The issue of business succession affects all industries in Germany. The skilled trades sector is no exception. As the German Confederation of Skilled Crafts (ZDH) recently announced, an estimated 200,000 companies across Germany will be up for succession in the next five to six years—a figure representing one-fifth of all skilled trades businesses in the country. “This is a huge issue for the chambers of crafts,” says Holger Schwannecke, Secretary General of the ZDH.
Handing these businesses over to potential successors is particularly complicated in rural regions, where the population is shrinking and there are hardly any newcomers. “We have a whole host of businesses located in rural areas, and the owners say: ‘Who would even want to come here?’” says Schwannecke.
Take the state of Bavaria, for example: According to the local chambers of crafts, 23,000 businesses in the Free State are facing a generational transition in the coming years. “For 5,000 of them, the situation is particularly urgent,” says a spokesperson. He points to the advanced age of business owners in several trades: Among plumbers and heating engineers, the owners are 50 years old on average; among metalworkers, the average is as high as 53. “If you start thinking too late—or not at all—about the future of a business, it can, in the worst case, even threaten its very existence,” say the Chambers of Crafts.
But major cities are also affected. Take Düsseldorf, for example: The local Chamber of Crafts estimates that in North Rhine-Westphalia—Germany’s most populous state—alone, about 30,000 businesses are facing a leadership transition due to the owners’ age. That represents roughly 20 percent of all businesses. In the coming years, individual trades will be affected to varying degrees by business succession or closures. Bakers, pastry chefs, and butchers, in particular, are well above the average at 34.4 percent. Their businesses often suffer from the low-cost offerings of discounters and supermarkets.
In medium-sized cities such as Kassel, the situation is similar. Sabine Aue of the local Chamber of Skilled Trades does not want to speak of an acute crisis in Hesse’s skilled trades sector, but she notes that by 2026, 2,300 businesses—or 30 percent of all businesses—will be up for transfer because their owners have reached the age of 65. Demand is particularly strong in the metalworking sector, according to Aue. But demand for businesses in the hairdressing trade also remains high. “Bringing up the rear are the food-related trades, especially butchers and bakers,” says Aue.
The general problem here is a lack of new entrepreneurs to take over these businesses. According to KfW Research, their numbers have been declining for years—from more than 1.5 million in 2001 to just 672,000 in 2016. “Fewer people in Germany are taking the plunge into entrepreneurship now than ever before,” writes Michael Schwartz, author of the KfW Research study. In this context, he points to the economic boom that has been going strong for years. The job market offers excellent opportunities for skilled workers who prefer permanent employment over the risks of self-employment. Added to this is a shift in values: family and leisure time have gained in importance, and work no longer holds the undisputed top spot.
Skilled trades expert Aue confirms this view. “The willingness to become self-employed isn’t very strong,” says Aue. She observes this behavior time and again when the economic situation is good. Fundamentally, however, she is optimistic about the future of the skilled trades. “Even though the trend toward pursuing academic degrees continues, more young people are once again recognizing how many career opportunities the skilled trades offer. They are consciously choosing an apprenticeship in the skilled trades, often with the goal of eventually starting their own business,” she says.
