It’s a changing landscape for German companies grappling with the retirement of the post-war generation and a shrinking labor pool.

At S&D Blech, a machine parts producer, the head of the grinding unit is calling it a day. His departure doesn’t signal an end to the grind, though; it marks the beginning of a new era as the company welcomes a robot to fill the vacancy.

In a country facing a labor drought, many small and medium-sized businesses are following suit, automating their operations in response to the aging workforce and labor market woes.

Official data for June reveals a staggering 1.7 million unfilled job positions in Germany. According to the German Chambers of Commerce and Industry (DIHK), over half of all companies are struggling to find suitable candidates.

This is estimated to cost Europe’s largest economy nearly 100 billion euros ($109 billion) annually.

Automation as a Solution

The push for automation is not just a fleeting trend but a long-term strategy. Henning Schloeder, the managing director at S&D Blech, points out that this move towards automation and digitalization has been ongoing for several years.

He firmly believes that it is necessary to mitigate the already challenging skilled labor situation, particularly in production and crafts.

The difficulty in finding a replacement for the retiring grinding unit head can be attributed to various factors.

Not only does the role require a significant amount of experience, but it also involves arduous and unattractive manual labor that very few are willing to take on. In Schloeder’s words, “It’s a back-breaking job that no one wants to do anymore.”

The Challenges of Machine Grinding

Machine grinding is a laborious and hazardous task. It involves high temperatures and constant noise, with the additional danger posed by the sparks it emits. Such conditions make it an unappealing job for potential candidates.

While Germany has seen an increase in the number of women in the workforce and a surge in immigration, these changes can only partially offset the demographic shifts.

With the baby boomers heading into retirement and a smaller cohort of workers entering the job market due to low birth rates, the Federal Employment Agency anticipates a potential loss of 7 million workers by 2035.

The impact of advanced automation technologies, from robotics to AI, is not unique to Germany.

Nela Richardson, the chief economist at ADP, a global payroll and HR services provider, emphasizes that these innovations are game-changers for the world of work in the long term. She predicts that everyone will need to adapt to a new way of working.

Germany’s Role in Robotics

Germany has already established itself as a significant player in the automation field. Heavy investments in automation by car manufacturers and other industrial giants have made Germany the world’s fourth-largest market for robots, and the largest in Europe.

This shift is not confined to large corporations; it extends to the heart of Germany’s economy—its often family-run Mittelstand companies.

These businesses, ranging from manufacturers like S&D Blech to bakeries, laundries, and supermarkets, are now incorporating robots into their operations.

The International Federation of Robotics reports that approximately 26,000 robotic units were installed in Germany last year, a figure surpassed only in 2018.

This growth in automation has allowed companies to safeguard their future by coping with staff shortages, as pointed out by Ralf Winkelmann, the managing director of FANUC Germany, a company that sells Japanese-made robots to small and medium-sized enterprises.

Transitioning to Automation

Ralf Hartdegen, whose consulting firm specializes in guiding companies through this transition to automation, notes that many companies eager to automate are hesitant to lay off employees.

Instead, they are increasingly basing their plans on the natural attrition of workers through retirement.

ROLEC, a family-run business specializing in systems to protect industrial electronics and control equipment, embraced automation by purchasing its first robot last year. This allowed them to continue production around the clock.

The company has already acquired a second machine and has plans for further investments in automation. For ROLEC’s CEO Matthias Rose, the results have been rewarding. He highlights the convenience of having parts processed and ready for use when employees arrive in the morning.

User-Friendly Automation

The shift toward automation is facilitated by the fact that robots have become much easier to use. Programming skills are no longer a prerequisite, as most robots now come with a Human Machine Interface, similar to a smartphone’s touchscreen.

Florian Andre, a co-founder of SHERPA Robotics, a startup catering to companies with 20 to 100 employees, emphasizes this ease of use.

Interestingly, even workers and trade unions, who were once concerned about job losses, have adopted a more positive view.

A survey conducted by the robots marketplace “automatica” in June revealed that nearly half of German employees see robots as a solution to address labor shortages.

ROLEC’s Rose recounts how their initial foray into automation in 2022 came as a backlog of orders required employees to work overtime and on Saturdays. Instead of being seen as competition, the robot was embraced as a helper, given the circumstances.

A spokesperson for Germany’s influential IG Metall trade union asserts that robots when adopted as part of a long-term corporate strategy rather than a quick cost-cutting measure, can make work “healthier, more interesting, and safer.”

Balancing Human Flexibility and Automation

Lorry and bus manufacturer Daimler Truck has integrated robotics into its operations, particularly for tasks that involve heavy lifting and pose challenges to workers’ physical health.

Despite the efficiency and precision that robots bring, Matthias Krust, the head of the company’s works council, points out, “There is nothing more flexible than a human.”

He emphasizes that as production becomes more complex and differentiated, the use of robots becomes increasingly challenging.

In a labor market that is evolving rapidly, Germany is leading the charge in embracing automation.

The adoption of robots is not just about filling vacancies but also enhancing the work environment and ensuring the sustainability of companies in the long run.

As the world continues to adapt to new technologies, the German workforce is embracing the opportunities presented by automation, making it a key player in the global shift towards a more automated future.