The discussion around Germany’s industrial crisis and the Polish steel sector should not be reduced to steel prices or the condition of German mills alone. Poland and Germany are deeply connected through supply chains, manufacturing partnerships and industrial trade, which means that any structural slowdown in Germany eventually has consequences for Polish producers as well.
From my perspective, however, the current situation should not be seen only as a threat.
It may also create an opportunity for part of Europe’s production capacity, engineering work and industrial orders to shift towards Central European companies. But there is one important condition: Polish manufacturers cannot compete solely on the basis of lower labour costs or cheaper steel.
We need to compete through technology, quality, flexibility, shorter lead times and the ability to deliver complete industrial solutions.
That, in my view, is where the future of European manufacturing is heading.
Łukasz Pawłucki
President of the Management Board, GMM INOX
Germany remains Europe’s industrial powerhouse, but its position is under growing pressure
For decades, Germany’s economic model was built on a powerful industrial base, strong exports, relatively competitive energy costs and the global strength of its automotive, machinery, chemical and metalworking sectors.
Today, almost every one of these pillars is under pressure.
The labour market data shows how significant the shift has become. Around 177,000 manufacturing jobs disappeared in Germany during 2025. The automotive industry and its suppliers lost approximately 52,000 jobs, mechanical engineering around 28,000, and the metal industry roughly 24,000 positions. (pkb24.pl)
In my opinion, this is no longer just a temporary downturn in the business cycle.
We are increasingly looking at a structural problem within German industry.
High energy costs, the cost of the energy transition, regulatory pressure, competition from Asia, changes in the global automotive market and weaker export demand are all making industrial production in Germany more difficult and more expensive.
Official data also shows considerable volatility. German industrial production rose by 0.9% month on month in May 2026, but by July it had fallen by 1.1% month on month. Automotive production was among the areas most affected. (destatis.de)
I would therefore avoid talking about the “collapse of German industry”. That would be an overstatement.
What we are seeing is more likely a long-term transformation of Germany’s industrial model, and that transformation will inevitably affect Poland.
Why does Germany’s slowdown matter for the Polish steel industry?
Germany remains one of Poland’s most important economic partners. Supply chains between the two countries are so closely integrated that it is difficult to treat Polish and German industry as entirely separate systems.
This is particularly true in:
- automotive manufacturing,
- machinery,
- metalworking,
- steel structures,
- industrial equipment,
- automation,
- components,
- chemicals,
- steel processing.
When a German car plant reduces production, the impact does not stop at that factory.
Lower vehicle output means less demand for components, machinery, tooling, steel structures, maintenance services and raw materials.
The effect moves through the entire supply chain.
This is why the impact of Germany’s industrial crisis on Polish steel is much broader than simply a question of steel imports and exports.
First risk: more German steel may be redirected to Poland
We started seeing signs of this even before the current industrial slowdown became fully visible.
At the beginning of 2026, representatives of the Polish steel industry warned that increasing volumes of competitively priced German steel were entering the Polish market. (businessinsider.com.pl)
The mechanism is straightforward.
If a steel mill or service centre has available production capacity but domestic demand is falling, it will naturally look for customers elsewhere.
Poland is an obvious destination:
- it is a large industrial market,
- it borders Germany,
- logistics are well developed,
- steel consumption is substantial,
- both countries operate within the EU single market.
This can create a seemingly paradoxical situation.
A crisis in German industry does not necessarily push steel prices higher. In some periods, it may actually put downward pressure on prices, because producers with unused capacity are more aggressive in neighbouring markets.
For companies that purchase steel, that may be beneficial.
For domestic steel producers, the picture is much more difficult.
Cheaper steel does not always mean a healthier market
As a manufacturer that purchases and processes stainless steel, I obviously pay close attention to material costs.
Lower steel prices can reduce the cost of a project. But we should not look at the market only through the perspective of one order or one quarter.
If European steelmaking capacity continues to decline because producers cannot compete with imported material or with manufacturers operating under very different cost structures, Europe may become increasingly dependent on external suppliers.
That becomes a matter of industrial security.
The European Union has also recognised this problem. In June 2026, new EU measures addressed the negative impact of global steel overcapacity on the European market. EU documents explicitly describe global excess production capacity as a structural problem that is unlikely to disappear in the short or medium term. (eur-lex.europa.eu)
That is an important signal.
Europe is beginning to understand that steel policy cannot be based solely on the principle of buying from whichever source offers the lowest price.
Second risk: a weaker German industrial sector means fewer orders for some Polish suppliers
This is probably the most immediate concern.
For years, many Polish companies have developed as suppliers to German manufacturers.
