Phoenix Contact is forced to adapt to ‘a change in geopolitical structures’
8 December 2025 
The German automation manufacturer Phoenix Contact is having to adapt the way it operates in response to dramatic changes in the economic climate, according to the company’s chief operating officer, Ulrich Leidecker. Speaking at the recent SPS exhibition in Germany, he said that “the market has developed in ways that are significantly different from those we expected in recent years, due to the changing framework conditions. The current economic development in Germany is not a classic economic crisis, but rather a fundamental change in geopolitical structures.
“Companies in Germany are having to adapt their structures in order to remain competitive,” Leidecker stated. “At Phoenix Contact, we have also been forced to adapt our company structures to the circumstances so that we can secure resilience and value creation. We are bringing our value creation closer to the sales markets and aligning our structures internationally.”
There is no spirit of optimism in industrial policy yet, Leidecker cautioned, and over-regulation is inhibiting innovation. “Even on topics that have been discussed for a long time – such as the Supply Chain Obligations Act and CSRD reporting – there has been no noticeable alleviation. This is necessary to give the industry the security to concentrate on innovations again.
“We must learn to work together more strongly in order to remain competitive internationally,” he added. “The fragmentation of our industry and the multitude of individual interests make it difficult to set common standards and drive innovation.”
Global challenges, such as tariffs and geopolitical uncertainties, are also influencing Phoenix’s decisions. “The political framework conditions are volatile,” Leidecker said. “We must remain flexible and adaptable.”
The company is positioning itself for the future, and is aiming to take advantage of growth in global markets, especially in China, India and the US. The company is relying on a balanced international presence to spread its risks and seize opportunities.
According to Leidecker, developments in China remain positive for Phoenix. “We are known there as a ‘Chinese-German company’ and we benefit from our long-standing presence and good reputation”, he reports.
Phoenix Contact is investing in a 20,000m² facility in Mexico, half of which will be used for production. This plant, well-connected logistically to the US, will play a key role in its future global production activities.
Phoenix has also opened a new location in Vietnam that combines production and logistics for its automation and power reliability portfolios. The location, with around 100 employees and state-of-the-art manufacturing processes, will serve both regional and global markets.
Leidecker emphasised that Phoenix Contact is still committed to Germany as a location, as demonstrated by an extension to its logistics site in Blomberg that is costing more than €100m – the company’s largest-ever single investment. This automated building, due for completion in 2028, will provide 200,000m³ of additional storage.
Phoenix Contact is experiencing a “moderate” market recovery this year, in the upper single-digit range – a distinct improvement on 2024. Nevertheless, the company has not yet recovered the decline in sales it suffered in 2023. Leidecker expects Phoenix Contact to hit a turnover of €3.3bn for the 2025 fiscal year.
“Despite all the challenges, we are convinced that technology is the key to a sustainable future”, Leidecker stated. He believes that innovation, cooperation, digitalisation, artificial intelligence, cybersecurity and energy resilience, will be the levers for the future.
Sustainability also remains a central issue for Phoenix Contact. The company is working to design its processes and products more sustainably, from development, through production, to logistics. “The current regulatory density makes it difficult for companies to implement sustainable solutions quickly and efficiently,” Leidecker reported. “That said, sustainable business practices and economic success are not mutually exclusive.”
