INDUSTRY OVERVIEW

The Machinery &Equipment Industryin Germany

ISSUE 2022/2023

THE MACHINERY & EQUIPMENT INDUSTRY IN GERMANY

Germany – Innovative Excellencein Engineering“Germany has a lot of industry and logistics – so that’s right at the core of our
go-to market plan. We see a lot of potential in helping German companies bemore effective and flexible, thereby giving them a competitive advantage.
And we see that our customers also want us to be near them as well.”Daniel Hessen, Chief Commercial Officer,
Wheel.me Service AS, Norway

Number 1

3.5%

EUR 17 bn

16%

EUR 260 bn

81%

Machinery & Equipment (M&E) is the second largest and themost innovative industry sector in Germany. It is one of thetechnological motors that drive the country as a high-technation – and one that combines all of the key future technologies (including electronics, robotics, materials, and software).

In 2021, mechanical and plant engineering was once again
the most important driver of growth in German industry.
Turnover increased to EUR 260 billion – a new record that
contributed considerably to the upturn in the German economy. The fourth industrial revolution is already in full swing
with the country’s ambitious Industrie 4.0 initiative. This
landmark project will usher in a new age of decentralized
production that will transform industry.

domestic industry sector by level and degreeof innovation

total domestic industry research and development spending in 2021

domestic post-Covid-19 record industry turnoverin 2021

The M&E sector is developing the climate-neutral manufacturing solutions to help Germany realize its climate
goals. Industry will be transformed through the provisionof “Carbon Contracts for Difference” to make climate-neutral manufacturing and production economically viable forindustry. The new industry-friendly funding and investment
framework will help businesses make the transition to climate-neutral production.

value added share of German economy
gross value added

share of global machinery trade and world’s
leading supplierof machinery turnover generated frominternational exports in 2020

Double-digit billion euro investments in the country's semiconductor and battery production sectors will see significant
demand – and market expansion – for mechanical engineering solutions over the next five years and beyond.

Germany’s Machinery & Equipment
Industry in Numbers
World’s Top M&E Manufacturer
With global machinery trade share of almost 16
percent, Germany’s M&E industry sector remains
the world’s leading supplier of machinery – consolidating its position ahead of both China andthe USA. In 2020, German machinery and plant
manufacturers were world market leaders in 13(rank 1) and 8 (rank 2) out of 31 M&E sectors. Germany is home to Europe’s best-performing M&E
sector, with record turnover in the region of EUR
260 billion in 2021. The positive turnover trend is
set to continue with market forecasts for 2022
(EUR 265 billion) and 2025 (EUR 290 billion) andbeyond predicting growth at the same level. German export levels have almost reached pre-crisis
levels, increasing by 9.8 percent to EUR 179.4 billion in 2021. Mechanical engineering is also oneof the largest industry sectors in the European
Union (EU), with the EU single market generating
M&E turnover of around EUR 586 billion.
FDI Magnet
Germany is the preferred M&E investment location in Europe, attracting around 24 percent of
all M&E projects. This makes the M&E sector thelargest industry sector in inward investment
terms, with one in five of all M&E manufacturing
and R&D investment projects. With 397 projects inthe period 2018 to 2021, Germany is ahead of theUK (297), France (160) and Spain (119). The USA isthe biggest inward investor in terms of both manufacturing and R&D projects and sales and service-related projects in Germany.

Most Important Industry Sector
Machinery & equipment is Germany’s largest
sector by level of activity, boasting almost 6,600
companies – of which nearly 90 percent are SMEs
– along the value chain. The German M&E industry remains Germany’s largest industrial employer: The German M&E industry currently employs aworkforce of over one million people. With total
R&D expenditure of almost EUR 17 billion in 2021,
the M&E industry counts among the most innovative industry sectors in the country. Within themechanical engineering sector, the machine tools,
drive technology and material handling equipment sectors are amongst the most important interms of annual turnover.

Germany isEurope's top
M&E FDI location.

German M&E Industry Turnover Forecast
in EUR billion

265.5

2022

285.8

288.0

289.9

2023

2024

2025

Source: Statista 2021

Production Value in Selected M&E Sectors in Germany 2020
in EUR billion

Pumps and Compressors

16.8

Engines and Turbines

15.9

Machine Tools

15.4

Power Transmission and Engineering

15.2

Material Handling Technology

14.5

Air Handling Technology

12.8

Agricultural Machinery

10.4

Constr. Equip./Building Mat. Machines

10.0

Source: VDMA 2021

3

MARKET OPPORTUNITIESNew Technology
TrendsAs the world's leading M&E market, Germany
plays a significant part in setting new trends
and developments. The country is pioneeringthe "decarbonization" of industry on the way
to climate neutrality. This is being complemented by advances in advanced manufacturing and the deployment of digital and energyefficient solutions in the future production
space.

