Roughly one in four workers in Bavaria—around 1.4 million people—is employed in the manufacturing sector, which includes businesses that produce or process goods such as furniture, tobacco, and automobiles, along with their suppliers. According to the Federal Employment Agency, the sector in Bavaria lost about 18,000 jobs by April 2024. However, the economic slowdown is affecting companies and employees in very different ways.
Growing Uncertainty, Yet Socially Responsible Downsizing
Markus Schmitz, head of the Bavarian regional office of the Federal Employment Agency, reported increasing uncertainty in the sector, particularly within the automotive, metal, and electrical industries. However, employment agencies observed that workforce reductions are often handled in a socially responsible manner. Many companies are cutting jobs held by older workers through severance packages or early retirement options. “There is no intention to lay people off,” said Schmitz.
Flexible Work Models: Foundry Offers 20 Shift Options
Efforts to retain core staff remain strong, as demonstrated by the Krause foundry in Pappenheim, Middle Franconia. The facility manufactures cast parts from various metals for wind turbines, ships, and medical technology. Long-time employee Erich Kuhn begins his shift at 3:30 a.m., despite having reached retirement age. According to site manager and authorized officer Jochen Strunz, the company offers around 20 different working time models to accommodate employees’ personal circumstances.
Structural Transformation and Economic Weakness Pose Dual Challenge
The Institute for Employment Research (IAB) notes that manufacturing is particularly sensitive to economic fluctuations. The ongoing weakness in the economy is pushing companies to adapt through digitalization and a transition to renewable energy, targeting climate neutrality. Krause, for example, has specific plans for a photovoltaic system and has already automated some production processes. Two robots, named after former employees “Erwin” and “Rainhard,” handle parts of the post-processing of cast forms.
Strunz emphasized that transformation is a long-distance effort, requiring substantial investment. He highlighted the importance of involving employees in the process and maintaining open communication. Many valuable suggestions for change, he said, come directly from staff: “Employees are developing ways to implement changes together without leaving anyone behind.”
Training Remains a Strategic Priority
Around 10 percent of the workforce at Krause—about 90 employees—are currently in training. Strunz confirmed that all trainees are retained upon completion. Across the sector, businesses continue to invest heavily in the training of young skilled workers. According to Schmitz, the risk of unemployment for those trained in manufacturing is significantly lower than in other fields.
Harald Höglmeier, CEO of HP-T Höglmeier Polymer-Tech GmbH in Ellingen, Middle Franconia, also noted changes in the market. His company supplies the automotive industry and has faced challenging years. However, he sees opportunity: “When major industrial firms falter, we have a chance to attract highly qualified personnel.”
Forecast to 2035: Demographic Change Worsens Shortages
A 2023 study commissioned by the Bavarian Business Association (vbw) and conducted by Prognos Research Institute found that both labor supply and demand in Bavaria are expected to decline by 2035. However, the supply is projected to shrink by 5.2 percent, while demand is expected to drop by just 2.0 percent—resulting in a growing labor shortage that will vary across regions and professions.
Northern Bavaria is forecasted to be hit hardest. In Kronach County, for example, labor supply in 2035 is projected to fall short of demand by around 21.9 percent. Similar shortages are expected in Kulmbach (19.8 percent), Wunsiedel (19.5 percent), and Lichtenfels (18.1 percent). In contrast, urban areas such as Munich will see a minimal gap of just 0.6 percent. Cities like Regensburg (3.1 percent), Dachau (3.3 percent), and Fürstenfeldbruck (3.3 percent) are also expected to experience only modest shortages.
The study identified critical future shortages in occupations such as cleaning, textile and leather processing, building and utility services, vehicle operation, and security. In contrast, fields like marketing, advertising, media, and agriculture are likely to see a labor surplus.
Demographic change remains the main driver of these shortages, especially in rural regions where a wave of retirements is not being matched by new talent entering the workforce.
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