Germany - Country Commercial Guide
Advanced Manufacturing

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-10-07

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) is cooperating with the German Mechanical Engineering Industry Association ().  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 to 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 Industrie 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, and advanced materials. By 2025, 84 percent of German manufacturers plan to be investing EUR 10 billion annually into smart manufacturing technologies, incl. the automotive industry at approx. 1.2 bn per year, machinery & equipment and plant engineering and construction at 1.5 bn, electronics and microelectronics industry at approx. 817 million per year, and the metal working industry at 424m per year. Today, 75% 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 20,000 industrial robots currently utilized in various industries. After having reached a peak in 2018, the number of installed robots dropped by 23% to 20,473 units. The main industries using them are automotive, electrical and electronics, metal working, chemical rubber and plastics, logistics, medical, and the food industry.

The automotive industry remains the most important customer of industrial robots (28% of all industrial robot installations take place here) even though it was down by 16% to 105,379 units in 2019.

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 annual turnover of almost EUR 12 billion in 2020 ($13.2 billion).  Service robots (medical robots, logistics robots and field robots) for professional use had a combined turnover of USD 8.5 billion in 2019.  By 2023, the combined turnover for this sector is estimated to reach USD 22.1 billion.

With 2.7 million industrial robots operating in factories worldwide, the sector increased by 12% in 2020 compared to 2019. Conversely, sales of new robots decreased by 12% in 2019. However, experts predict an average increase of 12 percent annually between 2020 and 2022, when the economic situation has recovered more from the effects of the pandemic. Indeed, the pandemic has strongly impacted the sector, but also offered a chance for modernization and digitalization and it will probably take until 2022 or 2023 to reach the pre-crisis level.

In terms of robot density (robots’ utilization per 10,000 worker), Germany ranks 4th in the world with 346 in 2019, behind Singapore (918), South Korea (868) and Japan (364). The USA ranks 9th with 228, China is 15th (187).

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.

Overall, the global economic crisis attached to the COVID-19 pandemic has impacted industrial robot sales in 2020. In the medium term, this crisis will be a digitalization booster that will create growth opportunities for the robotics industry worldwide. The long-term perspectives remain excellent.

Additive Manufacturing and Advanced Materials

The actual size of the additive manufacturing (AM) market in Germany is difficult to measure due to varying definitions and a lack of statistics. What can be ascertained is that the German AM market is growing.  Germany is Europe’s largest AM market with an average growth rate of 10-15% over the next few years.  With its high-tech market structure, Germany offers a ready playing field for innovative AM.  Most of the local AM companies are small to medium sized, with many being active globally.  A recent study by the European Patent Office reveals that nearly 50% of all AM patents registered in Europe are from German firms, such as Siemens; BASF; MTU; Evonik and EOS. German firms increasingly use AM to produce components that are more sustainable, at a lower cost than traditional production means or more lightweight. One notable example is Airbus’ AM printed lightweight injector head for the Ariane 5 rocket, saving 2 tons in weight. Besides medical products, custom-tailored or individualized products have gained importance in other industries. Porsche, for example is offering individualized seats for their clients. Main drivers in the German AM market are: Medical, transportation; aerospace, and automotive. Over the past year, AM has expanded into new applications including the printing of sand molds and cores for metal casting, consumer goods, and jewelry. Furthermore, the development of standards for AM is of high importance in Germany.

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. In addition to selling directly to an OEM or using a distributor, it can be an advantage to partner with a local AM provider which is offering a supplemental line of business. U.S. companies seeking to enter the German market can find German and other international business contacts at Europe’s prime trade show for AM: Formnext. Being a major event for U.S. AM businesses, the show was selected for the U.S. Department of Commerce’s Trade Event Partnership Program. The last in-person Formnext in 2019 attracted 852 exhibitors (including 58 U.S. companies) and 34,532 visitors. The next in-person Formnext takes place in Frankfurt, November 16-19. 2021. The show will host a U.S. Pavilion. The U.S. Commercial Service will provide U.S. companies with on-the-show-floor assistance and business counseling. In conjunction with the show, an AM standards forum will take place.

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 12.2 billion in 2020 ($ 13.42 billion). The COVID-19 pandemic has significantly impacted the German machine tool industry, recording a 28% drop in production. Imports from the USA have been about EUR 98 million ($107.8 million) for machines and equipment. The capacity utilization was at about 70.9 percent in 2020 according to the German machine tool association. The German domestic consumption is about EUR 6.2 billion ($6.8 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). The figures for the German precision tools industry show a decrease of 22.6 percent in 2020 to EUR 8.2 billion ($9.43 bn), and an expected production for 2021 of EUR 9.4 billion ($10,81 bn) which will be an increase of 14.6%.

Current trends include high-performance processes, Industrie 4.0, micro processing, direct drives, energy and resource efficiency, composite technology, additive manufacturing, laser beam sources, complete machining and shortening of process chains, besides others. The worldwide production of machine tools in 2020 fell by 20%, in euro terms, to a volume of EUR 58.0 billion ($63.8 billion). The COVID crisis left a serious impact on virtually all markets. However, machine tool orders may experience a strong turnaround in 2021.

Sensors and Measuring Technology:

Sensors and measurement technology are another growth subsector. In 2020, the annual turnover of all market players was estimated of EUR 35 billion. 2,500 companies and institutes employed about 250,000 people. In 2017 and 2018, we have seen growth rates of 9% and 10%, whereas the market in 2019 stagnated at  -1%. The export quota is 70%. Major markets are the following industries: automotive, electronics, consumer electronics, security, machinery & equipment, besides others. Major competitors include SICK AG, Siemens Sensor Systems, Bosch Sensortec and Beckhoff Automation. German industry expects further growth opportunities after COVID 19, 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.

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.