Visit Germany
Trade & Invest's 3D
Printing website forcurrent additive
manufacturing
developments:
www.gtai.com/
3d-printing

Additive Manufacturing
Additive manufacturing, more commonly known
as “3D printing,” is finding increased industrial
application beyond its rapid prototyping origins.
Germany already enjoys a reputation as a leader
in a market that is set to exceed EUR 21.5 billion
by 2023. The country occupies third spot internationally – behind only the USA and Japan – interms of distribution of industrial additive manufacturing installations. The M&E sector is the
major application industry for additive manufacturing. Toolless manufacturing, increased efficiency for materials and freedom of design will all
become reality thanks to additive manufacturing.
Germany boasts engineering facilities that allow
international investor to expand their operations
to Europe.
Energy-efficient Technologies
Industry sectors, including the plastics and metalindustries, are increasing their investment inenergy-efficient production. This is due in largepart to Germany’s ambitious “Energy Transition”
project. Energy-efficient machinery, optimized
components and systems (e.g. cross-sectoral technologies including electric motor systems, pumps
and fans) have a decisive role to play in complying
with climate protection and cost-saving goals.
German companies active in energy-intensive
industry sectors have been working for decades
to optimize production process energy-efficiency
levels. The government has set aside more than
EUR 17 billion in funding as part of the “National
Plan on Energy Efficiency 2050” for the period2020 to 2023.
Industrie 4.0 – Lead Market and Provider
Germany is one of the world’s leading advanced
manufacturing nations. The German market for
Industrie 4.0 solutions (software, IT services, andIT hardware) increased from EUR 95 billion in 20194

Industry Overview 2022/23  |  gtai.com

to almost EUR 102 billion in 2021 (equivalent toannual growth of around six percent over theperiod). This is forecast to rise to EUR 109 billion
for 2022.
According to bitkom, German companies havespent more than EUR 10 billion on Industrie 4.0
solutions during the period 2015 to 2020 – withspending of more than EUR 2.6 billion in 2020
alone. More than 65 percent of German companies
already use or plan to use special Industrie 4.0
applications. Continued double-digit growth isforecast in the respective software, IT services,and hardware segments that make up Industrie
4.0 solutions. Extra value added potential of morethan EUR 400 billion has been forecast for theperiod up to 2025. The main application industries
driving Industrie 4.0 solution uptake are the automotive, mechanical and plant engineering, electronics, and high-tech sectors. The additional value created by the "Industrie 4.0" digitalization of
production, supply and distribution chains is forecast to provide the German economy with a productivity boost of 12 percent by 2025.
Information and Connectivity
Production technology stands on the verge ofradical change with the arrival of the Internet ofThings and services in the factory. Automation andelectrification linked to intelligent control systems
is directing new product development in many
M&E segments and has enormous market potential for the future. Germany’s lead market for 5G
networks and applications ambitions have led tothe creation of a number of 5G production test
beds in real-world scenarios. The 5G Alliance forConnected Industries and Automation working
group of the German Electro and Digital Industry
Association (ZVEI) promotes the successful industrial implementation of 5G on the way to Industrie 4.0 among all relevant industry stakeholders.
Industrie 4.0 is expected to increase M&E sector
gross value added by EUR 23 billion through to2025. As well as concentrated engineering andproduction-related IT competence, the country
also boasts top-class know-how in automation
technology. More than a third of engineers activein the M&E sector are already dealing with matters IT and automation related – with the trend
set to continue.

Robotics and Automation
The robotics and automation (R&A) industry is oneof the most innovative in Germany’s mechanicalengineering sector. Germany is one of the world’s
five major markets for industrial robots, with the
R&A sector set to generate turnover of EUR 13.4
billion in 2021 according to the VDMA Robotics +Automation association. Germany has the highest
density of industrial robots in Europe and German
OEMs count among the world’s leading R&A companies. Human-robot collaboration (HRC) andmachine vision (MV) technologies are consideredmajor strengths in a global hub that boasts R&A
players from all market segments.
Demand for products “Made in Germany” is higher
than ever before: Around 50 percent of German
R&A manufacturing turnover is generated in international markets. Automotive manufacturers andsuppliers remained the main drivers of growth in2020. The electrical and electronics industry is also
investing heavily in production automation andnew production processes. The fast-growing service robot sector is providing opportunities tocompanies delivering innovative service robot
applications – 82 percent of the world’s service
robot suppliers are SMEs, reflective of Germany’s
strong Mittelstand.

Application
Industries
Germany’s highly industrialized environmentis just one of the reasons for the continued
success of the M&E industry. Germany’s largest industries (chemicals, electronics, automotive, and the food & beverage sectors) are
the four largest client sectors driving market
growth.
Almost 16 thousand companies, employing a combined workforce of more than 3 million, are activein these four sectors – generating combined turnover of around EUR 980 billion in 2021. New market opportunities are also opening up in the thriving renewable energies and resources sector.

