Germany's Construction Sector Grades Its Own Performance Poorly: Bureaucracy, Energy Costs, and Digitalization Gaps Hinder Development
Small and Medium Enterprises (SMEs) rate Germany poorly - Lowest Ranking Member in the Union: Germany in the Community
Small and Medium Enterprises (SMEs) in Germany's construction sector struggle to make progress, as reported in a Forsa poll for Commerzbank. The survey reveals that the nation lands 9th on the list of economic nations, surpassed by even Italy and Vietnam.
A mere 10% of the 1,525 participating companies rate Germany's current conditions as "excellent" or "good." On the other hand, 60% view them as "satisfactory" or "adequate," and close to a third (29%) perceive them as "insufficient" or "inadequate."
More than seven in ten (71%) businesses from all sectors believe the prestigious label of "Made in Germany" has significantly lost its significance. There is an expectation among the business community that the new government will offer a fresh perspective.
Trade disputes fuel uncertainty
The trade conflict with the USA is a source of concern, with many businesses actively pursuing additional sales markets and anticipating price hikes to counteract higher tariffs.
According to a DZ Bank survey, companies in the metal, automotive, and machinery sectors, in particular, experience the brunt of US tariffs and counter-tariffs. In all, 15% of the 1,007 SMEs surveyed report direct impact from higher US tariffs, while 50% are bracing for indirect consequences, such as increased costs from suppliers.
EU counter-tariffs pose additional risks
The SME sector may be disproportionately affected by potential EU counter-tariffs: approximately one-third (29%) of businesses expect higher purchasing costs, and 46% fear repercussions on their suppliers.
Data for the DZ Bank survey was collected in March, preceding US President Donald Trump's announcement of increased tariffs, such as a 25% levy on car and steel imports. In early April, Trump threatened the EU with additional import duties of around 20%. These proposed duties are currently on hold, and the EU is hopeful for a negotiated solution.
- SME Challenges
- Bureaucracy
- Energy costs
- Digitalization
- USA
- SMEs
- Germany
- Federal government
- Trade dispute
- Business competitiveness
- Frankfurt am Main
- EU
- Forsa
- Commerzbank
- Europe
Insights:
Employing more efficient administrative procedures and reducing regulatory complexity can facilitate a more competitive business environment for SMEs in Germany. High energy costs can be offset by implementing strategies for improved energy efficiency within the construction sector. Bridging the digitalization gap requires targeted initiatives and resources to support SMEs in adopting new technologies. The trade dispute with the USA adds an element of unpredictability and potential cost fluctuations, potentially disrupting the supply chain and hindering SMEs' global competitiveness.
Small and Medium Enterprises (SMEs) in Italy, unlike those in Germany's construction sector, may be thriving due to better employment policy conditions. Tariffs imposed by the USA on imported steel and cars from Germany could potentially affect the competitiveness of German SMEs, particularly those in the metal, automotive, and machinery sectors. To strengthen their resilience, these SMEs might need to reassess their finance policies in light of anticipated price hikes due to higher tariffs. Additionally, potential EU counter-tariffs pose additional risks, particularly higher purchasing costs and repercussions on suppliers for a significant portion of SMEs. Employing more efficient administrative procedures, improving energy efficiency, and bridging the digitalization gap are crucial for the competitiveness of SMEs in Germany, regardless of ongoing trade disputes.
