Berlin Dr. Michael Stahl Michael Stahl Head of Economic Department GESAMTMETALL the employers’ association of the German metal and electrical industry The current economic Situation of the German metal and electrical industry

Berlin Dr. Michael Stahl 2 Branches of the M+E Industry Automotive industry Mechanical engineering Electrical engineering Fabricated metal goods industry Foundries Communication equipment Medical, precision and optical instruments Steel working, steel rolling Non-ferrous metalworking industries Steel and light metal construction Shipbuilding and marine engineering Drawing and cold rolling mills Aerospace equipment, manufacturing and repair

Berlin Dr. Michael Stahl 3 Members & Employees  The M+E Industry in Germany comprises companies, of which are industrial companies with 3,5 million employees.  Gesamtmetall represents 19 member associations with companies and over 2 million employees.  companies are covered by collective agreements (with 1.8 million employees). The other companies are so called „OT“ members (with employees).

Berlin Dr. Michael Stahl 4 Total July Incoming orders (by origin) Upwards again Index value 2005 = 100, quarterly figures, seasonally adjusted and adjusted for price July 2009 compared to July 2008 Abroad: -27,8 % Domestic: -13,9 % Total: -21,5 % Domestic Abroad Source: Federal Statistical Office.

Berlin Dr. Michael Stahl Bottom of the crisis July 2009 compared to July 2008 Fabricated Metal Goods:- 28,5% Electrical Engineering:- 16,6% Mechanical Engineering:- 40,7% Automotive Industry:- 8,1% 1.Q. July/June 2009 compared to April/May 2009 seasonally adjusted Fabricated Metal Goods:+2,4% Electrical Engineering:+5,2% Mechanical Engineering:+9,2% Automotive Industry:+11,3% April/May June/July Incoming orders by branches Mechanical Engineering Fabricated Metal Goods Electrical Engineering Automotive Industry Index value 2005 = 100, quarterly figures, seasonally adjusted and adjusted for price Source: Federal Statistical Office.

Berlin Dr. Michael Stahl Still on the bottom July July 2009 compared to July percent Production Quarterly figures, seasonally adjusted Index value 2005 = 100 Source: Federal Statistical Office.

Berlin Dr. Michael Stahl 7 Production by branches Fall stopped Fabricated Metal Goods:-33,5% Electrical Engineering:-24,8% Mechanical Engineering:-31,5% Automotive Industry:-21,5% July 2009 compared to July Vj. June/July April/May Source: Federal Statistical Office. Mechanical Engineering Fabricated Metal Goods Electrical Engineering Automotive Industry Quarterly figures, seasonally adjusted Index value 2005 = 100

Berlin Dr. Michael Stahl 8 Jan. 76, July 69,3 Normal use of capacity Source: ifo Business Survey. Average degree of capacity utilisation in percent of their full use of capacity As low as never before Capacity Utilisation

Berlin Dr. Michael Stahl 9 July Increase in Employment from April 2006 to September 2008: Reduction July 2009 compared to July percent Reduction since October 2008: Employment Seasonally adjusted Measured in thousands of employees Sources: Federal Statistical Office, Gesamtmetall Calculations; *2009 prelimenary figures.

Berlin Dr. Michael Stahl The gap opened again 2006 vacant positions* (reported and not reported) 2007 August Seasonally adjusted Measured in thousands of people Unemployed People *) according to FAL researches every second vacant position isn‘t reported to FEA Sources: Federal Employment Agency (FEA), Gesamtmetall calculations. Labour Market of M+E Occupations

Berlin Dr. Michael Stahl 11 Job security Incoming Orders Employees 2. Q. July Aug. Sep. Oct. Nov. Dec. Jan. Feb. March Apr. May June Expected employment at a normal level of productivity Companies stick to permanent staff Production seasonally adjusted Index value 2. Quarter 2008 = 100 Sources: Federal Statistical Office, Gesamtmetall Calculations.

Berlin Dr. Michael Stahl 12 Short-time work in the M+E Industry Sources: Federal Statistical Office thousand Short-time work is exploding – Wave of announcements ebbs away Number of people covered by announcements Number of Short-time worker

Berlin Dr. Michael Stahl 13 Full time work net pay SC 100 % Short-time work net pay SC 100 % Short-time work + further training net pay SC SC = Contributions to Social Security Insurance Employer Employee 0 € What does the employer have to pay? only up to 7th month

Berlin Dr. Michael Stahl 14 Example: 50 % Short-time work Short-time work with 50 % reduction of working time net pay Employer Federal Employment Agency net pay cancelled net pay STWA 67 % Employees pay STWA = Short-time working allowance ES* Employer subsidy by CA (*not in all regions)

Berlin Dr. Michael Stahl Source: Federal Statistical Office. Job security Declining productivity – rising costs Production per hour Unit labour cost Annual percentage change

Berlin Dr. Michael Stahl 16 Sep Bottom of the crisis May Business Situation Source: ifo Business Survey. The balance values of the current business situation are the differences of the percentages of the responses “good” and “poor” Assessment of the present state of business Balance values, seasonally adjusted

Berlin Dr. Michael Stahl 17 Sep Positive again Business Expectations The balance values of the expectations are the differences of the percentages of the responses “more favourable” and “more unfavourable” Business outlook for the coming half-year Balance values, seasonally adjusted Source: ifo Business Survey.

Berlin Dr. Michael Stahl 18 Obviously less Sceptical Jan. Feb. Mrz. Apr. Mai Jun. Jul. Aug. Sep. Okt. Nov. Dez. Jan. Feb. Mrz. Apr. Mai Jun. Expected Development of Exports for the next 3 Months Business Expectations Source: ifo Business Survey The balance values of the expectations are the differences of the percentages of the responses “expected to rise” and “expected to decline” Expected Development of Production for the next 3 Months Balance values

Berlin Dr. Michael Stahl 19 Further Layoffs in Sight Jan. Feb. Mrz. Apr. Mai Jun. Jul. Aug. Sep. Okt. Nov. Dez. Jan. Feb. Mrz. Apr. Mai Jun Balance values The balance values of the expectations are the differences of the percentages of the responses “expected to rise” and “expected to decline” Expected Development of Employment for the next 3 Months Source: ifo Business Survey Business Expectations

Berlin Dr. Michael Stahl 20 Consumer Prices Close to Stability annual percentage change Sources: Federal Statistical Office, Consensus Forecasts, September 2009 quarterly figures forecasts July -0,5 Aug. 0,0 2010

Berlin Dr. Michael Stahl 21 Forecasts GDP1,3-4 1/21 1/2 productivity0,0-2 1/23 consumer spending0,41/2-1/2 public spending2,12 1/22 investment3,3-221/2 export2,9-155 import4,39 1/23 consumer prices2,601 Out of the Crises? annual percentage changes source: IW Köln,