ZVEI Trend Barometer – Comment Sentiment better than numbers

Gerhard Stelzer, Editor-at-Large der Elektronik und Elektronik automotive
Gerhard Stelzer, Editor-at-Large der Elektronik und Elektronik automotive

Decision-makers in the electrical industry are surprisingly optimistic. However, the key figures sales, production and incoming orders give no reason for this.

The German electrical and electronics industry has a mixed start to the new year 2020. On the one hand, new orders received by the key industry in November 2019 (latest figures) have slumped by almost 12 percent compared to the previous year 2018, as the ZVEI (German association of the electrical and electronics industry)  economic barometer January 2020 has determined. Domestic orders fell by 15.3 percent, and 8.9 percent from abroad. The drop in incoming orders from January to November 2019 was less dramatic. It amounted to 3.4 percent. However, this is no reason to sound the all-clear, as the decline in incoming orders accelerated until November.
Incoming orders naturally have a delayed effect on sales. In November 2019, the electrical engineering companies had to cope with a 4.6 percent slump in sales compared to the previous year, with sales of EUR 16.5 billion, whereby here too the domestic market weakened more than the international market. From January to November 2019, the sector generated sales of 175.2 billion euros, which corresponds to a still moderate 1.5 percent drop in sales. Here too, the bottom has probably not yet been reached.
What is surprising, however, is that the business climate in the German electrical and electronics industry continued to improve in December 2019, reaching its highest level for half a year. Less surprising in view of the above figures is that the current assessment of the situation is lagging behind business expectations. Cautious optimism seems to be spreading for the future. 18 percent of companies rated their current economic situation as good, 63 percent as stable and 19 percent as poor. For the next six months, 22 percent expect business to pick up, 54 percent expect it to remain stable and 24 percent expect it to decline. Here the development at both ends of the scale seems to polarize into winners and losers, which is not a good sign for the entire electrical and electronics industry. It smells more like a selection process.

What can the industry do?

It is only with new technical developments that new business areas typically open up. So it is important for the industry to continue to invest in research and development. Andy Grove is credited with the bon mot »only the paranoid survive«. Transferred to the German electrical industry, this means innovating to the max.
The industry must therefore maintain its innovative strength and best of all expand it. But the industry should not be left alone in this. Politics and society must not duck away. Politics must set reasonable framework conditions, e.g. with the further expansion of fiscal research funding and clever industrial policy that keeps know-how in the country, and society must admit to scientists and engineers that only technical progress is capable of solving society's most pressing problems, such as global warming or an ageing population. Politics and society must understand that scientific progress is part of the solution and not part of the problem.