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Turnover per employee indicates status of crisis' overcoming

Crisis indicator in German machinery industry in 2018 by 7.1% above prec-crisis level

Update June 24th, 2019 - The machine-builders have been hard struggling to overcome the deep fall of production and turnover by the world economic crisis.

 

That also still applies ten years after the outbreak of this crisis. The depth of this crisis as well as its duration belongs to the structural changes that have been developing in the course of industrial production in the leading industrialized countries since the year 2000.

 

As the industry analysis shows, the machinery industry consists of companies with a range of different sizes.

 

We would like to document how companies depending on their sizes are struggling to overcome the crisis effects and which sizes of firm is doing more easily in this context.

Machine-building companies distinguished according to their size

For this purpose we divide the machinery industry into six sizes of company classes according to the numbers of the Federal Statistical Office for 2018. These are machine-building companies with


  • fewer than 50 employees (40% of the companies 2018)
  • 50 to 99 employees (23%)
  • 100 to 249 employees (22%)
  • 250 to 499 employees (9%)
  •  500 to 999 employees (4%)
  •  1,000 and more employees (2%).

Turnover per employee indicating status of crisis' overcoming

The code number, which is to clarify to us the overcoming of the crisis effects, is the turnover per employee. The employees in the mechanical engineering companies operate with full commitment. On the other hand, the turnover they generate considerably depends on the worldwide market conditions as impact of the world economic crisis.

 

Now could the turnover per employee be exceeded above the pre-crisis level? And to what extent did this succeed?

Crisis indicator stagnates in 2018 after three years of growth

The diagram shows the results for the entire machinery industry. The turnover per employee is set to 100 for 2008 so that it becomes clear at a glance, whether this code number is now above, equal or below the pre-crisis level.

 

The result: The turnover per employee exceeded its pre-crisis level (=100) in 2014 with 100.5 for the first time, therefore confirming the crisis' end in the German machinery industry.


In the subsequent three years the crisis indicator kept growing by growing rates. In 2017 it reached a plus of 7%. 2018, however, it stagnated with a plus of only 0.1 to 107.1 index points.

Sales per employee in German machinery industry from 2008 to 2018 as crisis indicator.


A more differentiated picture offers the result for the six size classes.

Machine-building companies with 250 to 999 employees showing above average crisis indicator 2018

The turnover per employee in each of the sizes is again set to 100 for the year 2008.


The process of the crisis overcoming succeeded differently in the individual size classes. To make this easily visible we compare the crisis indicator of the sizes with the average crisis indicator for the entire machinery industry, which is 107.1.


Machine-building companies with 500 to 999 employess (light blue line) could exceed the crisis best. Their crisis indicator already exceeded pre-crisis level in 2011 (104.9), continued increasing and reached 119.7 in 2018, the highest value of all sizes.


Also machine-building companies with 250 to 499 employees (violet line) realized an above averag crisis indicator with 107.3 index points.


The company size of 250 to 999 employees is well above the average size of 171 employess per company in machinery industry2. Obviously an above average company size suits best to the mixed situation of the global economy. At the same time the very large companies with 1,000 employees and more are the least able to cope with this mixed situation.

Sales per employee regarding company sizes in German machinery industry 2008 to 2018.

The opposite is the large companies with 1,000 and more employees (light brown line).


Their crisis indicator only exceeded the pre-crisis level two years later in 2016, after the mechanical engineering industry as a whole had exceeded the pre-crisis level.


And in 2018 their crisis indicator fell back to the pre-crisis level of 2008 with 99.9 index points.


What does this mean?


Against the backdrop of the global economic mix of growth, stagnation and declines with annual growth rates of 1% in the industrialized countries, demand for large new plants is declining or stagnating. Existing plants are used for longer periods or are only partially modernised.


Added to this is the Trump policy of "America first". American sanctions against Russia, Iran and, to an ever greater extent, China are imposed as international law and the violation of them is declared. "America first" thus narrows the sales markets for non-US competitors.


This is the current "American way of life" to get the greatest possible advantage for American companies from the global economic situation.

Smaller machine-building companies with below average crisis indicator in 2018

Mechanical engineering companies with less than 250 employees only reach a below-average crisis indicator in 2018:   

 

  • Companies with less than 50 employees have a crisis indicator of 106.5% in 2018

  • Companies with 50 to 99 employees show a crisis indicator of 105.9

  • Companies with 100 and 249 employees show a crisis indicator of 104.6. 

 

Possible reasons for this are: greater competition worldwide, fewer supplier orders from the very large machine-building companies, reduced sales markets due to US sanctions, trend toward systemic automation solutions that require additional investment.

Turnover per employee in Euro

Finally still for information the absolute numbers for the code number turnover per employee.

Sales per employee and sizes in German machinery industry 2008 to 2018.

The average turnover per employee in the German machinery industry is €241,192 in 2018. Its range is €124,847 from the lowest to the highest value, i.e. 52% of the sector average, reaching from €158,518 with firms with fewer than 50 employees up to €283,365 with companies with 1,000 and more employees.

 


1) As well known all companies of the manufacturing sector are legally with 20 and more employees committed to report production, turnover, employees among others to the Statistical Offices. So these numbers are therefore very reliable.

2) There were 1,085,356 employees at 6,343 operations in the German machinery industry in 2018 according to the Federal Statistical Office.

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