R&A Turnover Development in Germany
in EUR billion
2019

2020

2021
14.7
13.4
12.1

8.0
6.4

7.0
4.0

2.8 2.6 2.8

Machine Vision IA Solutions

3.1 3.5

Robotics

Total

Source: VDMA 2021

Automotive
Automotive industry manufacturers, suppliers
and service providers represent Germany’s largest
industry in revenue terms – 968 companies generated turnover of EUR 380 billion in 2020. Germany
is the European car production leader: 3.1 million
passenger cars were manufactured in German
plants in 2021. Germany is Europe’s electric mobility champion and the world’s second-biggest electric car market, with 400,000 new electric passenger vehicle registrations in 2020. Total R&D investment in 2021 topped EUR 50.9 billion, making theauto industry the country’s most innovative
industry sector. Significant investment is being
made in battery cell R&D and production toestablish the country as an electric vehicle battery
leader.

Download
our Robotics &Automation
Industry fact sheet
for more R&A
developments.
www.gtai.com/
robotics-factsheet

Electronics
Germany is an important location for the highend production of complex electronic components. The ambitious development of semiconductor-based applications in the automotive,
energy and manufacturing sectors is critical to thecountry meeting its climate goals. Total industry
turnover reached EUR 200 billion in 2021 according
to industry association ZVEI, with real production
growth of four percent forecast for 2022. Germany’s ambitions are helping attract more and larger
investment projects, such as Intel and Infineon's
mega investments.

5

MARKET OPPORTUNITIESChemicals & Plastics
The chemical and pharmaceuticals industry is oneof Germany’s most important M&E applicationindustries. Germany is the European chemicals
market leader, with total chemical product originating in Germany equivalent to more than EUR
200 billion in 2020. In the same year, around EUR
9 billion investment in new production facilities inGermany was made. Almost forty highly developed chemical parks with excellent infrastructure
represent an optimal base for chemical processors,refiners, and end-product producers. Around one
third of all European chemical industry investment
is made in Germany. The country is also home toEurope’s leading plastics processing industry. With
industry turnover in 2021 of over EUR 61 billion,
the domestic plastics industry counts as one ofGermany’s most significant industry sectors. The
plastics and rubber machinery is a major supplierto the chemicals and plastics industry – withevery fourth plastics machine produced in theworld coming from Germany. Major opportunities
also exist in areas as diverse as chemical recycling
and the recycling economy as the country pursues
its climate-neutrality goals.
Food & Beverages
The food and beverages sector provides further
profitable market opportunities for M&E companies in Germany. The industry generated morethan EUR 200 billion turnover in 2021. Robust competition within the food retail market has led tohigh automation standards in production. In termsof machine production, the food processing andpackaging machinery industry ranks third in theGerman machinery industry (nearly EUR 14 billion
in 2020). Eighty-four percent of domestic industry
investment – equivalent to EUR 4 billion – wasspent on new machinery in 2020.

International R&D
Leadership

Germany isEurope's biggest
research spender,
with total R&D
spending of
EUR 105 billion
in 2020.

Europe’s Innovation Leader
Germany is Europe’s major investor in innovation.
Total R&D expenditure of EUR 105 billion in 2020
make Germany Europe’s biggest research spender.
Internationally, only the US, Japan, and China havelarger R&D budgets. Germany is also one of theEuropean leaders in terms of R&D investment as aproportion of the GDP – at 3.1 percent the country
outperforms the 2020 EU-27 average of 2.3 percent considerably. A study carried out by the German Institute of Economic Research (DIW) concludes that, at 12 percent, no other industrializedcountry has a larger share of gross value added
generated in research-intensive manufacturingindustries.
Patent Nation Germany
Germany is one of the most innovative countries in the world according to the World Economic Forum’s Global Competitiveness Report 2020.
German patent figures pay testimony to the innovation done in German companies. With morethan 25,000 patents granted at the European Patent Office in 2020, Germany’s share of patents ismore than twice as large as that of France. Germany is also a leading European nation in triadic
patents (i.e. patents registered at the three major

6

Industry Overview 2022/23  |  gtai.com

global patent offices: the European Patent andTrademark Office, the United States Patent andTrademark Office, and the Japan Patent Office).
With 57.4 triadic patents per one million inhabitants in 2019, Germany ranks fourth in Europe only
behind Sweden, the Netherlands and Denmark.
With its world-class R&D environment and strong
export orientation, Germany combines two essential locational factors. Germany, thus, is a major
source-country for innovative products.
Public Cluster Funding
The federal and state governments have a comprehensive raft of cluster development measures.
The most high-profile instrument of the Federal
Government’s cluster promotion policy, the “Leading-Edge Cluster Competition,” was officiallylaunched in 2007 and was the first nationwide
cluster-funding program open to all technologies.
The successor “Internationalization of LeadingEdge Clusters, Forward-Looking Projects, and Comparable Networks” initiative promotes international cooperation between German clusters, networks
and innovation regions. On the basis of the internationalization concept, individual R&D partnership projects will be developed with partners fromthe prioritized international innovation regions.

