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Germany the land of industry

OVERVIEW OF THE ECONOMICS OF GERMANY
 
The German economy is predominantly export-oriented and therefore export-dependent. However, since there are not too many sources of raw materials in Germany, importation also plays an important role, especially in the energy sector (mineral oil, natural gas).
 
Germany's exports in 2018 increased by 3 percent and set a record with 1 trillion 317 billion euros. Imports in the country were 1 trillion 90 billion euros and the foreign trade surplus was at 227 billion 800 million euros.
 
The value of 778.7 billion euros of Germany's exports last year was made to the European Union (EU) countries, while it imported goods to the value of 623 billion euros from EU. Compared to 2017, exports to EU countries increased by 3.8 percent while imports from these countries increased by 6.3 percent. Exports to the countries outside the EU amounted to 539.2 billion euros and imports from these countries amounted to 477 billion euros. The country's exports in this category increased by 1.9 percent compared to 2017 and imports increased by 5 percent. 
 
“Motor vehicles were Germany's most important export item in 2018”.
 
 
According to the provisional results, exports of German motor vehicles, trailers and semi-trailers amounted to 229.7 billion euros in 2018. The Federal Office of Statistics (Destatis) reported that, since 2010, motor vehicles, trailers and semi-trailers have been Germany's most important export products. This was followed by machinery (193.2 billion euro), chemicals and chemical products (117.7 billion euro).
 
WHY IS THE GERMAN ECONOMY SO STRONG?
 
Germany, the largest industrial country in Europe, takes on the role of leading the Industry 4.0 revolution.
 
The German industry has a 22.9 percent share in gross value generation. This is the highest share among the G7 countries. The strongest production sectors are mainly the automotive, electronics, machinery manufacturing, and chemical industries.
 
In terms of high export rates, Germany together with China and the USA is among the top three export countries. In 2017, Germany exported goods amounting 1.278.9 billion euros. 
 
Given the importance scale of foreign trade in the Gross National Product (GNP), Germany is the most open national economy among the G7 countries. The foreign trade rate is at the level of 84.4 percent; this is the total amount of imports and exports in the context of the GNP. In the US, this rate is 26.7 percent.
 
The most important economic centers in Germany are metropolitan areas such as Munich (high-tech), Stuttgart (automobile production), Rhine-Neckar (chemistry and IT), Frankfurt am Main (finance) and Hamburg (port, aircraft construction, media). Berlin/Brandenburg is the most powerful startup area.
 
The heart of the German economy beats in mid-sized enterprises that are with the annual turnover of less than 50 million euros and the number of employees is less than 500. 99.6 percent of German enterprises fall into this category. More than 1,000 of them are called 'Hidden Champions’, which are generally unknown to the public but are the leading companies in the world market. 
 
Germany is heading toward full capacity employment. The number of unemployed in June 2018 was about 2.2 million which is the lowest value since the reunification of two Germany. The largest German employers are Volkswagen (642.000 employee world wide), Deutsche Post (519.000), Robert Bosch (402.000), Schwarz-Gruppe (commerce, 400.000) and Siemens (372.000).
 
Economic Activities (2017)
 
Economic Structure (2015 )
Number of companies - 3.5 million
Total Turnover -  6.33 trillion Euro
Total Work Force - 29 million
 
 
Almost 10 percent of European manufacturing companies are German, which alone accounts for 30 percent of value added in manufacturing in the EU. In fact, they represent more than a fifth of Germany's added value - one of the highest in Europe. More and more foreign companies see Germany as an indispensable place for their production sites and benefit from the country's excellent business framework and superior productivity rates.
 
Investments in Germany
Germany is strongly integrated into the world economy. German direct investment abroad has increased fivefold since 1990, exceeding one trillion euros. And foreign investors invested an average of 700 billion euros in Germany. The strong German economy creates jobs and secures employment.
 
Germany is a very attractive country for foreign investors. According to the results of the study by Ernst & Young (E & Y) Consulting Group, Germany holds second place after the UK in the ranking of European locations for investment in 2017. There are 1124 investment projects of foreign companies in the country. 
 
Some of the reasons that make Germany attractive for foreign investors are the qualified labor force, transportation infrastructure and stable political and legal environment. The most criticized side of it is its digital infrastructure.
 
China shares fourth place with France after the United States, Switzerland, and Great Britain in the ranking of the largest direct investors in Germany.
 
Automotive Industry
Automotive Innovation Center of the World
Germany is recognized worldwide for its superiority in the automotive industry and excellence in engineering. From Asia to America, German cars host very important values of innovation, reliability, safety, and design. Germany is Europe's leading production and sales market. The country's world-class R & D infrastructure, industry chain integration and highly skilled workforce create a unmatched automotive environment at international level. 
 
