Household appliances: Traditional brand Miele cuts 2,700 jobs – is “Made in Germany” over?

The traditional German company Miele wants to cut 2,000 jobs and relocate 700 more to Poland.

Household appliances: Traditional brand Miele cuts 2,700 jobs – is “Made in Germany” over?

The traditional German company Miele wants to cut 2,000 jobs and relocate 700 more to Poland. Miele cites low demand and increased costs as the reason. The company described the move as an “efficiency program.” The cut is expected to save an additional 500 million euros by 2026, according to a company press release.

“What we are currently experiencing is not a temporary economic downturn,” said the Miele Group management. Rather, the general conditions have changed so permanently that the company now has to adapt to it. The family business from Gütersloh, founded in 1899, is run by two ownership groups, headed by Markus Miele and Reinhard Zinkann as managing partners.

After four successful years in which production was expanded, the move comes as a surprise to many. But the household appliances industry, which lives more than many others from the “Made in Germany” seal of quality, is generally experiencing difficulties.

In 2022, Miele achieved the highest sales in the company's almost 125-year history. This rose to 5.43 billion euros – an increase of 12.2 percent compared to the previous year. The prospect for 2023 was cautiously optimistic, Miele said at the time. Then came the nasty surprise: in 2023 sales fell by around 9 percent. The number of units sold fell by around 18 percent compared to the previous year.

According to Miele, the economic consequences of the war in Ukraine had a particular impact. The premium segment is badly affected. With the announcement, Miele joins a whole series of companies such as Bosch and ZF that also want to make massive job cuts.

Hard times are now beginning for Miele employees. The job cuts should primarily happen in the so-called indirect areas and not on the production machines and assembly lines. However, 700 jobs from the washing machine assembly at the Gütersloh headquarters are expected to go to Poland by 2027. In the future, standard household washing machines will be almost entirely assembled in the Polish factory in Ksawerów.

This development is dangerous for the “Made in Germany” label, because Miele is not an isolated case. “The entire household appliance industry is under extreme pressure,” says Sandra Deutschländer, industry expert at the Boston Consulting Group (BCG). "This is due, among other things, to the advance purchases during the corona pandemic. Consumers were at home and had a budget that they invested in durable consumer goods, among other things." After the pandemic, the economy worsened and inflation and prices rose enormously. "A very classic collapse in demand."

There are also problems on the supply side, says Deutschländer. "Manufacturers are suffering from increased production costs, especially energy and raw material costs." The pressure on margins has increased extremely as a result. "While volumes decline, fixed costs remain the same or even rise due to inflation. And that initially affects all manufacturers."

In addition, the crisis in the construction industry is affecting manufacturers of household appliances. "If less is built, fewer kitchens, ovens and washing machines are needed. It will take some time before the construction industry picks up again. And then it will take some time before this reaches the household appliances industry," says Deutschländer.

According to the expert, the relocation to Poland has nothing to do with lower personnel costs in Poland. They have almost equalized in recent years. We hear from industry circles that the reason for the reduction of the "German jobs" is different: at the main plant in Gütersloh, the production machines are set up on metal laundry drums. But these are more expensive than those made of plastic. And these are exactly what will be manufactured at the factory in Ksawerów.