German industrial output is facing a resurgence of supply chain bottlenecks, raising concerns about the nation’s economic resilience and prompting renewed scrutiny of government industrial policy. A recent survey by the Ifo Institute reveals a significant uptick in material shortages, with 11.2% of companies reporting difficulties securing necessary inputs – a stark contrast to the 5.5% recorded in October. Klaus Wohlrabe, head of Ifo surveys, directly attributed the escalation to the ongoing semiconductor shortage, exacerbating an already precarious situation.
The automotive sector is particularly hard hit, with over a quarter (27.6%) of firms now battling procurement challenges. This represents a dramatic shift from the less than 1% reported just months prior, highlighting the fragility of the industry’s recovery. Manufacturers of electronic and optical products, as well as those producing electrical equipment, are also experiencing worsening conditions, with the proportion of affected companies rising sharply. The machinery sector, a cornerstone of German manufacturing, has also seen a noticeable increase.
While the current rate remains significantly lower than the peak crisis period of 2021-2023, when over 80% of companies reported shortages, the recent surge echoes the levels observed in April 2024, suggesting a concerning trend. These recurring bottlenecks expose a vulnerability within Germany’s industrial base, raising questions about the sustainability of current supply chains and the effectiveness of strategies aimed at mitigating future disruptions. The reliance on globalized supply networks, coupled with geopolitical instability and increased demand, appears to be creating a recurring crisis, underscoring the need for a critical re-evaluation of industrial policy and a move towards greater supply chain diversification and domestic production resilience. Critics are already questioning whether current government initiatives are adequately addressing the root causes of the problem, demanding a more proactive and comprehensive approach to safeguard German industrial competitiveness.