Leading car brands produced in Germany are BMW, Mercedes, Audi, Ford, Iveco, MAN, Neoplan, Opel, Porsche, and Volkswagen.
According to the statements in a press release of Bernhard Mattes, president of the German Association of the Automotive Industry, German OEMs produced 16.5 million passenger cars last year. Germany's share in the global passenger car market is about 20 percent. In China, the market share increased to 22 percent. The automotive industry in Germany has a turnover of 423 billion euros and employs 834 500 workforce, which is more than ever. International facilities employ more than one million people.
 
 
Construction Industry
Germany is Europe's leading construction market and home to the largest building stock of the continent. German construction investments are expected to continue in the future.
 
Three-fourths of buildings in Germany were built before 1980, which allowed the existing stock to be renewed to meet energy efficiency targets. With high demand and strict building codes, Germany offers a highly dynamic market for energy efficient building products and service providers.
The outlook for the German economy continues to grow with an estimated GDP rate of 1.6% in 2017 and 1.9% in 2018 due to the impact of exports and investments, including government spending in the construction sector in terms of housing and infrastructure. Therefore, the outlook for the construction sector is strong, supported by a rising housing market, pointing to a growth rate of 9% in turnouts in 2016. Sector expectations foresee a 4% overall turnover increase for all market segments. The German construction sector has not suffered from the crisis as much as its European counterparts. On the contrary, there has been an increase in productivity and employment, primarily due to investments in the construction of residential properties.
 
 
Aviation Industry 
 
The German aviation industry has made significant progress over the past two decades.
 
Since the mid-90s, industrial revenues have increased more than fourfold and have exceeded 40 billion euros in 2017. 
 
Industry analysts predict that between 30 and 35 thousand new aircraft will be put in service over the next 20 years to meet increasing global aviation demand, leading to a new golden era of aviation. As a global aviation hub, Germany is home to one of the leading players in the civil and defense aviation market.
 
The combination of world-class R & D infrastructure and strong production base promises international investors to develop the latest technologies for tomorrow's aviation needs. Compared to other major manufacturing countries in the aerospace industry, such as the US, Canada, and France, the country's strong production base, availability of labor and cost-efficiency provide an advantage for investors.
 
Machinery and Equipment Industry
 
Germany's Machinery and Equipment sector is the second largest and most innovative industrial sector in Germany. The sector is dominated by small and medium-sized companies that offer customized products to meet the strong demand of both local and international manufacturing industries.
 
The machinery and equipment industry is a sector that combines all of the key technologies of the future, including electronics, robots, materials, and software.
 
The strength of this sector stems from the combination of Germany's proven engineering tradition, its position as a technology development leader and a highly diversified industry base. The fourth industrial revolution began in Germany with the Industry 4.0 project, which aims to make the country a leading market and a provider of advanced manufacturing solutions.
 
 
Trained Work Force
 
Germany's world-class education system is aimed at ensuring that the highest standards are always met. The German workforce consists of more than 43 million people which makes him the largest pool of ready labor in the EU. In addition, companies in Germany benefit from higher education levels in the workforce: more than 80 percent of the German workforce has formal vocational training or an academic degree.
 
Germany's world-famous dual vocational education system consists of approximately 1.3 million vestibule and more than 8,800 vocational schools. 
The share of German university students in mathematics, computer science and engineering is the highest in the EU, and 31 percent of all German students have the highest graduates with a doctorate in science and engineering, according to OECD statistics.
 
Industry 4.0
 
Germany has been carrying out significant efforts to become a world-leading and important supplier on the issues of the Fourth Industrial Revolution, which includes Internet-based services, called Industry 4.0 and the Smart Services World. Studies on the fourth industrial revolution are carried out in cooperation with the public, private sector and scientific community in the country.
 
While the Federal Ministry of Economy and Energy and the Federal Ministry of Education and Research are operating as the leading institutions in this field, many important research centers, technology clusters, industry, trade chambers and associations are also contributing to the realization of the vision of the Fourth Industrial Revolution of Germany (Industry 4.0 and the Smart Services World). 
 
The studies to make Germany a market and a supplier to lead the world in cyber-physical systems and intelligent services by 2020 has been carried out within the scope of the detailed policy, budget/fund programs, and support activities package. 
 
The Smart Factory KL initiative developed at the Artificial Intelligence Research Center (DFKI) in Kaiserslautern,  is the first independent display factory in Europe developed for industrial applications of the latest information and communication technologies. The initiative aims to form a basis for widespread use of innovative automation technologies in science and industry as well as to develop, implement and disseminate it in different sectors.
 
Smart Services World
 
"Smart Services World" project on internet-based services in the economy is a "Project of the Future", which was discussed within the scope of the German High Technology Strategy 2020 Action Plan and considered as the successor of Industry 4.0.
 
The project is supported by the German Federal Ministry of Economy and Energy (BMWI) and is run by the German Trade and Investment Agency. It is considered that the digital transformation of the global economy will bring about the transformation of products and online services into "smart services" in the new hybrid services economy.
 
Source: DESTATIS, , GTAI (German Trade & Invest), deutschland.de, T.C. Ministry of Science, Industry and Technology. 
 
 
 
 

Date : 15.03.2019