Overview

While there is not one clear universal definition, advanced manufacturing is often very broadly defined as the innovation of improved methods for manufacturing existing products, and the production of new products enabled by advanced technologies. The German government views Advanced Manufacturing as one of the highest-priority technology areas. The country is a leader in this field with a strong focus on Industry 4.0, machine building, precision engineering and control systems.  

Advanced Manufacturing is not a standalone category in statistics; rather, it encompasses a combination of industries, making it difficult to measure. For the market data table above, information from the automotive, chemical, medical equipment, metalworking, machinery, and electrical engineering sectors has been aggregated. While goods are included, services such as consulting on production automation are not reflected in the data. Over the last few years, German global exports have shown modest growth with some fluctuations. They rose from an USD 955 billion in 2022 to over USD 1 trillion in 2023, before contracting slightly to around USD 991 billion in 2024. According to TradeStats Express, a U.S. Department of Commerce-furnished database showing the latest global patterns of U.S. merchandise trade, the 2024 U.S. Advanced Manufacturing exports to Germany amounted to USD 37 billion. In contrast, the European Union’s statistics indicate the value of U.S. exports to Germany to be approximately USD 43 billion. This difference is explained by alternate measures of determining what does and does not fall into the category of Advanced Manufacturing. Germany’s total imports are substantially smaller than its exports amounting to USD 722 billion in 2024 based on the above HS-2 code definitions. There is no agreed upon definition of Advanced Manufacturing, as such results naturally vary depending on the one chosen by the source.  

Germany hosts numerous international trade shows, and the business environment in Advanced Manufacturing is defined by a complex network of associations. The largest among these associations is the machinery and equipment manufacturers association VDMA, which has over 3,600 member companies and splits into around 35 trade associations representing specific industry segments. The association ZVEI focuses on the electrical and digital industry and currently counts more than 1,100 member companies. The association Bitkom, which encompasses the entire digital economy and is not limited to manufacturing, currently has over 2,200 member companies. These associations have different foci but also overlap in areas such as Industry 4.0. Additionally, there are many other highly specialized niche associations for almost every aspect of Advanced Manufacturing. For U.S. companies entering Germany, the network of industry associations can be challenging to navigate, but it serves as a highly valuable resource for understanding and accessing the advanced manufacturing market.  

Policy Objectives and Challenges

The German government actively supports advanced manufacturing through various initiatives and programs aimed at fostering innovation and technological advancement. One of the key frameworks is the initiative Plattform Industrie 4.0 led by the German Ministry for Economic Affairs and Energy and the Ministry of Research, Technology and Space. This initiative focuses on the integration of cyber-physical systems, the Internet of Things (IoT), and cloud computing into manufacturing processes. By promoting smart factories where machines are interconnected and can communicate with each other, Industrie 4.0 aims to enhance productivity, efficiency, and flexibility in manufacturing. The government provides funding for research and development, supports pilot projects, and facilitates collaboration between industry, academia, and research institutions to drive the adoption of these advanced technologies.  

Another significant initiative is Manufacturing-X, which builds on the principles of Industrie 4.0. Manufacturing-X aims to create a standardized and secure data infrastructure that allows companies to share data seamlessly while maintaining control over their proprietary information. The German government supports Manufacturing-X through strategic investments, regulatory frameworks, and partnerships with industry leaders to ensure that the manufacturing sector remains competitive on a global scale. Together with 9 other nations (Austria, Canada, France, Italy, Japan, Korea, Spain, the Netherlands and the United States), Germany forms part of the International Manufacturing-X Council (IM-X).

Interoperability of systems remains a challenge. The Universal Machine Technology Interface (umati) initiative aims to standardize communication between machinery and IT systems using OPC UA specifications. This industry initiative, supported by the VDMA and the Machine Tool Builders’ Association VDW in collaboration with the OPC Foundation, facilitates seamless data exchange and integration across various manufacturing technologies. By promoting open, standardized interfaces, umati aims to become the global language of production.  