That model worked extremely well.
Poland offered competitive costs, strong technical skills, qualified workers, geographical proximity and fast turnaround times.
But if the German customer cuts production, its Polish suppliers receive fewer orders too.
In mid-2026, analysts were already pointing to weaker German demand as one factor reducing order volumes for Polish industrial companies, particularly those linked to automotive and machinery. (pkb24.pl)
For Polish companies, this is an important warning.
Dependence on a single market, a single country or a single industry is a much greater risk today than it was only a few years ago.
But there is another side to the story: production may move towards Poland
This is where I see the greatest opportunity.
If manufacturing in Germany becomes too expensive, companies have several options.
They can:
- reduce output,
- relocate production outside Europe,
- automate more aggressively,
- move parts of the value chain to more competitive European partners.
The fourth scenario is particularly important for Poland.
We do not need entire German factories to move east.
What we can win are larger parts of the industrial value chain.
Component manufacturing.
Welding.
Machining.
Prefabrication.
Assembly.
Tank production.
Process equipment.
Engineering.
Complete industrial systems.
This is, in my view, far more important than debating whether a tonne of Polish steel is cheaper than a tonne of German steel.
Poland needs to move from subcontracting to technology partnership
For many years, Poland’s main competitive advantage was cost.
That advantage is gradually becoming less significant.
Wages are rising, energy remains expensive, and companies across Europe are investing heavily in automation.
If Poland wants to benefit from the structural problems facing German industry, we cannot build our strategy around one message:
“We can do it cheaper.”
A much stronger proposition is:
“We can design it, manufacture it, test it and deliver the complete solution.”
That is also how I see the development of GMM INOX.
Manufacturing stainless steel equipment should not be about selling kilograms of processed metal.
Real value is created through:
- engineering,
- material selection,
- precision welding,
- high-quality surface finishing,
- quality control,
- technical documentation,
- testing,
- assembly,
- full project responsibility.
The more of these competencies remain with the Polish manufacturer, the less important the simple labour-cost difference between Poland and Germany becomes.
Germany’s difficulties may accelerate nearshoring
The events of recent years have changed the way companies think about supply chains.
The lowest purchase price does not always mean the lowest total cost.
Companies also need to consider:
- transport time,
- geopolitical risk,
- component availability,
- production flexibility,
- supplier visibility,
- technical communication,
- inventory requirements,
- risk of supply disruption.
Poland is in a very strong position here.
For a company in Germany or Austria, a Polish manufacturer is geographically close. A customer can visit the production site, inspect equipment, discuss technical details and receive the finished product by road within a relatively short time.
For complex industrial equipment, this matters enormously.
That is why I expect nearshoring to remain one of the strongest trends in European manufacturing.
China is also changing the competitive landscape
It would be a mistake to analyse Germany’s situation in isolation.
German industry is facing several major pressures at the same time.
One of the most important is China.
This is visible in automotive, machinery, electronics, chemicals, steel and industrial manufacturing more broadly.
In the first half of 2026, German exports to China were down 12.3% year on year, while imports from China increased by 8.9%. (destatis.de)
That says a great deal about how the relationship has changed.
China is no longer just a major export destination and a source of low-cost production.
It is increasingly a direct competitor to European manufacturers in their home markets.
If Europe wants to maintain a strong industrial base, the answer cannot be cost cutting alone.
We have to become technologically stronger and more flexible.
Stainless steel should be analysed differently from commodity steel
It is also important to separate different parts of the steel market.
Not every segment behaves in the same way.
Mass-produced structural steel is one thing. High-quality stainless and acid-resistant steel used in specialist process equipment is another.
At GMM INOX, we work for sectors such as food processing and pharmaceuticals, where material price is only one part of the purchasing decision.
Customers also consider:
- material grade,
- weld quality,
- surface roughness,
- hygienic design,
- cleanability,
- material documentation,
- process requirements,
- fabrication quality.
At GMM INOX, steel is often just the starting point for a much more advanced product: a process tank, mixer, production line component or custom industrial system.
In my view, companies operating in this part of the value chain have the best chance of strengthening their position in Europe.
Germany will not cease to be an industrial power
It is important to keep a sense of proportion.
Germany still has enormous capital resources, technical expertise, research capabilities, globally recognised brands and a highly developed industrial network.
The 2026 data also shows that the economy is not moving in only one direction.
In May, new manufacturing orders in Germany increased by 1.9% month on month. In June, exports reached a seasonally adjusted record of €139.3 billion. (destatis.de)
The picture weakened again later, with industrial production falling 1.1% in July and exports declining 0.8% from June. (reuters.com)
This suggests that we are looking at an unstable industrial transformation and structural weakness, not a simple linear collapse.
