In light of Germany’s acute labor shortage and the difficulties in finding skilled workers to fill key positions, many companies, including S&D Blech, a machine parts producer, are turning to automation as a solution. The head of the grinding unit at S&D Blech is retiring, and instead of struggling to find a suitable replacement, the company has decided to replace him with a robot.
Germany’s post-war “baby boom” generation is gradually exiting the workforce, exacerbating the labor squeeze. Official data reveals that 1.7 million German jobs were unfilled in June, causing more than half of all companies to struggle with vacancies. This labor shortage is estimated to cost nearly 100 billion euros ($109 billion) annually, hindering growth in Europe’s largest economy.
To cope with these challenges, S&D Blech has been investing in automation and digitalization over the years. The company’s managing director, Henning Schloeder, acknowledges the difficult skilled labor situation, particularly in production and crafts. Finding a replacement for the retiring head of the grinding unit has been challenging due to the physical demands and hazardous nature of the job.
The labor shortage in Germany is further compounded by demographic changes. As baby boomers retire and a smaller cohort enters the labor force due to low birth rates, the pool of available workers is expected to shrink by 7 million people by 2035, according to the Federal Employment Agency. These trends, not unique to Germany, are driving the adoption of advanced automation technologies such as robotics and AI across developed economies.
Germany’s investment in automation has propelled it to become the world’s fourth-largest market for robots, and the largest in Europe. Beyond industrial giants, small and medium-sized enterprises, like S&D Blech, as well as bakeries, laundries, and supermarkets, are increasingly embracing automation as robots become cheaper and easier to operate.
While some may fear job losses, robots are increasingly viewed as helpers rather than competitors. A survey conducted by robots marketplace automatica in June found that nearly half of German employees see robots as a solution to address labor shortages. Workers and trade unions recognize that automation can make work healthier, more interesting, and safer.
It is evident that automation is shaping the future of work, changing the way tasks are performed across various industries. Germany’s Mittelstand companies are embracing this shift to ensure their survival amidst the labor shortage. By leveraging robots and automation technologies, these companies can maintain productivity, meet customer demands, and adapt to the evolving labor market.
1. Why are companies in Germany turning to automation?
Due to an acute labor shortage, companies in Germany are struggling to fill vacancies, leading them to embrace automation as a solution. The gradual exit of the post-war “baby boom” generation from the workforce and a smaller cohort of workers entering due to low birth rates have created a significant labor squeeze.
2. How is Germany investing in automation?
Germany is already the world’s fourth-largest market for robots, and the largest in Europe, thanks to heavy investment in automation by car makers and other industrial giants. This investment has made robots more affordable and easier to operate, enabling small and medium-sized enterprises to also adopt automation technologies.
3. How do workers and trade unions view automation?
Workers and trade unions in Germany are increasingly embracing automation as robots are seen as helpers rather than competitors. A survey conducted in June found that nearly half of German employees believe robots can help address labor shortages. Automation is also recognized for making work healthier, more interesting, and safer.
4. Are robots being used across different industries?
Yes, beyond the industrial sector, robots are being employed in various industries such as bakeries, laundries, and supermarkets. As robots become more accessible and easier to use, a wide range of companies, from large corporations to family-run businesses, are utilizing automation to enhance productivity and meet operational demands.