Just a couple of years ago, the Dutch manufacturing industry was the growth leader in the eurozone. Now? The Netherlands is officially struggling to keep up.
How bad is it? Well, Dutch production levels have officially been declining for 16 straight months. Recent figures from Statistics Netherlands (CBS) show that in October 2024 alone, production dropped by 2.5% compared to the same month last year.
This ongoing slump started in mid-2022 — and it continues to cause headaches for manufacturers across the country.
So, what’s the issue?
The big players in the industrial sector have many concerns, from finding an adequate inventory management guide to dealing with a lack of qualified staff. But the production issue is larger than that.
The main culprit here is a sharp drop in incoming orders, which has hit multiple sectors hard.
Transportation equipment manufacturers and the chemical industry are particularly feeling the pain, according to the AD. Meanwhile, food manufacturers are standing out as the exception, managing to increase production even during these tough times.
Overall, production levels are nearing their lowest point since May 2020, when the COVID-19 pandemic wreaked havoc on global supply chains.
Industrial economist Albert Jan Swart from ABN AMRO has been keeping a close eye on the situation. Speaking to NU.nl, he lists a few major factors behind the stagnation:
- High interest rates: These have driven up borrowing costs for companies that depend on loans to keep their operations and investments running smoothly.
- Germany’s economic struggles: As the Netherlands’ biggest trading partner, Germany’s problems are spilling over, and the German automotive sector has been hit hard by falling sales and tough competition from cheaper Chinese electric vehicles.
- Political uncertainty: The potential return of Donald Trump to the U.S. presidency is causing unease among Dutch exporters. Trump’s previously announced import tariffs on European goods could make life even harder for businesses reliant on U.S. markets.
READ MORE | Here’s how another Trump presidency would impact the Netherlands
The competitors are taking over
While the decline in production is already evident (and has been for a while), industry insiders warn that a deeper crisis may be looming.
Koos van Haasteren, the director of Chemelot — a major industrial cluster in Limburg — has raised alarms about a potential “industrial exodus.”
Talking to the AD, he describes the Netherlands as “sleepwalking” toward a disastrous future, where entire industries could collapse under the weight of rising costs, shrinking competitiveness, and policy hurdles.
“We are not only more expensive than China or the United States, but even Germany and Belgium offer more competitive conditions,” Van Haasteren explains. One major issue is that the Netherlands is the only country in Europe to abolish its large-scale energy user discount.
Why should we care?
It’s easy to dismiss this as a problem for big businesses, but in reality, the stakes are high for the entire country. Van Haasteren warns that losing major industrial hubs would deal a severe blow to Dutch prosperity.
These sites aren’t just places where goods are made — they’re centers of innovation and high-paying jobs that sustain the local economy. “We risk losing our unique knowledge and production locations,” he warns.
So, the Dutch industrial sector is in a bit of a pickle. Immediate action is needed to restore competitiveness and reverse the downward trend. At the same time, long-term solutions are crucial to ensure a sustainable future for the industry.
According to the experts, without intervention, Dutch manufacturers risk being outpaced by cheaper and more efficient competitors in China, the U.S., and even neighboring European countries.
As Van Haasteren puts it, the Netherlands cannot afford to live in a fairy tale. The challenges are real, and the clock is ticking for decisions that can help secure the future of Dutch industry.
What’s your take on the situation? Share your thoughts in the comments below.