Supporting Innovation Leadership
International reports and studies regularly identify Germany as one of the world’s most innovative
locations. Germany’s government is seeking toconsolidate the country’s internationally leading
innovation position through the provision of innovation-friendly framework conditions and marketoriented support programs. To further increase theattractiveness of Germany as a research location,
a number of tax-based R&D subsidies – including
the Research and Development Tax Subsidy Act –have been introduced. The Research Allowance Act
also promotes private sector R&D activities in theareas of basic research, industrial research andexperimental development.
M&E Technology Investment
The M&E industry counts as one of the most innovative sectors in the economy. According to theZEW (“Centre for European Economic Research”)
Industry Report Innovation – Machinery Industry
2021, almost 80 percent of M&E companies wereactive innovators in 2020. Of these, 61 percent
brought new or significantly improved products
to the market, while 60 percent of M&E companies introduced new or noticeably improved andcost-cutting process technologies. Machinery andequipment innovation outlay reached a new highof nearly EUR 17 billion in 2021, with further R&D
budget of EUR 17 billion forecast for 2022. Witha 6.8 percent share of innovation expenditure to
turnover in 2020, the M&E industry belongs to thefive most most innovative sectors in Germany.
The German economy retains its role as a globallycompetitive and flexible R&D test bed.

M&E Innovation Expenditures in Germany
in EUR billion

Share of innovation expenditures to turnover

5.9%
16.7

2018
Source: ZEW 2022
*forecast

6.4%
17.8

2019

6.8%

17.0

17.0

17.0

2020

2021*

2022*

“Europe and Germany in particular are seeinga large wave of investments into semiconductor
fabs. Intel's landmark decision to build two such'fabs' in Magdeburg for EUR 17 billion is the primeexample. This ramping of capacity will need a
lot of plant engineering as well as manufacturing equipment – opening up opportunities forboth German and international companies.”
Max Milbredt, Project Lead Intel,
Senior Manager Electronics, Germany Trade & Invest

Share of Research-intensive Industry in Gross Value Added 2018
in percent

Research-intensive industries (total)
High-tech industries
Cutting-edge technologies
12.0
9.5

9.2

7.1
5.2
2.8

Germany

2.4

Japan

1.9
USA

3.3

4.0
2.0 2.0
United Kingdom

3.5
1.4

2.1

FranceSource: DIW 2021

New High-Tech Strategy
All research programs financed by the German
federal government have been concentrated within the Federal High-Tech Strategy. One major goalof the strategy is to increase R&D expenditure asshare of GDP to 3.5 percent by 2025. Additionally,a series of new research policy initiatives isplanned through to 2021 and existing funding programs will be optimized. Research and development projects can take advantage of generous
financial support in the form of grants, with interest-reduced loans and special partnership programs rounding off Germany’s public R&D project
support measures. The Federal Ministry for Economic Affairs and Climate Action provides targeted financial support to small and medium-sizedenterprises through the promotion of researchand development activities, innovation consulting
and cooperation with science.

7

MARKET OPPORTUNITIESGerman Engineering
Excellence
German manufacturers are the world leaders in 13 out of 31 M&E sectors in international comparison. In a further eight categories,
German companies occupy second spot compared to their international rivals. These numbers show very clearly that developing andmanufacturing machinery in Germany delivers
strong results.
Value Chain Opportunities
Complete value chain coverage is one of the main
drivers of the sustained success of the German
M&E industry. Numerous research institutions,close proximity to key supplier industries – including electronics, robotics, materials, and software –and a strong industry base guarantee a poolingof resources of all actors within the value chain topromote innovation and R&D excellence. Service &maintenance and repair & overhaul are other value chain areas proving attractive thanks to theirmarket size and healthy growth prospects.
With expertise running the gamut from energy
conversion to energy-efficient components andproduction, mechanical engineering plays a central

Greenfield and Expansion Investments by Business Activity 2020
in percent

Manufacturing + R&D

Logistics

Sales, Marketing & Support

Other Activities

Business Service
38.0%

Nearly 1 in 5
companies chose Germany as a production
or R&D location.

19.0%

8orem ipsum

17.0%

8.0%

18.0%

Germany Trade & Invest, Regional Development Agencies, 2021

8

Industry Overview 2022/23  |  gtai.com

role in the future prospects of the environmental
technology sector and is also an integral part ofthe electric mobility value chain. Many electricvehicles no longer require “traditional” parts, withnew components instead needing to be integrated. Technological advances are also making a difference to the perceived value percentage in vehicle pricing. Germany’s track record and technology
leadership will ensure that the German M&E
industry remains competitive on all fronts.

