German rubber production down as industry loses ground to ‘non-EU’ rivals

Frankfurt – German rubber industry has reported a 5% year-on-year decline in production during 2023, as manufacturers in the country face high energy costs and bureaucratic challenges.

According to data published by the German Rubber Association (WDK), tire production in the country dropped 6% year-on-year to 470 kilotonnes in 2023, while technical rubber manufacture fell 4.2% to 1.15 million tonnes.

Sales, however, were up 10% over the previous year at €11.4 billion, mainly reflecting higher prices, in the tire and automotive segments.

Employment within the sector declined by 0.6% to 65,900 people, WDK reported 21 Feb.

Utilisation rates dropped 6.4% year-on-year to 77.5%, reflecing a 4.9% decline in tire ulitisation to 73.8% and a 7.8% fall in general rubber utilisation rates to 81.2%.

Investments by the tire sector decreased by 2.3% year-on-year to €430 million in 2023, while the general rubber industry’s investment remained flat at €300 million, according to WDK.

The results “clearly shows that non-European companies are now increasingly gaining market share at the expense of quality-oriented and bureaucracy-burdened domestic industry,” said WDK president Michael Klein.

Urging the German federal government to “act now!”, Klein called for “lower corporate taxes, competitive energy prices, less bureaucracy and comprehensive market surveillance."

According to WDK, costs remain at “a historically high level” within the German rubber industry despite falling energy and raw material prices.

“Even an increase in industry sales of a good 10% – with declining volume sales – is not enough to fully compensate for this,” the association added.

According to WDK chief economist Michael Berthel, the earnings situation in the industry remains "extremely tense".

"Compared to other countries, our external cost burdens in Germany are simply too high,” he added.

As a consequence of such pressure, Berthel said the industry could lose 5% of all its employees in the next two years due to relocations abroad.

Manufacturers of mobility components are particularly affected by the trend, Berthel added.

While supply to the automotive sector grew year-on-year, the weakness in demand for non-automotive technical rubber products, which started in 2022, continued last year.

Furthermore, a “crisis” in the construction industry meant that rubber companies in that sector “hardly found any buyers since last year,” Berthel added.

The "glimmer of hope", the WDK economist said, was that research and development budgets increased during the year.

For 2024, WDK expects a “parallel development of revenues and sales“, which could cumulate in a sales growth of 1% to 2%.