Overview

Advanced Manufacturing (AM) is the convergence of information and communications technologies with manufacturing processes to drive real-time control of energy, productivity, costs and information across factories and companies.  In 2011, it was identified as one of the highest-priority manufacturing technology areas by the Federal German government.

The OPC Foundation (Open Platform Communications) cooperates with the German Mechanical Engineering Industry Association (VDMA). In June 2016, these two parties signed an MOU to build an international standards regime utilizing the OPC UA Machine Vision Companion Specification.  This machine protocol has been developed to help all automation companies implement Industry 4.0/IoT with robotics, automation, and machine vision software language with their products.  For the interfaces UMATI (universal machine technology interface) has been set up. Both OPC UA and UMATI enable higher-level data processing in a standardized and more secure manner.

Policy Objectives and Challenges

A major challenge for industry and government is the definition of reference architecture and frameworks necessary for interoperability.  They are also challenged with how to build confidence around new and innovative approaches to security.  In April 2016, the two major international players, the International Internet Consortium (IIC) and the German-led Industry 4.0, agreed to collaborate for the benefit of interoperability of systems from these different domains.  Major German trade associations such as the ZVEI (The German Association for Electrical & Electronic Industry), VDMA (German Engineering Association), Bitkom (Federal Association for Information Technology, Telecommunications and New Media) are driving these discussions.

Leading Sub-Sectors

Over the next several years, Advanced Manufacturing is expected to provide excellent export potential for industries such as machine tools/general industrial equipment, robotics, information and communication technology, process control instrumentation as well as electronics industry production equipment, additive manufacturing, advanced materials, and industrial IT.   By 2025, 84 percent of German manufacturers plan to invest EUR 10 billion (USD 10.52 billion) annually into smart manufacturing technologies, including the automotive industry at approx. 1.2 billion per year, machinery & equipment and plant engineering and construction at 1.5 billion, electronics and microelectronics industry at approximately 817 million per year, and the metal working industry at 424 million per year.  Today, 75 percent of the German companies in most industries have implemented digital solutions, and 15 million employees are directly and indirectly involved in advanced manufacturing industries in Germany.

Robotics and Automation

Germany is the fifth largest robot market in the world with about 22,000 industrial robots currently utilized in various industries, accounting for 6 percent of the global robot installations in 2021.  After having reached a peak in 2018 with 27,000 installations, the number of installed robots dropped by 19.5 percent to 22,000 units in 2019.  The main industries using robots are motor vehicles with 6,672 installations in 2020, automotive parts (2,998), metal and machinery (2,538), electrical and electronics (1,053), chemical rubber and plastics (997), food (424), logistics, medical and other industry.  Please note that this data includes the industrial/commercial use of robotics only. 

The Robotics + Automation Association in Germany represents three industry segments: Robotics, machine vision and integrated assembly solutions with combined estimated annual turnover of almost EUR 14.7 billion (USD 15.47 billion) in 2022, which is a 10 percent increase, and would be a return to pre-crises sales figures of 2019.  Service robots (medical robots, logistics robots and field robots) for professional use had a combined turnover of USD 8.5 billion (USD 9.52 billion) in 2019.

With 3,015 million industrial robots operating in factories worldwide, the sector increased by 10 percent in 2020 compared to 2019 with 2.731 million robots.  However, experts predict an average increase of 6 percent annually between 2022 and 2024, when the economic situation has recovered more from the effects of the pandemic and the disruption of the supply chains.  Indeed, the pandemic has strongly impacted the sector, but also offered a chance for modernization and digitalization.

In terms of robot density (robots’ utilization per 10,000 workers), Germany ranks 4th in the world with 371 in 2020, behind South Korea (932), Singapore (605), and Japan (390). The USA ranks 7th with 255, and China is 9th (246).

Future trends in this sector are the utilization of artificial intelligence, human-robot collaboration, digital transformation in production, and service robotics in the commercial and health industry, collaborative robots, and mobile platforms, e.g., AGV’s, robot leasing like Robot as a Service – RaaS, not to mention components that make the robot more precise like soft actuators for the gripping technology.

Overall, the global economic crisis related to the COVID-19 pandemic has impacted industrial robot sales between 2019 and 2021, as well as the supply chain disruptions.  However, the long-term perspectives remain excellent.

Additive Manufacturing and Advanced Materials

The actual size of the additive manufacturing (AM) market in Europe and Germany is difficult to measure due to varying definitions and the lack of statistics. It is clear, however, that the European AM market is growing.  Depending on the European region, the AM market is experiencing 15-20 percent growth annually. Growth expectations in European countries with few AM players are generally higher than in those markets with a well-established AM industry.

Germany is Europe’s largest AM market with growth rates of up to 15 percent.  A recent study by the European Patent Office reveals that nearly 50 percent of all AM patents registered in Europe originate in Germany.  Germany has the largest and most active additive manufacturing market in the EU.  About four years ago, only a small number of local firms used AM - mostly for prototyping.  Since then, the number of AM users in Germany has nearly doubled.  Local companies with AM production prefer in-house AM facilities over external AM services.  They use AM for prototyping and proof-of-concept, for the manufacture of small volumes or to make spare parts, or special items for customers.  Some companies print single items with unique features, which either cannot be produced otherwise, would be more time-intensive or too costly when produced with traditional methods such as certain forged parts. Moreover, like in the United States, AM has proven to be a problem solver in Germany during the pandemic, overcoming medical production gaps and bridging broken supply chains.