M&E Innovation
Clusters
The decentralized nature of the M&E industry has
allowed innovation clusters to develop strong science and industry networks. This has helped themsecure an internationally leading position in various technology fields and consolidated their international benchmark status. Germany’s industry
cluster concept has created an environment inwhich operators from all sectors are able to flourish in close proximity with other important actors.
go-cluster
The “go-cluster” excellence program brings
together almost 100 innovation clusters fromacross Germany. Funding is provided to model
projects for the development of forward-looking
cluster concepts and novel business models. In
2021, the Federal Ministry for Economic Affairs
and Climate Protection published a public noticeannouncing new funding to encourage the development and implementation of resilient cluster
concepts and business models that allow German
cluster management organizations to secure thefuture of their cluster actors and support them inasserting their position in domestic and international competition.
Fraunhofer Innovation Cluster
As part of Europe’s largest applied science
research organization, institutes belonging to the
Fraunhofer-Gesellschaft are active in developing
new technologies for industry and the public sector. More than 30,000 Fraunhofer employeesdevelop cutting-edge technologies in 76 research
institutions spread across Germany (20 Fraunhofer
research institutes specialize in matters purely
M&E related). Fraunhofer innovation clusters are
based on established networks of research institutions, investors and companies that lead to new
business ideas and start-ups. Regional innovation
clusters help close the gap between science andindustry. Successful clusters stimulate competition
while creating productive collaboration.

Selected M&E Industry-related Clusters in Germany

2

Clusters4Future
As the new flagship measure of the German government's High-Tech Strategy 2025, the Zukunftscluster-Initiative (Clusters4Future) will make a special contribution to knowledge and technology
transfer across the country. Created to establish a
new generation of regional innovation networks,
the cluster competition will help Germany build
on and consolidate its strong position among theworld's innovation leaders and master the challenges in important future fields. The Clusters4Future Initiative launches the competition for thebest ideas for new value creation in Germany.

5

7

6
1

3

4

Clusters4Future: SmaRTHIThe SmaRTHI collaboration between the
TU Chemnitz, TU Dresden, HTW Dresden,
and Fraunhofer UWI was selected as one of
15 successful Clusters4Future finalists. The
future cluster, located in the ChemnitzDresden region, is developing smart robots
for time-flexible, immersive and locationindependent application. Focal points
include automation, AI, sensor technology,
human-robot collaboration, system integration, and artificial reality and virtual
reality solutions integration. The cluster, inwhat has been dubbed “Robot Valley Saxony,” has access to the 5G Lab Germany and
IIOT testbeds at the TU Dresden and HTW
Dresden respectively.

go-cluster
Fraunhofer Innovation Cluster
Production Technology
Automation and Transportation Technology / Aerospace
Materials Technology
Electronics /Measurement /Sensors
Selected: Cluster4Future
1 SmaRTHI (Smart Robotic - Robot Valley Saxony)

Selected: International Cluster & Partner Countries
2 CFK Valley/Japan
3 Leichtbau BWE/France, Canada
4 Cluster Mechatronic & Automation/Netherlands
5 its OWL/Canada
6 Wetzlar Network/Czech Republic
7 Software Center Darmstadt/Brazil, Singapore, USA
Sources: Fraunhofer Innovation Clusters, go-cluster BMBF, GTAI Research (02/2022)

9

INVESTMENT CLIMATE

Dynamic Labor
MarketGermany enjoys a long and successful tradition in mechanical engineering and manufacturing. Researchers, companies and employees alike continue to profit form the country's
global know-how. The "Made in Germany"
quality seal has long been recognized acrossthe globe as a sign of engineering excellenceand precision.

Workforce in Germany by Level of Professional Education 2019
percent of total workforce

Unskilled 17%

University
graduates 23%

Skilled craftsmen(dual education
apprentices) 48%

Vocational college
graduates andtechnicians 11%
Source: Federal Statistical Office 2021

Growth of Labor Costs in Manufacturing 2017-2020
annual average growth in percent

Netherlands

1.8%

Spain

1.9%

Greece2.1%

France2.1%

Germany
EU 27
Hungary
Poland

2.2%
2.6%
5.9%
6.3%

Slovak Rep.

6.9%

Czech Rep.

