Germany is the largest economy in the EU, and it’s the second most populous country. It is the fifth largest economy in the world.
After WWII, Germany was divided into two sectors, the FRG (West Germany) and the GDR (East Germany). In 1990, after the end of the Cold War, Germany was reunified, and the country has invested heavily in improving infrastructure, productivity and wages. Germany adopted the Euro in 1999.
The country has a total area of 357,022 sq. km and borders the Baltic Sea, the North Sea and other countries including the Netherlands, Poland, Austria, Belgium, the Czech Republic, Denmark, France, Luxembourg and Switzerland. Its population is evenly distributed across the country.
Manufacturing in Germany
Typical manufacturing products made in Germany include machinery, vehicles, machine tools, electronics, food and beverages, textiles and shipbuilding. It is among the world’s largest and most advanced producers of iron, steel, coal, chemicals and cement.
Industrial production is growing at about 3.3% annually as of 2017. Manufacturing suffers slightly from a lack of investment, but the government introduced a series of stimuli and tax cuts designed to improve productivity. The manufacturing sector invested 53.4 billion euros in R&D in 2016.
Other Important Industries
Consulting, transportation, tourism, telecommunications, and banking are important service industries in Germany. In fact, the services sector makes up 68.6% of the GDP and employs 74.3% of the labor force.
Agriculture uses only about 0.7% of the labor force, but it is very productive. Key commodities include potatoes, wheat, barley, sugar beets, fruit, cabbage, milk, cattle, pigs and poultry. The country devotes 48% of its land to agriculture.
Supply Chain Infrastructure for Manufacturing
Transportation and communication are robust in Germany. Coupled with its advantageous location in Europe, this fact makes Germany an excellent location for manufacturing and distribution.
There are 318 airports with paved runways in Germany, which moved about 6.9 billion mt-km of goods in 2015. The healthy air infrastructure ensures that manufactured goods and raw materials can move quickly to and from all parts of the globe.
Germany ranks number 7 in the world for km of rail, 12th in the world for roads and 18th for inland waterways, making it fast and easy to ship by almost any method. The country has major seaports on the Baltic Sea and container ports in Bremen and Hamburg. There are also numerous river ports, an LNG terminal for import and oil terminal on the Brunsbuttell Canal. Whether you choose to ship by rail, water, truck or air, the movement of goods is fast and efficient.
Germany’s labor force is about 45.9 million people. Industry employs 24.2% and services 74.4%. As noted earlier, agriculture accounts for a very small percentage. The unemployment rate is 3.8%, down from 4.8% in 2016.
Overall, the German workforce is well educated and highly skilled, but it can be difficult to attract or retain people with sought-after manufacturing skills.
At around $4.199 Trillion in 2017, Germany’s economy is number 5 in the world and the largest economy in Europe. There is a strong demand for manufactured goods, particularly German automobiles, which have a global reputation for quality. The economy is growing at about 2.5% annually. The government is stable and business laws are clear-cut, making it highly attractive for businesses.
In 2017, Germany exported $1.434 Trillion worth of goods. Its trading partners included the U.S., France, China, Netherlands, the U.K., Italy, Austria, Poland and Switzerland. Export commodities include automobiles, machinery, chemicals, computer and electronic products, electrical equipment, pharmaceuticals, metals, food, textiles, rubber and plastic products.
Germany imported around $1.135 Trillion in 2017. The primary commodities included machinery, computers and data processing equipment, vehicles, chemicals, oil and gas, metals, electrical equipment, pharmaceuticals and food and agricultural products. Its main import partners included the Netherlands, China, France, Belgium, Italy, Poland, the Czech Republic, the U.S., Austria and Switzerland. Germany is an excellent location for manufacturers because of the proximity of raw materials and the ready market for finished goods.
Germany’s current constitution went into effect in May 1949. It is a federal parliamentary republic. There are 16 states, and the current chancellor is Angela Merkel. Since March 2017, the president is Frank-Walter Steinmeier. The next election is scheduled for February 2022.
Taxes equal 45% of the GDP, making Germany number 22 in the world for taxes. The corporate tax rate is about 30-33% with trade tax and solidarity taxes, but the total tax and contribution rate can reach as high as 48.8% of profit. Tax payments must be made nine times per year.
Starting a business in Germany is quick and easy but be aware that the paid-in minimum capital may be nearly 30%.
Getting Down to Business
Doing business in Germany can be simple and profitable because of its stability, highly-developed infrastructure and central location. QAD is able to adapt to any style of manufacturing and to the needs of all geographic locations, and QAD Internationalization enables companies to identify and overcome the challenges associated with taxes, regulations and globalization for true global manufacturing.
How would you describe the state of Manufacturing in Germany.? Learn more about manufacturing and doing business in other great countries around the world.