Main drivers in the German AM market are aerospace, medical, transportation and automotive.  Over the past few years, the German AM has expanded into new applications, including consumer goods and jewelry.  While it is still difficult for company newcomers to find the appropriate AM solution for their company-specific business model, the number of companies in Germany using AM has continued to grow.  The increased use of AM during the pandemic drew the attention of non-AM users.  While local firms hold back on investments due to the stagnating German economy, demand for AM is expected to grow.  The German government forecasts that the local economy will reach pre-pandemic levels by 2023. 

With its high-tech market structure, Germany offers a ready playing field for innovative AM. The German AM market hosts mostly small to medium-sized AM companies.  The United States is considered a global AM market leader in Germany.  Therefore, the German market is highly receptive to U.S. AM technology and materials.

German Machine Tool and Precision Tool Market

The ongoing boom in almost all user industries worldwide has already driven production output to more than EUR 13.2 billion in 2021 (USD 15.61 billion).  The COVID-19 pandemic and the recent supply chain disruption has significantly impacted the German machine tool industry, recording a 28 percent drop in production until 2020.  However, order intake in the first quarter of 2022 increased by 44% compared to the same period in 2021.  Imports from the U.S. have been about EUR 98 million (USD 103.2 million) for machines and equipment in 2020.  Capacity utilization stood at about 71 percent in 2021 according to the German machine tool association.  German domestic consumption was about EUR 6.2 billion (USD 6.53 billion).

Germany’s best prospect import segments within the machine tool industry are laser-, ultrasonic-machines; machine centers; lathes; drilling machines; grinding, honing and lapping machines; gear cutting machines; sawing, cutting-off machines; bending, folding, and straightening machines (incl. presses).

Figures for the German precision tools industry allow an estimated increase of 8.5 percent in 2022 to EUR 10.2 billion (USD 10.73 billion), compared to EUR 9.4 billion (USD 11.11 billion) in 2021.

Current trends include high-performance processes, Industry 4.0, micro processing, direct drives, energy and resource efficiency, composite technology, additive manufacturing, laser beam sources, complete machining and shortening of process chains, industrial software, and others.  Worldwide production of machine tools in 2020 fell by 20 percent; in euro terms, to a volume of EUR 58.0 billion (USD 66.25 billion).  Challenges in the future could include the shortage of labor and supply chain disruptions. According to a VDMA survey, “92 percent of German machine tool manufacturers were noticeably or seriously affected by supply chain problems in September and December 2021”.  The COVID crisis left a serious impact on virtually all markets, but machine tool orders may experience a strong turnaround in 2022, reaching just 8% less than the record year in 2018 with a production of EUR 17 billion (USD 20.07 billion).

Sensors and Measuring Technology

Sensors and measurement technology are another growth subsector.  In 2021, the annual turnover of all market players was estimated at EUR 35 billion (USD 41.4 billion).  2,500 companies and institutes employed about 250,000 people.  In the first quarter of 2022 we have seen a growth rate of 8 percent, and the second quarter of 2022 is forecasted to experience 6 percent growth.  The export quota is 50 percent. Major markets are the following industries: advanced technologies, robotics, automation, automotive, electronics, consumer electronics, security, machinery & equipment, and others. Major competitors include SICK AG, Siemens Sensor Systems, Bosch Sensortec, ifm, and Beckhoff Automation.  German industry expects further growth opportunities after COVID-19 and supply chain disruptions that impacted 87% of the members the German Sensor Technology Association, particularly through the industrial automation/internet of things.

Opportunities

Germany’s advanced manufacturing companies usually require in-country partners.  These partners could be agents and distributors selling to OEMs as final consumers or OEMs as distributors for an exclusively built component.  An in-country facility and a membership in one of the German associations is recommended, and system integrators are often the ideal partner for automation and internet of things products and services.  Advanced technologies require more IT / OT solutions, platforms that handle the data traffic, and software companies who are specialized in industries to collect all necessary data, visualize the data and save costs in product development and design, reduce energy consumption, assist customers with predictive maintenance and more.

Challenges & Barriers

Germany maintains a highly open and transparent business environment, and there are few formal market access barriers.  Probably the greatest challenge to entering the German market is conforming with German electro-technical standards and conformity assessment procedures, which differ markedly from those in the United States.  For most electrical components such as plugs and cables, U.S. and European standards are nonaligned.  In practice, this means that for most U.S. machinery makers, the additional labor required to assemble machinery for the German market will affect pricing by inflating the price paid by the customer while decreasing the cost competitiveness compared with domestic and other European-made machines. As part of the European Commission’s Machinery Directive, machinery sold throughout the EU is required to obtain a CE marking whenever the product is covered by specific product legislation.  CE stands for “Conformité Européenne” and is intended to demonstrate compliance with European safety and environmental standards.

The recent supply chain disruptions due to the COVID lockdown in China and the Russia-Ukraine war will also open new opportunities for new suppliers in Germany.  The global market strategy will be realigned in Germany.