I do not expect Poland to “replace Germany”.
That would not be realistic.
What is much more likely is a gradual redistribution of orders, production tasks and industrial competencies across Europe.
That is the space where Polish companies can compete.
What could happen to steel prices?
This is one of the hardest questions to answer.
Several forces are pulling in opposite directions.
On one side, weaker industrial demand in Germany and across Europe puts downward pressure on prices.
On the other side, there are:
- energy costs,
- carbon costs,
- CBAM,
- trade restrictions,
- global overcapacity,
- Chinese industrial policy,
- US tariffs,
- geopolitical conflicts,
- volatile raw material prices.
For that reason, I do not expect a simple scenario in which “Germany’s crisis means cheap steel”.
What I expect instead is greater price volatility.
Periods of oversupply and aggressive pricing may alternate with sudden increases caused by energy, regulation or trade policy.
Europe’s biggest industrial problem is competitiveness
For me, the debate about Germany ultimately leads to a much broader question.
Europe needs to decide whether it still wants to be a region where manufacturing is economically viable.
European companies face high costs related to:
- energy,
- labour,
- regulation,
- environmental transition,
- investment financing.
At the same time, they compete with manufacturers operating under entirely different conditions.
The issue of global steel overcapacity has become so serious that in June 2026 the EU explicitly described it as structural and pointed out that the European Union is the only major steel-producing region where production capacity is declining. (eur-lex.europa.eu)
That should concern anyone interested in Europe’s long-term economic independence.
Without a strong industrial base, strategic autonomy becomes extremely difficult.
What should Polish manufacturers do now?
I would not wait for Germany’s industrial problems to automatically generate new business for Polish companies.
That is not how markets work.
Companies need to prepare deliberately.
In my view, several areas are particularly important.
First – diversify markets. Germany should remain one of Poland’s most important partners, but excessive dependence on one country increases risk.
Second – invest in technology. Automation, modern equipment and quality control allow companies to compete on more than labour cost.
Third – increase value added. Selling a complete industrial system is better than selling a single component. Delivering engineering, manufacturing and assembly is stronger than selling labour hours.
Fourth – invest in people. European industry will continue to need skilled welders, engineers, designers and process specialists.
Fifth – remain flexible. The ability to produce short series, custom equipment and project-specific solutions can be a major advantage over larger industrial groups.
At GMM INOX, we are investing during a period of uncertainty
From an entrepreneur’s perspective, one of the most interesting aspects of the current environment is that uncertainty does not have to mean standing still.
At GMM INOX, we decided to continue investing and expand our production capabilities.
In 2026, we began construction of a new production and office complex worth approximately PLN 10 million, which will increase our technological and manufacturing capacity. (gmminox.com)
I do not see this investment as a bet that the economic environment will suddenly become easy.
Quite the opposite.
Periods of major structural change often create the opportunities that determine a company’s position for many years.
If European customers increasingly look for new suppliers and manufacturing partners, we want to be ready in terms of production space, technology, quality and people.
Germany’s industrial crisis and Polish steel – threat or opportunity?
My answer is simple: both.
For Polish steel producers and companies competing mainly on price, the situation may be extremely difficult.
Oversupply, German steel entering the Polish market, high energy costs and global competition may put significant pressure on margins.
Companies heavily exposed to German automotive and machinery may also experience periods of weaker demand.
At the same time, there is a real opportunity for Polish industry to capture a larger share of the European value chain.
Not by selling cheaper steel.
By selling engineering, technology and complete products made from steel.
That is where I see the future.
If Polish manufacturers continue to invest in people, quality, automation, engineering expertise and the ability to deliver complete projects, the current transformation of German industry could ultimately strengthen Poland’s industrial position.
For many years, Germany was mainly a huge export market and a source of orders for Polish suppliers.
In the years ahead, it may also become a market where Polish companies increasingly operate not as low-cost subcontractors, but as equal technology partners.
That is the position worth building.
Łukasz Pawłucki
President of the Management Board, GMM INOX
Sources
- German Federal Statistical Office, Destatis – 2026 data on industrial production, orders and foreign trade.
- German Federal Ministry for Economic Affairs and Energy – economic assessments published in 2026.
- PKB24 – data on 177,000 manufacturing jobs lost in Germany.
- Business Insider Polska – reports on increased competitive pressure from German steel in the Polish market.
- Regulation (EU) 2026/1384 – global steel overcapacity and its impact on the EU steel market.
- Reuters – reporting on German industrial production and exports in 2026.