Leading Sub-Sectors

Over the next several years, Advanced Manufacturing is expected to provide export potential for industries such as machine tools/general industrial equipment, robotics, information and communication technology, process control instrumentation as well as additive manufacturing and advanced materials. Most German manufacturing companies implemented a digital strategy and strategic investments to prepare for smart manufacturing. More than half of German manufacturing companies have already invested in Enterprise Resource Planning (ERP), Manufacturing Execution Systems (MES), cloud-based systems and cybersecurity. By 2026, 64 percent of German companies plan to further invest in ERP, 75 percent in MES, 72 percent in cloud-based systems, and 70 percent in cybersecurity.  

Robotics and Automation

Germany is one of the top five adopters worldwide with about 28,400 installations of industrial robots, accounting for around 5 percent of the global installations in 2023. Within Europe, Germany holds a market share in these segments of 31 percent. The VDMA’s Robotics + Automation trade association represents three industry segments: robotics, machine vision, and integrated assembly solutions. The association continues to grow and had over 415 members as of the second quarter of 2025. The combined estimated annual turnover of these industry segments is forecasted to reach EUR 14.5 billion (USD 15.6 billion) in 2025. The robotics and automation market struggled in 2024, closing with a turnover of minus 1 percent. The market totaled EUR 16.0 billion (USD 17.3 billion) in 2024. VDMA forecasts a minus of 10 percent in revenue for 2025

In terms of robot density (robots per 10,000 employees), Germany ranks 4th in the world with 429 in 2023, behind South Korea (1012), Singapore (770), and China (470). The United States of America ranks 10th with 295 robots per 10,000 employees in 2023. Germany and the United States maintained similar ranking positions compared to 2022 (Germany: -1, United States: no change). According to the VDMA Robotics + Automation, China is setting its sights on Europe. China’s adoption of robotics has accelerated quickly, entering the global top 10 for robot density only in 2019. Since then, its ranking has surged from 5th highest globally in 2022 to 3rd in 2023. Therefore, competition for the German robotics and automation industry is likely to intensify in the future due to the increased number of Chinese competitors.  
 

New installations in the automotive sector rebounded rapidly in 2023, recovering from a decline in 2022 and returning to the levels seen in 2021. Other segments, especially metal and machinery, show continued growth. Overall, new installations of industrial robots in Germany increased by 7 percent in 2023, after a growth of 1 percent in 2022.  

The convergence of technological trends such as cloud computing, 5G mobile networks, and machine vision are allowing for new business models by enabling fully digitalized production with optimized performance. Machine vision simplifies programming, facilitating the detection of shapes and guiding grippers in complex environments, while artificial intelligence is making automation smarter, faster, more efficient, and more accessible. This technological evolution not only enhances maintenance processes and accelerates programming through learning by experience but also supports sustainability efforts. In the broader market, labor scarcity in developed economies is driving increased demand for automation. Small and medium-sized enterprises (SMEs) are increasingly seeking easy access to automation, fueling the trend of “democratizing” robotics by lowering the barriers to robotization, thus making advanced technologies more available to all. According to the International Federation of Robotics (IFR) the five most relevant automation trends in 2025 are Artificial Intelligence, Humanoids, sustainability, (Robot-as-a-Service (RaaS), and robots addressing labor shortages. Humanoid robots, or robots in the shape of human bodies have a broad range of potential uses, especially in filling labor shortages in historically non-automated tasks; however, most industrial manufacturers are focusing on humanoids for single-purpose tasks only, especially in the automotive sector. It remains to be seen whether these robots can provide a cost-effective and scalable solution to increasing labor needs in the short and medium term.  

Data sovereignty and strict privacy regulations are key challenges for SMEs entering the German market. Large cloud providers in Germany offer solutions with local data centers. Many companies prefer on-premises solutions for their manufacturing sites.  

Additive Manufacturing and Advanced Materials

Germany is Europe’s lead market for additive manufacturing (AM). In addition to hosting most of Europe’s AM manufacturers and users, it also achieves the largest volume of sales in Europe. About 70% of German AM firms sell mostly within Europe; some export to the United States and other countries. Their strongest competitors come from China and the United States. A recent survey by a local association reveals that 77% of German AM companies expect growth in the AM domestic market over the next 24 months. Despite some consolidation, the German AM market players are generally optimistic, expecting healthy sales increases over the next years. Moreover, local companies are willing to invest more into AM. Current key AM market challenges in Germany are bureaucracy, lack of recognition of AM as an enabler, and insufficient coverage of AM topics in research. The local industry is working on reducing unit costs and on enhancing process stability. AM is continuing to enter new applications. In Germany, AM products from the United States are well known for their good quality and competitive edge. Hence, the German market is highly receptive to them. Market prospects for AM materials and innovative AM machinery are good to excellent.

