Germany has emerged as a world-renowned business and manufacturing location. It has always been a famous automobile industry, through chemicals and engineering, to digital innovations and to Industries – the country has always been the flagbearer of industrial leadership.
The country has become a global place where innovation has been at the forefront. Germany is continuing to evolve into the digital age and they have been able to embrace new industries that include environmental technology, additive manufacturing and the digital economy. The land boasts of a world-class infrastructure, a skilled and flexible labour force as well as a national strategy that always looks and embraces innovation. This is country where everyone can come and invest in – especially in engineering and heavy industries.
It is no secret that German mechanical engineering has always been the backbone of the German economy. Even in the international market, the country stands for progress, performance, and reliability.
Over the past 20 years, it has been able to grow at 2.2 percent and it has been able to generate an average EBIT margin of 3.9 percent.
Now, there are hardly other industry which is so diverse and at the same time, an industry which has been developing with so much gusto.
At the same time, there are signs of change. There is immense pressure from foreign competitors as they are offering better quality at a lower price even in industries that are traditionally dominated by German companies. The international integration of markets has increased and this has had a knock-on impact on volatility. There is a fourth industrial revolution in the offering and we cannot ignore the impact of digital technology on the value chain. And there is also the impact of disruptive technologies that include 3D printing which have the potential to change the very structure of business models.
As things stand right now, there is one in ten mechanical engineering products worldwide is produced in Germany. And if we factor in the high export share, these products comprise 16 percent of machinery exports worldwide.
Not only this, as many as 1 million employees have generated a turnover of around EUR 200 billion a year. As far as the revenue is concerned, Germany has become the world’s third largest producer of machinery and plants after China and the United States.
Apart from this, German mechanical engineering is very innovative – in the manufacturing industry, 11 percent of research and development (R&D) expenditure flows from this sector.
There is an average growth of around 10 percent p.a. (2010 to 2012) in German mechanical engineering and this growth is organically driven. Now, companies that have more than EUR 50 million in revenue grow not only with the respective user markets, but also from market share gains.