BDG significantly revises forecast for 2025 downwards

In autumn 2024, the BDG had still predicted a largely stable development. Although the assessment at that time did include a reference to possible downside risks, the assumption of a ‘sideways movement’ proved to be too optimistic. In the first half of 2025, production in iron and steel foundries fell by eight per cent to 1.34 million tonnes. The decline in non-ferrous metal casting was of a similar magnitude: minus 8.2 per cent to 370,000 tonnes. The slump in export business is particularly severe: while iron and steel foundries exported 8.8 per cent less, exports from non-ferrous metal foundries fell by as much as 17.5 per cent.

Statistical base effects from the weak second half of 2024 could visually mitigate the losses in the coming months. However, there is no sign of a real upturn. 2025 will thus be the third consecutive year without growth after 2023 and 2024.

Causes: car production and trade barriers

One of the main reasons for the weakness is the decline in car production in Europe. Important production locations such as Spain (-10 per cent), the United Kingdom (-7 per cent) and Hungary (-5 per cent) recorded significant declines. Although production in Germany increased by four per cent, structural change in vehicle manufacturing is leaving its mark: battery electric vehicles, which require fewer cast components, increased by 32 per cent, while combustion engine vehicles declined by four per cent.

In addition, international trade conditions have become more stringent. In mid-August, the US raised tariffs on more than 100 cast products to 50 per cent. This affects engine blocks, cylinder heads and pump housings, among other things. Around five per cent of total German cast exports are directly affected, with up to 80 per cent indirectly affected if cast parts are used in machines or vehicles that are delivered to the US. The BDG warns of growing diversion effects: Asian suppliers could thus exert additional pressure on the European market.

Slump in exports and industry-specific burdens

The situation is particularly critical for exports in the foreign vehicle manufacturing sector. Just a few years ago, this segment was considered a stabilising factor. Within five years, the share of exports destined for vehicle manufacturing rose from 54 to 65 percent. Now, however, it is showing disproportionate weakness. Mechanical engineering, traditionally the industry's second mainstay, is also faltering: order intake fell by two per cent in the first half of the year, while production fell by as much as five per cent. This means that important impetus for a sustainable recovery is lacking.

At 75 per cent, capacity utilisation in July was well below the critical 80 per cent mark. Many companies are deliberately holding back capacity so that they can react quickly to a possible recovery. However, the price for this is rising unit costs and a further decline in employment. In June 2025, around eight per cent fewer people were working in the industry than in the previous year – a level last seen during the financial crisis and the coronavirus pandemic.

This presents the foundry industry with a dilemma: on the one hand, the shortage of skilled workers is a structural risk, while on the other hand, ongoing underutilisation is forcing companies to cut staff.

Political uncertainty exacerbates the crisis

In addition to economic and structural factors, political uncertainties are exacerbating the situation, according to the Foundry Association. ‘The super depreciation allowances that have been introduced, for example, will only have an impact on medium-sized industrial companies if the federal government implements a more far-reaching perspective for Germany as a business location,’ writes Dr Tillman van de Sand, Head of Market Analysis and Economics, in the latest BDG report. ‘The dispute over energy cost relief, for example, is further paralysing investment decisions.’ 

In the second half of 2025, base effects could brighten the statistics somewhat, but the fundamental problem remains: the foundry industry continues to undergo profound structural and demand changes. Only from 2026 onwards could special funds and investment programmes bring about a noticeable upturn.