8.2%

Source: Eurostat 2022

10

Industry Overview 2022/23  |  gtai.com

Engineering Excellence
According to the German Federal Statistical Office,Germany has a particular high number of firstyear students. In the 2020/21 winter term, morethan 418,000 students – at 422 institutions ofhigher education – embarked on a course of academic study. Germany’s share of university students in the natural sciences, mathematics andstatistics, in information and communication technologies, and in engineering is the highest in theEU, with more than 37 percent of all students
enrolled.
Dual Education System
In order to secure the economy’s demand for highly qualified personnel, Germany developed a dual
system in vocational training – combining thebenefits of classroom-based and on-the-job training over a period of two to three years. In close
cooperation with the German government, theGerman Chambers of Industry and Commerce(IHKs) and the German Confederation of Skilled
Crafts (ZDH) ensure that exacting standards are
rigidly adhered to, guaranteeing the quality of
training provided all over Germany. Approximately
one in five German companies participates in the
dual vocational training system, thereby turning
apprentices into specialists who fit each company’s needs. Most apprentices receive an employment contract after training. Companies participating in vocational training usually take overaround 74 percent as employees, underlining theimportance of the training system. More than 1.3
million young people are currently in vocational
training in Germany.
Competitive Labor Costs
High productivity rates and steady wage levels
make Germany an attractive investment location.
Since 2017, wages in the manufacturing sector
have risen among EU-27 countries, with a growthrate averaging 2.6 percent. While some countries –particularly in Eastern Europe – experienced a riseof more than five percent, Germany recorded oneof the lowest labor cost growth rates with 2.2
percent in the EU manufacturing sector. Highly
flexible working practices such as fixed-term contracts, shift systems, and 24/7 operating permitsenhance Germany’s international competitivenessas a suitable investment location for internationally active businesses.

Creating Investment
Stability
The German market is open for investment inpractically all industry sectors, and businessactivities are free from regulations restricting
day-to-day business. German law makes no
distinction between Germans and foreign
nationals regarding investments, available
incentives or the establishment of companies.
The FDI legal framework in Germany favors theprinciple of freedom of foreign trade and payment. Generally, there are no restrictions or barriers to capital transactions or currency transfers,
real estate purchases, repatriation of profits, oraccess to foreign exchanges.
Sound and Secure Legal Framework
According to the World Economic Forum (WEF),
Germany is one of the world’s best locations interms of planning and operating security. Germany is also one of the world’s leading nations interms of intellectual property protection and protection from organized crime. German regulatory
authorities are highly professional in their operations. The German legal system also counts as oneof the world’s most efficient and independent.
Social, economic, and political stability provides asolid base for corporate investment projects. Contractual agreements are secure and intellectual
property is strictly protected in Germany.
First Choice Business Location
According to a survey of 550 decision-makers,
Germany was ranked the highest country of all
European Union member states with “the mostcredible and investment-friendly COVID-19 recovery plans.” The European Attractiveness Survey
confirms Germany’s reputation as one of the most
attractive business locations in the world. Germany has caught up with France and the United
Kingdom so that the three nations are tied as
Europe’s best investment destinations. According
to preliminary data produced for the Financial
Times’ fDi Markets database, Germany was
Europe’s leading – and the world’s third leading –FDI project destination location in 2021. The
AmCham Business Barometer 2021 highlights theposi­tive regard in which US companies active inGermany hold the country. Asked about theiropinion on the German busi­ness environment, 63
percent of US company respondents rated Germany as “good” or “very good” business location.

TOP 10 M&E FDI Destination Countries in Europe
number of projects
Destination Country

2018

2019

2020

2021*

Total

Germany

101

127

112

57

397

United Kingdom

101

95

48

53

297

France

56

57

28

19

160

Spain

34

39

17

29

119

Russia

42

34

18

15

109

Turkey

22

16

24

21

83

Netherlands

24

22

22

12

80

Poland

20

18

25

15

78

Belgium

12

10

12

18

52

Italy

7

17

8

15

47

534

554

416

347

1.851

Europe total**

Sources: fDi Markets , GTAI FDI Competence Center , 02/2022, 2021* preliminary data**All European countries

Reliable Logistics Infrastructure
Germany’s infrastructure excellence is confirmed
by a number of recent studies including the Swiss
IMD’s World Competitiveness Ranking 2021 andvarious investor surveys conducted by institutions
including the WEF World Economic Forum and
Ernst & Young. The 2012-2018 Logistics Performance Index of the World Bank ranked Germany
first worldwide for its logistic proficiency; singlingout Germany’s quality of trade and transport
infrastructure. Accumulated in this score for Germany are high marks for the quality of roads andair transport, excellent railroads and port infrastructure, as well as its information infrastructure.
Internationally Competitive Tax Conditions
Germany offers one of the most competitive tax
systems of the big industrialized countries. The
average overall tax burden for corporations is justbelow 30 percent, with a number of municipalities
offering lower rates. Moreover, Germany provides
an extensive network of double taxation agreements (DTA) ensuring that double taxation is ruled
out, e.g. when dividends are transferred from a
German subsidiary company to the foreign parent
company.

