German rubber industry sees signs of recovery in second half

Frankfurt, Germany – Rubber manufacturers in Germany are seeing some signs of recovery in 2024 but remain under severe pressure from weak demand and high costs.

Sales and production improved compared to the previous quarter, found a first-quarter survey by industry association the WDK.

However, the study – carried out in April and participated in by more than 60% of member companies – registered negative trends compared to the prior-year first quarter.

Year-on-year, turnover fell 3.8%; sales dropped 2.8% while domestic production declined 1.8%, said the WDK management summary provided to ERJ.

WDK noted that the first quarter of 2023 was “relatively stable”, with business development only becoming “increasingly gloomy as the year progressed.”

The latest responses from the German rubber industry reflect general economic leading indicators pointing to a slight upturn in overseas business.

Incoming orders from abroad are up 1.1% on the previous year, but the domestic demand has “not yet been able to follow suit,” noted the WDK.

“There are signs of an improvement for the year as a whole,” read the survey summary, noting that companies in the sector expect sales to grow in 2024.

This, said WDK, suggests that, after a downturn at the start of the year, German rubber manufacturers will see a pick-up in sales in the second half of the year.

But, it emphasised: “The German market is still lagging behind global economic development [as]the framework conditions for a competitive location are lacking."

This was evidenced by the industry survey, which found that 16% of companies are planning to relocate production abroad – a "high figure" by historical standards.

“This relocation trend can be explained by a look at the earnings situation, which is strained or even under threat for about a third of companies in the sector,” said WDK.

The main obstacles for rubber manufacturers remain low demand, skills shortages and excessive red-tape due to German and EU regulations, the association concluded.