The focus was on companies headquartered in Germany. The survey was conducted at the end of the first quarter.