Germany is Europe’s largest market for advanced materials. Composites and lightweight materials are of particular importance. Demand for innovative materials is strong despite a currently stagnating overall German economy. Sustainability and recycling are of growing importance. Materials for the following applications are expected to see the highest growth rates over 2025-2026: Aerospace, transportation and wind energy. The German automotive industry, traditionally a strong user of advanced materials, is still facing challenges.  

Demand for advanced materials, in general, is expected to grow significantly over the next several years. They considered as essential for the future development of new products in aerospace; transportation; energy; sports, and others. The German market is highly receptive to innovative materials from the United States.  Market prospects for innovative U.S. composites and other materials are good to excellent. Of particular interest are: Lightweight materials, materials with special characteristics, materials designed for additive manufacturing, green chemistry, automated production technology and recycling solutions.     

German Machine Tool and Precision Tool Market

The association VDW, the German Machine Tool Builders’ Association, represents the machine tools and manufacturing systems sector within the VDMA. According to the VDW, the demand for machine tools, which declined in 2024, is expected to continue to decline. Orders received by the German machine tool industry in the first quarter of 2025 were down by 10 percent compared to the same period the previous year.  Domestic orders fell by 30 percent compared to the previous year, while orders from abroad remained stable, following a 24 percent drop in export orders the year before. In 2024, German manufacturers saw a 19 percent increase in orders from the U.S. The trend has continued into 2025, however at a slower pace. VDW expects the market to stabilize due to general improvement in economic conditions, however a further decrease in orders is expected.  

VDW’s forecasting partner Oxford Economics predicts a continued decrease in demand for machine tools in 2025, forecasting a 10 percent drop in production to USD 14.3 billion. Uncertainty due to trade policy remains high, particularly regarding large global key markets. However, the German government’s recent announcement of large-scale infrastructure investments and an economic stimulus package including accelerated depreciation incentives could help lift demand.  

The precision tool market is represented by VDMA’s section Precision Tools with around 170 member companies. The market for precision tooling saw a nominal production decrease of 9 percent in 2024 to EUR 9 billion euros (USD 9.7 billion), and the VDMA anticipates weak performance in 2025. Global crises and unfavorable political and economic conditions in Germany are the VDMA’s main concern.  Many challenges, including trade policy, tax burdens, and increased bureaucracy, are eroding profits. The production value of precision tools of EUR 9 billion euros (USD 10,5 billion) was below the forecasted 9.7 billion euros (USD 10.4 billion). The overall situation remains challenging for many companies. According to the VDMA, Germany is facing a split development with sectors such as electric mobility, wind power, medical technology, aerospace, and defense seeing consistent growth, while standard machinery businesses are not performing as well.  

The industry is embracing innovative solutions to create more sustainable and efficient production processes in response to growing environmental and energy challenges. A key focus is on developing standardized methods to calculate the carbon footprint of tools, enabling easier comparison and driving reductions in emissions. Recycling initiatives, particularly for valuable materials like tungsten carbide and plastic packaging, are making significant strides in minimizing waste and reliance on raw material imports. Additionally, advancements in extending the lifespan of carbide tools through reconditioning can extend their lifespan, making them a more sustainable and cost-effective option for manufacturers. These efforts reflect Germany’s strong commitment to sustainable and efficient manufacturing.

Despite negative forecasts and difficulties encountered by the German machine tool and precision tool industry in 2024 and 2025, there remain significant opportunities arising from structural changes and growth in emerging sectors. It is also common practice for German industry associations, in representing the interests of their members, to adopt a realistic and cautious approach in their sector outlooks and forecasts. The German industry continues to emphasize the importance of improvements to the overall business environment, including the reduction of bureaucratic hurdles, as a key factor for future growth.  

