Germany´s Companies frantically rehire workers and ramp up capacity

German industrial companies are frantically rehiring workers and ramping up capacity as they approach output levels last seen before the 2008 collapse of Lehman Brothers sent the global economy into a tailspin.

Orders for export-driven Germany’s key sectors such as machinery, cars and chemicals are pouring in, say businesses.

Axel Heitmann, chief executive of Lanxess, Germany’s biggest speciality chemicals group, said Europe’s industrial powerhouse was profiting from a rebound in demand from Asia. “Germany has all the reason to be very optimistic,” he added.

German engineering, the country’s industrial heart employing 915,000, last week revealed a 61 per cent increase in orders year-on-year in May.

Manfred Wittenstein, president of VDMA, the German engineering association, said it had raised its production forecast for 2010 from a zero increase to one of 3 per cent.

“We are approaching normal capacity utilisation,” Mr Wittenstein said. “With this order inflow, we will soon face the problem of a skill shortage.”

Within a matter of months, many engineering and car companies were forced to switch from a long period of short-term work to rehiring contract workers and running full and even special shifts.

German unemployment fell to 7.5 per cent in June, the lowest level since December 2008.

Mr Heitmann said Lanxess was raising its capital expenditure by more than 50 per cent to €430m this year to increase capacity and it would spend more in 2011.

“Some of our product lines have already reached pre-crisis capacity utilisation,” he said.

Peter Schwarzenbauer, Audi’s head of sales, said the premium carmaker was on track to reach its 2008 record of 1m cars sold.

Germany’s upbeat news has prompted economists to lift their economic growth forecasts. Last week, Commerzbank revised its German GDP forecast for this year to 2.5 per cent from 1.8 per cent.

Mr Wittenstein and other industrialists forecast growth to slow in the second half of the year. “The Chinese market will calm down and previous year’s figures will become harder to beat,” Mr Wittenstein said. Data from China and other parts of Asia have pointed to a slowdown in manufacturing on the continent. The mood in corporate Germany seems unshaken by these prospects.

Ulrich Reifenhäuser, managing director and owner of plastics machinery maker Reifenhäuser, said his company was struggling to cope with an order increase of more than 100 per cent in some months this year.

“I really hope that this will start to level off and that growth rates will come down again. I am hoping for a more moderate and steady growth rate,” he said.

http://www.ft.com/cms/s/0/db7cae3c-879f-11df-9f37-00144feabdc0.html