As of: February 1, 2024, 8:22 p.m
By: Andreas Höß
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Bertram Kawalth is chairman of the VDMA in Bavaria and head of the valve and control technology manufacturer Schubert & Salzer.
The stack of papers in his hand: 125 pages of documentation for one of his 27 million valves.
Photo: Andreas Höß © andreas höss
Bureaucracy, energy prices and a shortage of skilled workers: Entrepreneur and Bavaria's VDMA boss Bertram Krawlath talks about the situation in mechanical engineering and the problems of medium-sized companies.
Ingolstadt - His valves help ensure that beer flows from the tap at Oktoberfest and that the fountains in Las Vegas spew fountains: Bertram Kawlath runs the valve manufacturer Schubert & Salzer - a classic German medium-sized company with around 200 employees and customers around the world.
He is also chairman of the Association of Mechanical and Plant Manufacturers (VDMA) Bavaria, to which over 500 companies belong.
Krawlath: “Some mechanical engineers have real existential fears”
With 223,000 employees, the industry is Bavaria's largest employer, ahead of the automotive industry.
We spoke to Kawlath about the situation in mechanical engineering and the problems faced by medium-sized companies.
Mr. Kawlath, German industry is groaning and drawing bleak future scenarios. How does Bavaria's mechanical engineering industry, which you chair as head of the association, look to the future?
Bertram Kawlath: We feel all the problems too.
But one thing is important to me: If we only focus on the negative, we are creating a crisis; it will become a self-fulfilling prophecy.
Entrepreneurship requires optimism.
And we must not lose it.
Does the current situation make you optimistic?
She is no reason to celebrate.
The economic downturn, energy prices, the shortage of skilled workers, a possible re-election of Trump: These are all reasons why companies are holding back on ordering machines and systems.
For our members, this means that orders are declining.
The bottom has probably not yet been reached.
Some mechanical engineers have real existential fears.
But this is only half the truth.
And the other half?
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The bottom line is that we are doing better than one would assume given the mood of crisis.
It only hits some of our members hard.
Others are experiencing double-digit growth and have had a record year.
There are also many small world market leaders in our association who continue to do the best business from Germany.
Until recently, the order situation was better than ever; we still have many pre-orders on the books.
So it's not all bad.
If the situation isn't that bad, how do you explain the subterranean atmosphere?
On the one hand, there are companies that are on the verge of extinction.
People are currently concentrating on these and ignoring the success stories.
On the other hand, the last few years have really taken their toll on many entrepreneurs.
In what way?
Corona, the supply chain problems, the war with Russia and the explosion in energy prices: since 2020, crisis has followed crisis.
At the same time, regulation has continued to bombard us without a break.
Because of this, a lot of anger has built up among the companies.
Bureaucracy is the main reason for this?
Every single measure would perhaps be acceptable and many of them are well-intentioned.
Overall, however, this is particularly overwhelming for small and medium-sized companies.
If the EU supply chain law comes into effect, we should also be personally liable if a supplier screws up.
I have 450 suppliers from 17 countries.
How should I check this please?
The EU supply chain law should not apply to companies with fewer than 250 employees.
It indirectly applies to them too.
If you want to supply large corporations, they often simply pass on the proof requirements.
If you don't provide any information, you won't get the orders.
And many questions are difficult to answer.
For what reason?
With a T-shirt, you may be able to prove that it was made with child labor or that you didn't care about environmental protection.
This becomes almost impossible with machines and systems that contain hundreds of parts and preliminary products.
When I order circuit boards in Asia and ask for proof of which mines the metals on the boards installed there come from, they just give me a bird.
And the supply chain law is not the only requirement.
Which ones are still there?
For example, the business trip certificate, the General Data Protection Regulation, the Packaging Act and so on.
The planned ban on the forever chemicals called PFAS is also hanging over my company.
It should apply not only to disposable cups, but also to every valve my company makes.
Sometimes you think: Are they kidding me?
All of this costs nerves, time and money.
How much?
We examined this in a study.
In large companies, the bureaucracy costs in mechanical engineering currently amount to one percent of sales, in small companies it is three percent.
But at least that doesn't sound completely exaggerated.
Oh well.
First, this only applies to federal rules.
EU and national rules are not taken into account at all.
Second, in many companies two or three percent corresponds roughly to the research costs or the return on investment.
That means: Instead of spending the money on research, you have to spend the money on documentation requirements.
It is often said that many entrepreneurs already want to relocate. Also in Bavaria's mechanical engineering?
We asked our members who would like to move their production abroad in the next five years.
The result: only a single-digit percentage.
The lion's share wants to invest here in Germany.
Does that mean that Germany is not as bad as a location as many say?
Maybe medium-sized companies are just more rooted in their homeland than large corporations.
But precisely because medium-sized businesses see their future here, politicians must create good framework conditions and finally tackle all the problems.
What are you demanding?
We support climate and environmental protection and also the fight against child labor.
But I only want to be responsible for things that I can actually check.
That's why I call for more sense of proportion and pragmatic solutions.
Example of supply chains: reporting requirements could be significantly reduced for primary products from the EU, Japan or Canada because it can be assumed that basic rules are adhered to.
In return, one could take a closer look at raw material imports from Africa or textiles from Bangladesh.
But there are many other options for relief.
And often small changes are enough.
Which one?
When you transport large systems such as wind turbines, you have to carry out a stress report for every single bridge on every single trip - regardless of whether you had already made the same trip with the same transport a week before.
A report is enough!
We are also not allowed to recruit skilled workers from abroad through temporary employment agencies, which could be changed with a half-sentence in the law.
Why don't you do that?
The aim is presumably to prevent German jobs from being replaced by dumping wages from abroad.
That's out of time.
Dumping wages are not our problem.
Due to the aging of society, we can no longer fill all positions and urgently need workers from abroad.
Politicians have known this for years but have done nothing.
It is still extremely complicated and lengthy to get a visa.
They seem to want to scare people away instead of recruiting them.
Why don't we have clear immigration rules like those in Canada, where there is a simple points system?
The issue of immigration is a political minefield.
That's right.
That's why we need constructive and fact-based debates again on controversial topics such as renewable energies or immigration.
Instead, certain parties are demanding that Germany leave the EU.
What would happen if Germany left the EU?
I could close my company.
It would be even more difficult to get skilled workers.
And: My company operates in 93 countries around the world.
Each of our over 20 million different valves has 125 pages of documentation.
Reference is made to hundreds of standards.
If we leave the EU, we would have to specialize these papers and standards for 28 EU countries.
There would then be significantly more bureaucracy, not less.
Interview: Andreas Höß