Sensors and Measuring Technology

Several German industry associations cover sensor and measuring technology. The VDMA’s Measuring and Testing Technology currently comprises around 200 member companies. ZVEI’s automation sector division Measurement Technology and Process Automation counts around 100 member companies, and AMA Association for Sensors and Measurement (AMA) has around 450 member organizations including private corporations as well as research institutions. AMA reported a 4 percent revenue decline in the last quarter of 2024 when compared to the previous quarter. When compared to the fourth quarter of 2023, revenues fell 8 percent. Members anticipate a modest revenue growth of 3% in 2025.  

Sensors and measurement technology are essential in Advanced Manufacturing for reducing costs, improving quality control, and enhancing sustainability. By providing real-time data, these technologies enable precise monitoring and control of processes, which helps prevent defective production, reduce waste, and optimize energy use. Accurate measurements also facilitate efficient maintenance, minimizing downtime and extending the life of equipment. Recent advancements in computer vision and AI/machine learning have enabled a variety of novel business models in fields such as pattern recognition and predictive analytics. Thus, integrating advanced sensor and measurement technologies supports both economic and ecological goals, driving continuous improvement across various industrial sectors.  

Opportunities

The Advanced Manufacturing sector in Germany is far from uniform While some industries are facing a stagnation in demand, other areas, such as automation and future technologies, show growth potential.  With its many industry associations combined with its hundreds of international trade shows, Germany provides an excellent environment for companies that are new to the market to network with experts in the field and learn more about market specifics. The number of potentially relevant trade shows is extremely high, especially in manufacturing. In addition to the large shows, there are hundreds of highly specialized trade fairs that focus on small market segments or very specific technologies and materials.  

The same level of differentiation and specialization can be seen in the associations in Germany. The large associations VDMA, ZVEI, and Bitkom have complex structures of departments or working groups that deal with specific advanced manufacturing topics, such as Industry 4.0 interoperability. Apart from these large players, there are many highly specialized smaller associations and cross-organizational working groups. In general, advanced manufacturing companies that enter the German market typically need in-country partners. These partners could be agents and distributors selling to original equipment manufacturers (OEMs) as end users, or OEMs as distributors for an exclusively manufactured component. Systems integrators are often the ideal partner for automation and IoT products and services. An in-country presence and membership in a German association is highly recommended.  

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 mostly 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. Europe, particularly Germany, undoubtedly presents challenges in areas such as regulations, certification, as well as data protection, privacy, and data sovereignty. The German business mindset can be cautious when adopting new technologies, but there is also a strong openness to innovation, particularly in improving production, reducing costs, moving towards a net-zero future, and implementing technologies that enhance, rather than replace, human work. Successfully navigating the German market can serve as a valuable foundation for expanding your operations across Europe.  

With the new German government’s focus on infrastructure investments and the recently announced stimulus package, there are promising signs of potential growth and opportunity for the Advanced Manufacturing sectors. The Federal Ministry of Finance announced in June 2025 that the cabinet has approved a new law introducing accelerated depreciation of 30% for investments in machinery and equipment made between July 2025 and the end of 2027. This measure aims to provide strong incentives for businesses to invest and offers greater planning certainty. Additionally, a gradual reduction of corporate taxes starting in 2028 is expected to further support economic growth. Together, these steps could help strengthen the foundation for innovation and competitiveness in German Advanced Manufacturing. Overall, these developments may contribute to a more favorable environment for investment and innovation in Advanced Manufacturing in Germany.  

Trade Events

• formnext – International exhibition for additive manufacturing technologies and tool making, Frankfurt, November 18 - 21, 2025  
• Hannover Messe – World-leading trade fair for industrial transformation, Hanover. April 20 - April 24, 2026  
• SENSOR+TEST – The leading international trade fair for sensor, measuring, and testing technology, Nuremberg, June 9-11, 2026  
• automatica – The leading exhibitions for smart automation and robotics, Munich, June 25-27, 2027 
• EMO – One of the world’s premier trade shows for the metalworking sector, Hannover, September 22-26, 2025  
• SPS – Smart Production Solutions – Nuremberg, November 25-27, 2025  
• VISION  – The world’s leading trade fair for machine vision, Stuttgart, every two years, October 2026