Thousands of German Jobs on the Line as Industrial Giants and Mid-Size Firms Reshape Operations

Germany's industrial base undergoes sweeping restructurings from steel to auto, with layoffs, insolvencies, and union protests; some firms achieve turnarounds amid challenges.

Worker representatives are sounding alarms across Germany’s industrial heartland as a wave of restructurings, insolvencies, and strategic exits reshapes the country’s manufacturing landscape from steel mills to auto factories.

The most stark warning comes from the steel sector. Stephan Ahr, works council chair at Saarstahl, says the project to produce green steel is at risk of collapse. Debt of 1.7 billion euros, political lobbying pressure, and the sheer cost of transformation could derail the entire saarländische industrial base, he argues. To underline the urgency, unions have called for a protest day on June 12 that is expected to draw thousands of participants.

In the automotive supply chain, the restructuring is equally dramatic. Rheinmetall, the defence group, is offloading its civilian automotive division to financial investor Aequita for 350 million euros. The sale affects 6,200 employees. IG Metall has negotiated a bridging collective agreement that includes a three-year guarantee against dismissals and a ban on plant closures. Rheinmetall says it wants to focus on its higher-margin defence operations, a rationale that has sparked debate about the long-term commitment of German industry to car components.

Volkswagen’s German plants are under growing strain. At the Salzgitter site, works council chief Björn Harmening has ruled out closures, pointing to agreements struck in 2024, but he concedes the plant is suffering from high material costs for battery vehicles and weak demand in China. At VW’s Zwickau factory, employment has already dropped from more than 10,000 to 8,000. Further pressure comes from Stellantis, Opel’s parent company, which plans to cut 650 of the 1,650 engineering jobs at its Rüsselsheim development centre. The aim is a drastic reduction of European production capacity.

Amid these large-scale shifts, smaller manufacturers are also falling. The Chemnitz textile machinery builder STC Spinnzwirn has filed for insolvency, citing a lack of orders, rising costs, and geopolitical uncertainty linked to the Iran war as reasons. The company employs 140 people. Preliminary insolvency administrator Joachim Voigt-Salus described the core of the business as healthy. Wages are secured until July, and the main insolvency proceedings are expected to open on August 1.

There is at least one positive note. Office furniture maker König + Neurath, based in Karben, has completed its insolvency proceedings under self-administration as planned. Out of an original workforce of 830, 700 employees remain. The turnaround came at a cost: workers made financial concessions through adjusted bonus payments and a three-year postponement of collective wage increases. Chairman Patrick Heinen, who took over in April, continues to lead the company.

In Zweibrücken, machine tool builder Pallmann plans to eliminate roughly half its jobs. Mayor Marold Wosnitza has promised talks with the state government and unions, but no details have yet emerged.

Labour unrest is spreading beyond manufacturing. The Verdi union has called nationwide warning strikes in retail and wholesale. In Saarbrücken, around 300 employees from Kaufland, Ikea, and Rewe walked off the job. Verdi is demanding a monthly pay increase of at least 225 euros.

Politically, the German government is facing criticism for its slow implementation of the EU’s pay transparency directive, which was adopted in 2023. The rules come into force for the public sector on June 8, but private-sector employers are still excluded from the regulation. The European Commission could launch infringement proceedings over the delay, adding another layer of uncertainty for businesses already navigating a turbulent economic climate.