The German Mechanical Engineering Industry – an Overview
Mechanical engineering is doubtlessly one of the crown jewels of Germany’s industry, which is why we would like to introduce you to this influential sector in the following:
More than 9,000 companies with an annual turnover of 263 billion euros (2023) make Germany the third most important market player in this industry after China and the USA. Here, you will find global and famous players such as Siemens, Bosch, and Schaeffler. However, the vast majority (> 95 %) of these companies are small and medium-sized enterprises, most of which are still owned by the founding families. This particular shareholder structure creates a culture of patiently pursuing strategies that focus on sustainable long-term goals rather than arbitrating for short-term profits. Geographically, most of these (about two-thirds) in the three industrial hotspots of Baden-Württemberg, Bavaria, and North Rhine-Westphalia.
A closer look at the various sectors that make up the mechanical engineering industry reveals a clear hierarchy in terms of annual turnover (as of 2023). At the top of this hierarchy are machine tools (22.9 billion euros), conveyor systems (21.5 billion euros), and drive systems (21 billion euros). These big three are followed by agricultural machinery, mining, construction and building materials machinery, pumps and compressors, fittings and mountings, and refrigeration and air technology. Food processing machinery, textile machinery, and ovens come next, followed by machinery for the paper industry, as well as metal production and rolling mill equipment. Taken together, all companies in the mechanical engineering sector account for 3.2% of Germany’s gross domestic product.
Highly Skilled Workforce
It is no surprise that Germany is one of the world leaders in mechanical engineering, given the excellent education and training opportunities available in this field. Germany’s numerous universities of applied sciences and internationally renowned institutions such as the RWTH Aachen and the Technical University Munich attract not only domestic students seeking a career in mechanical engineering. Many expats also look to Germany for an education in this field, as employees around the world consider a German engineering degree as favorable. The combination of theoretical knowledge and practical applications that students are taught optimally prepares them for the demands of the industry. This results in a highly skilled workforce in the German mechanical engineering sector, which currently consists of approximately 955,000 employees (2023).
World Class Innovation and Quality
Although Germany is best known for its largest industry – the automotive sector – mechanical engineering is one of the most innovative industries, supplying complex products to all economic sectors. In this industry, the ever-growing need for innovation with sustainable and resource-efficient production processes, eco-friendly products, and resilient supply chain ecosystems offers the most critical economic and ecological opportunities.
In addition to taking a leading role in the European Union’s Green Deal to make Europe the first climate-neutral continent by 2050, Germany has also committed to the United Nations’ Agenda 2030 and the Sustainable Development Goals. These include ensuring affordable and clean energy, promoting sustainable production, and providing an infrastructure for sustainable economic growth. Therefore, the German market offers optimal conditions to expand and develop your business.
Manufacturing: A Driver for Global Recovery
In defiance of the uncertainties posed by key challenges such as global protectionism, reluctance to invest in capital goods, and rapid structural change, exciting opportunities emerge from technological change and industrial transformation. Especially new manufacturing technologies (e.g., digital twins) and the development of new standards for smart machines and systems (e.g., OPC UA in connection with Industry 4.0) create highly lucrative opportunities and a multitude of new job profiles.
Finally, funding for innovative ideas is evident in Germany. You will not encounter any lack of resources for capital as a hurdle to growth here. The German federal government is eager to locate resources where necessary and useful, not only for domestic companies but especially for new entrants with bright solutions for complex problems. Thus, all you need to do is take action.
So, Is It All Smooth Sailing in Germany Right Now?
Taking the pulse of an industry that produces more value than several European countries is always just painting an overall picture. Germany has not been at the forefront of embracing digitalization and has – for too long – relied on technologies that were leading in the last century. This becomes palpable in the current discussions and is also the reason for political conflict.
However, Germany has always been an “oil tanker” and it takes time to set a new course. Once this new course is set, however, Germany will not only invest heavily into conquering these new waters – it will also complete the transformation successfully.
An Infrastructure for Growth
Conclusively, the German mechanical engineering market is on the verge of transformation. Topics such as automation, robotics, and digitization are no longer on the horizon, but on the front porch. Industry 4.0 is paving the way to bright opportunities and Germany offers the right infrastructure to make them a reality. Despite of some bumps in the road, we therefore see good chances for the German mechanical engineering industry to regain its place in the world.