11

INVESTMENT CLIMATE

Financing & Incentives
in Germany
Incentives programs in Germany are available
through different public funding instruments andfor different funding purposes. The individual
funding requirements may, for example, result
from investment projects, research and development activities, personnel recruitment, working
capital needs or other specific purposes. The different incentives instruments including grants,
loans and guarantees are generally available for all
funding purposes and can ordinarily be combined;
thus matching the different business activity
needs at different development stages of thecompany.
Please visit
our website formore incentives
information:
www.gtai.com/
incentives

Investment Project Financing by Private Equity
Technologically innovative start-ups in particularhave to rely solely on financing through equity
such as venture capital (VC). In Germany, appropriate VC partners can be found through the
Bundesverband Deutscher Kapitalbeteiligungsgesellschaften e.V. (BVK – German Private Equity
and Venture Capital Association). Special conferences and events like the Deutsches Eigenkapitalforum (German Equity Forum) provide anotheropportunity for young enterprises to come into
direct contact with potential VC partners. Public
institutions such as development banks (publicly
owned and organized banks which exist at thenational and state level) and public VC companies
may also offer partnership programs at this development stage.

Incentives in Germany

Funding purposes

Investments

Working
CapitalResearch &Development

Specific
Purposes

Personnel

Financing supported by any of the following public funding
instruments (combinations of instruments usually possible)
Public funding instruments

Grants12

Loans

Guarantees

EquityCapitalIndustry Overview 2022/23  |  gtai.com

Mezzanine
CapitalInvestment Project Financing by Bank Loans
Debt financing is a central financing resource andthe classic supplement to equity financing in Germany. It is available to companies with a continuous cash flow. Loans can be provided to financelong-term investments, working capital and operational costs (R&D, personnel) and for bridging
temporary financial gaps. Besides offers fromcommercial banks, investors can access publicly
subsidized loan programs in Germany. These programs usually offer loans at attractive interest
rates in combination with repayment-free startup years, particularly for small and medium-sizedcompanies. These loans are provided by the KfW
federal development bank and also by regional
development banks.
Investment and R&D Incentives
When it comes to setting up production and service facilities, investors can count on a number ofdifferent public funding programs. These programs complement investment project financing.
Most important are cash incentives provided in
the form of non-repayable grants applicable toco-finance investment-related expenditures suchas new buildings, equipment and machinery. R&D
project funding is made available through a number of different incentives programs targeted at
reducing the operating costs of R&D projects. Programs operate at the regional, national, and European level and are wholly independent frominvestment incentives. At the national level, all
R&D project funding has been concentrated in theHigh-Tech Strategy to push the development of
cutting-edge technologies. Substantial annual
funding budgets are available for diverse R&D
projects.
Labor-related Incentives
After the location-based investment has been initiated or realized, companies can receive further
subsidies for building up a workforce or the implementation of R&D projects. Labor-related incentives play a significant role in reducing the operational costs incurred by new businesses. The rangeof programs offered can be classified into threemain groups: programs focusing on recruitment
support, training support, and wage subsidies
respectively. Labor-related incentives play a significant role in reducing the operational costs
incurred by new businesses.

Best Practice Example:
Wheel.me Service AS Norway
Germany Trade & Invest provides a range ofinward investment services to international
investors. After careful consultation with theindividual investor, a support program of consultancy and information services is drawn up
to help set the stage for investment success.
Company Information: Wheel.me Service AS
Norwegian robotics and IoT company Wheel.me
was established in Oslo in 2013. The company
claims to be the provider of the world’s firstautonomous wheel whose patented system consists of a robot component, indoor navigation
technology and data analytics. The innovation
allows almost anything to be easily transformed
into an autonomous robot and with no need tochange design or form factor. Large-scale industrial application areas include the transportation of parts within manufacturing facilities andthe autonomous movement of patient beds andequipment in hospitals.

tives application processes, and company expansion procedures were also provided. After a comprehensive site-selection process, the company
chose the Frankfurt (Main) area in Hessen as its
preferred location.

“Being strategically located in Frankfurt
in Hessen – the most important region for
excellent international connections – was an
obvious choice. The German culture of quality
and excellence is what ‘Made in Germany’ is
all about. Wheel.me AS shares this same commitment to quality and competitiveness.”
Daniel Hessen, Chief Commercial Officer,
Wheel.me Service AS, Norway

Investment Project Time Line
Project Information
Wheel.me AS required a new manufacturing site
to meet new customer demand in Europe as wellas to serve its existing international customer
base. Germany Trade & Invest was informed of
the company’s investment plans by the German
Chambers of Commerce Abroad (AHK Norway) In
Oslo. The company also advised of its plan toenter the German market providing rental management solutions.
Germany Trade & Invest Support
Germany Trade & Invest provided an overview
of the market and identified a number of potential market-entry strategy options. Germany Trade& Invest worked closely with partners from theGerman Chambers of Commerce Abroad as well
as local economic development agency partners
Hessen Trade & Invest and FrankfurtRheinMain
on behalf of the investor. Contact with potential
partners and multipliers was initiated and all necessary legal and financial information made available in customized form.
In a brief period, Germany Trade & Invest’s industry experts and economic development agency partners set up visits to potential production
sites. Supplementary support services specific tocompany formation, personnel recruitment, incen-

November 2021
Initial investor contact with Germany Trade & Invest established.
January 2022
First online meeting to discuss investor requirements.
Frankfurt (Main) area in Hessen identified as site.
February 2022
Contact to Hessen Trade & Invest (HTAI) and FrankfurtRheinMain
economic development agencies initiated and support services
secured. Rental of office space in Frankfurt (Main).
March 2022
Preparation of the company formation (GmbH) in Frankfurt region
April 2022
Germany Trade & Invest provides further support with marketingand testimonial activities. Project handover HTAI.
From May 2022
Market expansion within Germany and other European countries.
Participation at internationally leading trade fairs with applicationindustries in Germany.
2023-2025
Investment expansion and R&D project plans and realization. Plans
for own production facility and R&D project realization in Germany.

