German Giant Cuts 2,500 Jobs as Competitors Move to Cheaper Spots

German machinery manufacturer Voith announced plans to cut up to 2,500 jobs over the next two years, roughly 10% of its 22,000 global workforce. The cuts will disproportionately hit Germany, where the company faces what CEO Dirk Hoke calls structural challenges including high energy costs, labor costs, and regulatory complexity. Competitors have already moved production to lower-cost countries, leaving Voith 10 to 20% more expensive in project bids.

This matters because Voith is not making commodity products. The company supplies custom-engineered turbines and generators for hydropower plants worldwide. One quarter of all electricity generated globally from hydropower uses Voith equipment. Their paper machines handle a large proportion of worldwide paper production. Drive systems from Voith power industrial plants, rail vehicles, and marine vessels. These are specialized products requiring deep engineering expertise accumulated over decades.

The job cuts target management and indirect staff rather than production workers, but that distinction misses the point. When you slash engineers, project managers, and technical support staff, you are cutting the knowledge base that designs custom turbines, troubleshoots problems at customer sites, and manages complex multi-year projects. Voith operates facilities like the Bath County Pumped Storage Station in Virginia, the world's largest pumped storage plant with over 3,000 MW capacity. Each turbine is custom-designed for specific site conditions, water flow rates, and power requirements.

For US utilities and manufacturers depending on Voith equipment, fewer engineers means longer lead times for new installations, delayed responses to maintenance issues, and stretched technical support when problems arise. Hydropower projects already take years from design to commissioning. Paper machine installations require extensive on-site engineering support. When your supplier cuts 10% of its workforce while competitors have already offshored production, your options narrow considerably.

The broader context makes this worse. German machinery and equipment manufacturing is contracting for the third consecutive year. The sector is losing ground to competitors in lower-cost regions while facing energy costs that remain structurally higher than competitors. Voith previously cut 800 jobs in 2015 and sold off its industrial services division in 2016. The company spun off its commercial vehicles division just last month. Each restructuring promises efficiency gains and focus on core business. Each round also reduces the pool of expertise available when customers need specialized support.

When critical infrastructure suppliers shrink, the question is not just whether they survive. It is whether the institutional knowledge base survives with them and whether alternative suppliers exist at all for highly specialized equipment.

In a world of black swans and cascading disruptions, this is what resilience in action looks like.