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Automotive Industry
Dostech, a small supplier of sealant technology in Germany's industry-rich Baden-Wuerttemberg region, shifted focus in 2018 when a surge in automotive enquiries prompted it to embark on a major electric transport project.
The move initially paid off, fuelling rapid growth and enabling the company to buy the building that now houses its headquarters in Moessingen, south of Stuttgart. But it also exposed them to Germany's carmakers, which are now mired in crisis.
"This area is shaky," director and co-founder Steffen Braun told Reuters. "It is no longer as stable and it's hard to make investments." The firm has had to cut staff and auto-related revenues have fallen.
Such pressures are mirrored across Baden-Wuerttemberg, which holds an election on March 8 and where the economy has become the top concern of voters.
The state is home to Mercedes and Porsche, car brands that were for decades synonymous with German manufacturing excellence. But intense competition - particularly from China - an uneven shift to EVs and rising costs have rocked the sector.
Falling demand in the auto supply chain is squeezing hundreds of smaller manufacturers and threatening job security and municipal services.
Although Chancellor Friedrich Merz's conservative party is still likely to win the election, the economic worries and a sense of lost regional pride are providing fertile ground for the far-right AfD's narratives.
A much tougher world for an export powerhouse
Once a leader, Baden-Wuerttemberg is more exposed than most to the structural change sweeping through German industry.
The state is Germany's top exporting region, accounting for 15.5% of national exports, and manufacturing accounts for 38.1% of the state's gross value added, compared with 28.5% nationwide.
Baden-Wuerttemberg's economy shrank by 0.4% in 2024, more than the 0.2% decline in Germany as a whole and, while the country returned to modest growth last year, the state is expected to have contracted again.
Adding to the difficulties, U.S. tariffs which have upended world trade have hit hardest in export-oriented states with a large automotive footprint, said Ifo economist Robert Lehmann.