German industry is experiencing a deep structural break, but experts say this does not amount to deindustrialisation. Three studies from the Ifo Institute, the German Economic Institute (IW) and the Bertelsmann Foundation-a finding reported by the “Frankfurter Allgemeine Zeitung”-lead to this conclusion.
A striking and central result is that 76 percent of the manufacturing sector’s gross value added comes from industries whose products have seen steadily increasing demand over the past five years. In other words, most German companies are largely focused on growth-oriented products, from pharmaceuticals and semiconductors to machine building.
Even in sectors that are often considered to be in crisis-such as metal production and chemicals-the research shows that the growth segments dominate. The automotive industry remains a major concern, with nearly 900 000 jobs. Competition has intensified, and German car exports to China have fallen by roughly half in a few years, indicating that a shift toward growth products has not yet been achieved.
The researchers urge policymakers to move away from preserving outdated structures and, instead, to create innovation‑friendly conditions. They propose a model in which research and development take place in Germany while production occurs abroad, provided that capital markets, the tax system and regulation are redesigned to support innovation. In the end, the studies paint a nuanced picture: a somewhat gray one. Oliver Falck of the Ifo Institute sums it up by saying, “I would not bet against German industry. I see absolutely positive developments”.
