Germany's manufacturing collapse sparks job cuts and social unrest in industrial towns
Germany’s manufacturing sector is shrinking rapidly, hitting its lowest share of the economy in decades. Last year alone, industrial firms cut 124,000 jobs, with the auto industry and chemical giant BASF among the hardest hit. Experts now warn that without action, the country’s economic transformation could deepen regional inequality and social unrest. The chemical hub of Ludwigshafen has felt the impact sharply. BASF, the city’s largest employer, has slashed around 2,500 jobs there since 2022, with further reductions expected. While the company has pledged to avoid forced redundancies until at least 2028 and continue local investment, its decision to sell thousands of company-owned flats has fuelled local anxiety.
Meanwhile, BASF’s focus has shifted eastward. In 2025, it opened an 8.7 billion euro ($10 billion) complex in China—the largest single investment in its history. This move reflects a broader trend among German manufacturers, who are scaling back domestic operations due to soaring energy costs, weak demand, and stiff competition from Chinese rivals. The consequences of industrial decline are already visible. Regions hit by job losses have seen rising social tensions and growing support for fringe political groups, including the far-right Alternative for Germany (AfD). By 2025, manufacturing’s share of the economy had fallen to just 19.5 percent, its lowest level in years. Against this backdrop, Marcel Fratzscher, head of the DIW economic institute, has called on politicians and businesses to act. He stresses the need to ensure Germany’s economy not only survives the current upheaval but emerges stronger from it.
The decline in German manufacturing shows no signs of slowing, with job cuts and overseas investment reshaping industrial towns. BASF’s commitments in Ludwigshafen offer temporary relief, but the long-term challenge remains. Without targeted support, the economic shift risks leaving entire regions behind, with measurable effects on employment and social stability.
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