13

OUR SERVICES

Germany Trade & Invest Helps You
Germany Trade & Invest’s teams of industry
experts will assist you in setting up your operations in Germany. We support your project management activities from the earliest stages ofyour expansion strategy.
We provide you with all of the industry information you need – covering everything from key
markets and related supply and application sectors to the R&D landscape. Foreign companies
profit from our rich experience in identifying thebusiness locations which best meet their specificinvestment criteria. We help turn your requirements into concrete investment site proposals;
providing consulting services to ensure you makethe right location decision. We coordinate site visits, meetings with potential partners, universities,

and other institutes active in the industry. Our
team of consultants is at hand to provide youwith the relevant background information on Germany’s tax and legal system, industry regulations,and the domestic labor market. Germany Trade &Invest’s experts help you create the appropriate
financial package for your investment and put you
in contact with suitable financial partners. Our
incentives specialists provide you with detailed
information about available incentives, support
you with the application process, and arrange contacts with local economic development corporations.
All of our investor-related services are treatedwith the utmost confidentiality and provided
free of charge.

Our support services for your investment project

Strategy

Evaluation

Decision & Investment

Project management assistanceBusiness opportunity
analysis and market
research

Project partner
identification andcontact

Joint project management with regional
development agency

Coordination and support of negotiations
with local authorities

Cost factor
analysis

Sitepreselection

Site visit
organization

Final site
decision support

Project-related
financing andin­centives consultancy

Organization of
meetings withlegal advisors andfinancial partners

Administrative
affairs support

Accompanying
incentives applicationand establishment
formalities

Market entry
strategy support

Location consulting/Site evaluation
Identification ofproject-specificlocation factors

Support services
Identification of
relevant tax andlegal issues

14

Industry Overview 2022/23  |  gtai.com

CONTACT

Investor Consulting

Imprint
Publisher
Germany Trade and Invest
Gesellschaft für Außenwirtschaft
und Standortmarketing mbH
Friedrichstraße 60
10117 Berlin
Germany
Executive Board
Dr. Jürgen Friedrich, Chairman/CEO
Dr. Robert Hermann, CEO

Ms. Peggy Görlitz is the senior manager responsible for machinery and equipment in Germany
Trade & Invest’s Mechanical & Electronics Technologies (MET) team. She is an acknowledged
industry expert with a wealth of 30 years’ experience and a proven track record in helping international companies set up their business operationsin Germany.

EditorWilliam MacDougall, GTAI
LayoutDanielle Röbbenack, GTAI
Print
Kern GmbH, 66450 Bexbach
www.kerndruck.de

For questions on how to establish your businessor service center in Germany, please contact Ms.
Peggy Görlitz at peggy.goerlitz@gtai.com

Picture Credits
Cover: Schaeffler KG (FAG)
Page 15: Peggy Görlitz (Illing & Vossbeck)

For more information about the machinery &equipment industry in Germany, please visit our
website at www.gtai.com/machinery

Notes
All rights reserved ©Germany Trade & Invest,
March 2022

Contact us at our headquarters in Berlin:
Germany Trade & Invest
Friedrichstraße 60
10117 Berlin
Germany
T +49 30 200 099-555

Reproduction, in whole or in part, only permissible
with express prior authorization. All market data
provided is based on the most current market
information available at the time of publication.
Germany Trade & Invest accepts no liability forthe actuality, accuracy, or completeness of theinformation provided.
Order Number
20749/2

15

About Us
Germany Trade & Invest (GTAI) is the economic development agencyof the Federal Republic of Germany. The company helps create andsecure extra employment opportunities, strengthening Germany as
a business location. With more than 50 offices in Germany and abroad
and its network of partners throughout the world, GTAI supports ­German companies setting up in foreign markets, promotes Germany as a­business location and assists foreign companies setting up in ­Germany.
All investment services and related publications are free of charge.

Germany Trade & Invest
Headquarters
Friedrichstraße 60
10117 Berlin
Germany
T +49 30 200 099-0
F +49 30 200 099-111
invest@gtai.com
www.gtai.com

Germany Trade & Invest
Bonn Office
Villemombler Straße 76
53123 Bonn
Germany
T +49 228 249 93-0
F +49 228 249 93-212
info@gtai.de
www.gtai.de