Manufacturing for Growth: Germany

Strength in the midst of economic crisis

Germany's history for manufacturing excellence is renowned. From some of the world's most luxurious automotive brands to the country's continued dominance in the field of "mechatronics," the premium brand often associated with the moniker "made in Germany" has resulted in the country being recognized as one of the most competitive developed nations in the world.

Unlike emerging economies, however, Germany has taken a different approach in sustaining its global manufacturing prowess and is today in a position of strength while most of the Eurozone navigates the turbulent economic storm that engulfed the continent throughout 2012 and will continue to do so in 2013.

Germany's path to prosperity over the last decade has focused on the development of new technologies and its ability to drive innovation leveraging a highly skilled workforce that demands higher labour rates, resulting in economic benefits for the nation's economy, its citizens, and companies operating in the market.

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Manufacturing growth summary

CEO Policy Recommendations

Executives believed that the following set of recommendations would enable Germany's pursuit of more advanced manufacturing capabilities

  1. Urge policy-makers to develop a realistic approach towards energy transition and lengthen transition period to 20 years in order to reduce risk to the manufacturing industry
  2. Develop competitive energy policies that are cost competitive and ensure stable supply

  • Develop a realistic approach towards energy transition and lengthen the transition period over several decades

  1. Maintain current education standards, and provide more resources for education and qualification that focus on nurturing talented students and allow for the formation of elite institutions
  2. Develop programs that promote science and ensure a sustainable pipeline of qualified graduates with degrees in engineering, natural science, mathematics, and informatics
  3. Increase government support of basic scientific research to enable more cooperation between companies, universities, and research institutions

  • Invest in the education system and develop programmes that increase the number of qualified engineers, scientists, and mathematicians

  1. Invest in R&D programmes that support manufacturing, including funding for the infrastructure necessary to develop new technologies
  2. Provide appropriate incentives to consumers so that they adopt new technology (e.g. electric vehicles)
  3. Establish demand-side innovation policies that result in business certainty and, as a result, create incentive for investment
  4. Foster more regional growth clusters where private companies collaborate closely with the public sector, thus providing platforms for the development of innovation

  • Focus on innovation and differentiation in the area of high technology

  1. Advocate strongly for the development of cross-border intellectual property protection policies and the enforcement of consequences stemming from legal violations
  2. Collaborate with policy-makers to develop a clear view of intellectual property rights in universities and other research and development partnerships to establish a foundation for companies, universities, and technology clusters

  • Take an international leadership role in developing and standardizing intellectual property laws

  1. Limit regulation that is burdensome to entrepreneurial liberty and actionability
  2. Adopt a simple tax plan that lowers corporate tax rates, as well as individual tax rates
  3. Ensure a stable democracy and build on Germany's strong social consensus of working together toward a common goal

Additional challenges impacting Germany's manufacturing competitiveness

  • Develop a long-term strategy to ensure Germany continues to have access to supply of raw materials
  • Address the rigidity of German labour laws to encourage continued investment in Germany's manufacturing sector

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