Total market size = (total local production + imports) – exports
Aerospace & Defense Market in USD millions (The security market is not reflected in the table but in the written paragraph below.)

Germany hosts the world’s third-largest trade show for aerospace & defense (ILA Berlin Air Show), the world’s largest trade show for aircraft cabin interiors (Aircraft Interiors Expo / AIX) and Europe’s largest trade show for general aviation (AERO), making it an ideal platform for U.S. companies to meet with their global partners and buyers.  The major safety & security shows that are relevant for the German market are held in Essen (Security Essen), but also in London (DSEI) and Paris (Milipol).U.S. aerospace & defense manufacturers produce the highest trade surplus, year after year, of all manufacturing sectors.  According to TradeStats Express, a U.S. Department of Commerce-furnished database showing the latest global patterns of U.S. merchandise trade, the 2019 U.S. aerospace exports to Germany amounted to $10.15 billion.  The trade surplus was USD 7.94 billion, representing a 209 percent increase over 2017 (USD 3.8 billion).  These figures are in stark contrast to the European statistics stating exports of USD 3 billion.  This is due to a different approach in assessing the sale of sub-systems and components.  Aerospace & defense is complemented by homeland security & public safety, an industry spanning across 16 vertical markets with a projected global turnover of more than USD 400 billion in 2019.  Both industries are grappling with the impact of the coronavirus pandemic.  Commercial aviation is feeling it a lot stronger than defense and security segments though.  In June 2020, domestic air traffic at Germany’s airports was down by 91 percent, European traffic was down by 93.9 percent, and intercontinental traffic was down by 96%.  Aerospace manufacturing is expected to decrease by 35 percent in 2020.  Revenues in the security segment will shrink by 20 to 25 percent.  During the rebound, U.S. manufacturers should be well-positioned to benefit from gradual market growth in Western Europe, especially Germany.

Leading Sub-Sectors

Germany has the third-largest aerospace & defense market in Europe, with 2019 revenues at USD 45.9 billion, following the UK at GBP 79 or USD 100.8 billion (including land defense systems) and France at USD 83.2 billion.  Some three quarters or USD 35.4 billion of the German production are exported.  France received a third of the exports with USD 12.4 billion.  In large part, these exports are attributable to Airbus intra-company trade as part of their geographically dispersed production model with several major sites in Germany and France.  The German homeland security & public safety market amounted to USD 20.3 billion in 2017.  

This figure was published at the “Security Essen” trade show in August 2018.  Updated figures are not available at the time of this writing.  It is safe to assume that the industry saw modest but steady growth until 2020, mostly due to ongoing upgrades of the German internal security and migration enforcement infrastructure and an increased need for security services.  The security services market makes up 50 percent of the overall market and grew by 4.3 percent from EUR 8.76 or USD 10.34 billion to EUR 9.14 USD 10.23 billion in 2019.

Aerospace is a German Government priority.  The Federal Ministry of Economic Affairs and Energy (BMWi) lists aerospace as a key industry with high growth rates and a strong industrial core in Germany.  The revised and updated “2018 Technology Strategy of the German Aerospace Industry” builds on BMWi’s earlier “Aerospace Strategy”, underlining the particular importance of the aerospace sector for Germany as an industrial country both technologically and economically.  Besides aiming at increased competitiveness, the aerospace sector promises to make significant contributions to overarching societal goals, especially with regards to climate, noise and environmental protection.  Moreover, BMWi has initiated the 6th iteration of the Aerospace Research Program (LuFo)—a grant program for aerospace research and technology projects—in the fall of 2018.  In May 2020, the German government agreed a EUR 9 billion (USD 10,26 billion) bailout package for German flag carrier Lufthansa, turning the German government into the single largest shareholder in Europe’s second-largest airline.  This measure mainly helps to stabilize the German air transport industry.  Aerospace manufacturing relies on the recovery of the global air transport industry.  Best prospects for U.S. exporters exist in the following segments:  commercial aircraft, business jets, turboprops, helicopters, UAVs, structures, propulsion systems, subsystems for aerospace vehicles;  military aircraft, air defense systems;  spacecraft, launch systems, communications systems; access control, identity management, integrated systems, security services.  

The main vertical markets for homeland security & public safety in Germany are airport security, smart borders, telecommunications and critical infrastructure, and police modernization.

Policy Objectives and Challenges

U.S. suppliers should be aware of the effects of the U.S. Export Control Reform (ECR) regarding changes to the EAR and ITAR for U.S. aerospace & defense companies.  The Commercial Service will continue to support U.S. companies by conducting frequent and active outreach to the Bundeswehr’s Federal Office of Equipment, Information Technology and In-Service Support (BAAINBw) in Koblenz, and following the latest aerospace, defense and security policy developments and discussions in Germany.  On an international level, we will gain insight from organizations, such as the Aerospace and Defense Industries Association of Europe (ASD), the U.S. Aerospace Industries Association (AIA) and Homeland Security Research (HSR) in Washington, D.C. to understand their positions on transatlantic trade issues, and communicate U.S. objectives.  

In a number of recent tenders, the German military and some state police forces have imposed non-ITAR/EAR/PESCO clauses on prospective bidders, asking them to attest that their products do not fall under the respective regimes.  This excludes many U.S.-designed and U.S.-made defense-sector goods.  

Opportunities

Opportunities include a 4.5 gen fighter jet program for the German Air Force;  anti-submarine warfare (ASW) / anti-surface warfare (ASuW) helicopters for the German Navy;  exo-atmospheric engagement systems for German F124 frigates;  Search and Rescue (SAR) helicopters for the German Federal Armed Forces (Bundeswehr);  heavy lift helicopters for the German Army;  gas turbines for 4 multi-role combat ships (MKS 180) for the German Navy;  Scalable Space Inertial Reference Units (SSIRU-L) for SARah, Germany’s radar reconnaissance satellite constellation;  integrated air and missile defense system (TLVS) for the Bundeswehr;  large twin-engine transport helicopters for the German Federal Police.

Trade Events

• Aviation Forum, Hamburg, November 17-18, 2020
• Aircraft Interiors Expo, Hamburg, April 13-15, 2021
• AERO, Friedrichshafen, April 21-24, 2021
• DSEI, London, September 14-17, 2021
• inter airport Europe, Munich, November 9-12, 2021
• ILA Berlin, Berlin, May 11-15, 2022
• Security Essen, Essen, September 20-23, 2022

Other Web Resources

German Aerospace Industries Association (BDLI)

German Airport Technology & Equipment (GATE Alliance)

HANSE-AEROSPACE e.V. (Largest independent association of aerospace suppliers and service providers in Germany)

ALROUND (Association of aerospace-oriented SMEs in Germany)

German Helicopter Association (DHV)