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Turnover per employee indicates status of crisis' overcoming

Crisis indicator in German machinery industry in 2019 only 4.7% below prec-crisis level

Update June 10th, 2020 - 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 eleven 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 2019 1. These are machine-building companies with


  • fewer than 50 employees (40% of the companies 2019)
  • 50 to 99 employees (24%)
  • 100 to 249 employees (21%)
  • 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.

 

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

Crisis indicator drops in 2019 nearing pre-crisis level

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 until it stagnated 2017 and 2018 with a plus of 7% resp. 7.1%.


In 2019, the crisis indicator drops to 104.7 index points approaching to the pre-crisis level of 2008. This corresponds to the crisis-related decline in sales in the mechanical engineering sector, which began in June 2019.

Sales per employee in German machinery industry from 2008 to 2019 as crisis indicator.


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

Machine-building companies with 500 to 999 employees showing the best values of the crisis indicator 2019

The crisis indicator as turnover per employee is back to 100 for 2008 for each company size category.


The process of overcoming the crisis was successful to varying degrees in the individual company size classes. For this purpose, we compare the crisis indicator of farm sizes with the average value of 104.7 for mechanical engineering.


Three company sizes cope with the consequences of the crisis with above-average success:
  

  • Larger companies with 500 to 999 employees   
  • Smaller firms with fewer than 50 employees   
  • Companies with more than 50 to 99 employees.


Mechanical engineering companies with 500 to 999 employees (light blue line) were most successful in overcoming the crisis. Their crisis indicator exceeded the pre-crisis level as early as 2011 (104.9), has been rising continuously since then and reached 119.9 in 2019, the highest value of all company sizes to date.


The smaller mechanical engineering firms with fewer than 50 employees (dark brown line) also achieved an above-average crisis indicator of 108.5, thus signalling their above-average ability to overcome the crisis.


Mechanical engineering firms with 50 to 99 employees (dark red line) achieved an above-average crisis indicator of 105.0 for above-average ability to overcome the crisis.


Companies with 100 to 249 employees (green line) show below-average success in overcoming the crisis. Their crisis indicator is 102.7 in 2019, which is below the average of 104.7 index points.


Mechanical engineering companies with 250 to 499 employees (violet line) fall just below the pre-crisis level of 2008 with a crisis indicator of 99.4.

Sales per employee regarding company sizes in German machinery industry 2008 to 2019.

The opposite pole is formed by large companies with 1,000 or more employees (light brown line).


Their crisis indicator did not exceed the pre-crisis level until two years later in 2016, after the mechanical engineering industry as a whole had exceeded the pre-crisis level.In 2018, their crisis indicator fell back to the pre-crisis level of 2008 with 99.9 index points.


In 2019, this development worsened further with a crisis indicator of 97.9, which is significantly below the pre-crisis level (=100) of 2008.


What does this reflect?


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


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


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

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 2019.

The average turnover per employee in the German machinery industry is €235,852 in 2019. Its range is €116,351 from the lowest to the highest value, i.e. 49% of the sector average, ranging from €161,547 with firms with fewer than 50 employees up to €277,898 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.

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