Why the Mechanical Engineering Industry Holds Hope for Recovery - Baden-Württemberg's machinery sector thrives on exports despite trade risks in 2024

Machinery manufacturers in Baden-Württemberg experienced a mixed year in 2024. While domestic order volumes stabilized, export demand drove stronger growth than in other German states, fuelled by increased orders to the USA and Asia, according to reports from the VDMA. However, the sector faced challenges from global trade tensions and shifting stock market conditions.

The region's mechanical engineering industry recorded an 8-10% rise in orders during 2024, outperforming the national average of 5-6%. This growth was largely driven by exports, particularly to the USA and Asia. However, December brought a setback as incoming orders dropped by 3%, with foreign demand falling by 10% despite a 16% increase in domestic orders.

Across the year, the domestic market remained weak but stable, showing only a 3% uptick. Meanwhile, eurozone orders climbed by 9%, helping offset some losses. Still, the sector ended 2024 with a real, price-adjusted decline of 2%.

Businesses in the region remain cautiously optimistic, as key eurozone markets show signs of recovery. However, uncertainties persist. Unpredictable U.S. tariff policies and China's expanding trade influence continue to weigh on sales outside Europe. The industry, which employs 331,500 people across over 1,500 companies, remains a vital part of Baden-Württemberg's economy.

The mechanical engineering sector in Baden-Württemberg demonstrated resilience in 2024, with export-led growth softening the impact of a weak domestic market. While eurozone demand is improving, global trade risks still pose challenges. The industry now looks ahead, balancing optimism with caution in an uncertain economic landscape.