Data released in early June by the VDMA (German Engineering Federation) shows that Germany’s domestic machinery orders fell 4% to 5% in real terms year-over-year. High manufacturing costs and rigid bureaucracy continue to weigh down the home market. However, the industry is forecasting a 1% production recovery to $15.72 billion USD (€13.7 billion) for the latter half of 2026. This mild turnaround is entirely driven by the rollout of the German federal government’s “Special Assets” (Sondervermögen) off-budget funds, which are finally trickling down into physical orders for climate protection, infrastructure, and defense machinery.
Source: VDMAand VDW Read The Article Read The Article Read The Article
PSR Analysis. For German heavyweights like Wacker Neuson, BMW Group, and Stihl, the message is clear: survival inside Germany requires a shift away from standard commercial lines toward state-funded infrastructure and municipal grid expansion.
To fight off rising Chinese export competition (which jumped 18%), German OEMs are increasingly shifting to a “Local-for-Local” manufacturing footprint, moving up to 20% of their production capability out of Germany into other eastern EU regions (like Poland and Romania) to capture lower labor and operational costs while maintaining an EU-origin label. PSR
Emiliano Marzoli is Manager of European Operations for Power Systems Research
