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 26,000 installations of robots utilized in various industries, accounting for 5 percent of the global robot installations in 2022. The Robotics + Automation Association represents three industry segments with their 370 members: Robotics, machine vision and integrated assembly solutions. In 2022 the combined estimated annual turnover of these industry segments hit EUR 14.4 billion (USD 15.55 billion). For 2023 an increase of 9 % to about EUR 15.7 billion (USD 16.96 billion) is expected according to the association.
Installations of industrial robots in selected German industries in 2021 were: motor vehicles with 6,206 installations, metal and machinery (3376), automotive parts (2,740), plastics and chemical (1,490), electrical and electronics (1,154), pharma/cosmetics (485), food (424), logistics, medical and other industries. In 2022 the automotive installations went up to 4,400 installations, and the chemicals and plastics industry increased to 2,200 installations. The fastest growing segment is the electronic industry, which surpassed the automotive industry with new installations in the last two years. Please note that this data includes the industrial/commercial use of robotics only.
In terms of robot density (robots’ utilization per 10,000 workers), Germany ranks 4th in the world with 397 in 2021, behind South Korea (1000), Singapore (670), and Japan (399). The USA ranks 9th with 274, recently surpassed by China which ranks 8th (276).
Future trends in this sector are the reshoring of production, securing the supply chains, low cost options for new industry segments, new distribution channels, the utilization of artificial intelligence, human-robot collaboration, digital transformation from order to delivery, service robotics in the commercial and health industry, collaborative robots/cobots, 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. This and many more current and future trends are accompanied by sustainability, i.e., reducing energy and the carbon footprint.
The service robots’ markets mentioned with future trends are: Medical, logistics, hospitality, transportation and logistics, field, inspection and maintenance and agriculture robots. According to the World Robotic Association, the United States of America has the most service robot suppliers in the world with 223 companies, followed by China with 103 companies, and Germany with 91 suppliers.
Although American and European countries will face a lack of skilled workers, the long-term perspectives remain excellent with predicted growth rates of 7 to 10 percent.
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 demand in almost all user industries worldwide has already driven production output of the German machine tool industry to more than EUR 14.1 billion in 2022 (USD 15.22 billion), however the order intake in the second quarter of 2023 decreased by 3 % compared to the same period in 2022. The order backlog compensates for this short decrease in all machine tool segments. Imports from the U.S. have been about EUR 118.7 million (USD 128.2 million) for machines and equipment in 2022. Capacity utilization stood at about 88 percent in 2022 according to the German machine tool association. German domestic consumption was about EUR 7.6 billion (USD 8.2 billion). Based on the domestic consumption Germany has an import quota of 47 %, and an export quota of 75%.
Germany’s best prospect import segments within the machine tool industry are laser, 3D printers; 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 major industries consuming machine tools and precision tools are automotive industry and component suppliers, mechanical engineering, metal and metal products, aerospace, electrical industry, e-mobility, and the defense industry.
Figures for the German precision tools industry allow an estimated increase of 8 percent in 2023 to EUR 10.9 billion (USD 11.76 billion), compared to EUR 9.9 billion (USD 10.69 billion) in 2022.
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. Challenges in the future could include the shortage of labor, the costs of labor, and supply chain disruptions, according to Stefan Zecha, Chairman of the precision Tools Association. Positive signals are coming from the striving renewable energy production and their need for mechanical components, resulting in growing orders for cutting tools. Increasing order intakes are also seen for turning and milling machine tooling.
Sensors and Measuring Technology
Sensors and measurement technology are another growth subsector. In 2022, the annual turnover of all market players was estimated at EUR 35 billion (USD 37.8 billion). 2,500 companies and institutes employed about 250,000 people. In the first quarter of 2023 we have seen a growth rate of 7 percent, compared to the previous year. The export quota rose by 15% to 65 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.
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.
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.
Trade Events
• EMO – One of the world’s premier trade shows for the metalworking sector, Hannover, September 18-23, 2023
• formnext – International exhibition for additive manufacturing technologies and tool making, Frankfurt, November 7-10, 2023
• Hannover Messe – The world’s leading trade fair for industrial transformation, Hanover. April 22- 26, 2024
• SENSOR+TEST – The leading international trade fair for sensor, measuring, and testing technology, Nuremberg, June 11-13, 2024
• automatica – The leading exhibitions for smart automation and robotics Venue: Munich, June 24-27, 2025
• Schweissen & Schneiden – One of the world’s premier trade shows for the welding sector, Essen, September 15-19, 2025