Threat of redundancies

Industry struggles with poor order situation

There is still no end in sight to the economic downturn, and the mood in the industry is correspondingly poor. If the situation does not improve soon, there is a threat of redundancies.  

The economic crisis is not only a reality, it is also threatening to become increasingly entrenched. The latest economic survey by the Vorarlberg Chamber of Commerce for the first quarter of the current year also bears witness to this: the business climate index - i.e. the average of the current business situation and the assessment of the business situation in six months' time - is still clearly in negative territory with a minus of 7.9 points. The last time a positive value was recorded was one and a half years ago. Michael Amann, Managing Director of the Industry Division of the Vorarlberg Chamber of Commerce, is not even trying to sugarcoat the situation: "The situation in Vorarlberg's industry remains precarious. Incoming orders are declining and the number of employees is under increasing pressure. Last but not least, companies are struggling with rapidly rising personnel costs."

Downsizing only a matter of time

In fact, the details of the current economic barometer give little cause for hope: around a third of companies (34%) are currently reporting a poor business situation. For 37%, order backlogs have collapsed, and for 32%, foreign business is currently poor.

37 percent

of all Vorarlberg industrial companies surveyed as part of the current economic barometer are complaining of a slump in orders. This could soon force companies to reduce their workforce.

This must be particularly worrying: When asked about the number of employees in three months' time, 35 percent of companies stated that they expect staff numbers to fall. The latest AMS figures confirm the unpleasant development on the labor market: at the end of March 2024, 9590 people were registered as unemployed in Vorarlberg - an increase of 13.2 percent compared to the previous year. "Companies are trying to keep their skilled workers despite a lack of orders. However, it is becoming increasingly difficult to achieve the required prices for industrial products 'Made in Vorarlberg' on the international market, especially due to the sharp rise in costs," reports Amann. The industry representative fears that the location is increasingly losing competitiveness. In Austria, for example, unit labor costs rose by 12 percent in 2023, compared to only four percent for our equally hard-hit neighbors in Germany.

If we as Vorarlberg's industry are no longer competitive, production sites will be at risk and, in the medium term, there will also be a loss of prosperity.

Michael Amann, Geschäftsführer der Sparte Industrie

Tax cuts and a reduction in bureaucracy
It is therefore no wonder that industry representatives see it as the responsibility of politicians in particular. The central demands are well known: a significant reduction in the tax rate and the removal of bureaucratic hurdles.

In any case, it is highly unlikely that the crisis will resolve itself. In the latest economic survey, just six percent of the companies surveyed in the Ländle region stated that they expect the business situation to improve in the next six months. So times remain frosty.