The German Mechanical Engineering Industry – an Overview

The German Mechanical Engineering Industry – an Overview

Today, mechanical engineering is one of the crown jewels in Germany’s industry. According to the 2019 figures of the Federal Agency for Statistics, more than 6,6 thousand companies generate nearly 230 billion € turnover with the help of a 1,1 million workforce. Within this number you find world players such as Siemens, Bosch and Schaeffler. But the vast majority (> 95 %) of these businesses are small and mid-sized companies, most of them still in the ownership of the founding families. This very specific shareholder structure makes them patiently pursue strategies relying on sustainable long-term objectives rather than arbitrating for short-term profits.

A closer look into this branch with regards to annual turnover highlights a hierarchy lead by tooling industry (23,6 billion €), power train (19,6 billion €) and conveying technology (19 billion €). They are closely followed by mining and material extraction technology, air conditioning and air treatment industry as well as pump and compressors technology. Agricultural machinery, fittings, components for hydraulic or pneumatic installations come next along with machine manufacturers of for food and textile industry. All companies of this sector put together; this single branch generates up to 3,5 % of Germany’s Gross Domestic Product.

Innovation and quality in world class

While the automotive sector proves itself to be the largest industry sector in Germany, mechanical engineering is one of the most innovative industry sectors and supplies complex products for all economic branches. In this sector, the need for innovation with sustainable and resource-efficient production processes, eco-friendly products and resilient supply chain ecosystems provide the most critical economic and ecological opportunities. Besides Germany taking a leading role in the European Union’s Green Deal to make Europe the first climate-neutral continent by 2050, it has also committed to the United Nation’s Agenda 2030 and the Sustainable Development Goals. This is among other to ensure affordable and clean energy, to promote sustainable production and to provide an infrastructure for sustainable economic growth. Therefore, being the market with the most optimal requirements to expand and develop your venture.

Learn more about our market entry approach in this industrial sector.

Manufacturing: A Driver for Global Recovery

Despite all the obstacles that the pandemic brought along and the significant measures that have been introduced, mechanical and plant engineering ensured for the economy to survive and guaranteed a stable economic basis in Germany and all of Europe for the years to come. Upon this foundation, the German Mechanical Engineering Industry Association (VDMA) re-estimated output for 2021 more optimistically to grow by approximately 4%.

However, key challenges like global protectionism, reluctance to invest in capital goods and rapid structural changes still draw overall insecurities. Though, exciting opportunities arise through technological changes 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) demonstrate highly lucrative opportunities and a multitude of new job profiles.

To be able to keep up in the new areas, many mechanical engineers will need further training and development. Companies should keep in mind that only those who ensure for their skilled workers to be trained in time can be sure that they will also be able to keep up with new production processes and Industry 4.0 strategies.

Last but not least, funding for innovative ideas is evident. A lack of resources for capital are no hurdle to thrive. The German federal government is eager to locate resources where necessary and useful, not only for domestic companies, but also and especially for new entrants with bright solutions for complex problems. Thus, only action has to be taken.

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, whilst Germany offers the right infrastructure to realize those.

An exercpt of specific case studies in mechanical and engineering.