German Industry relies on Germany


As new figures from the survey “Modernization of Production“ conducted by the Fraunhofer Institute for Systems and Innovation Research ISI show, in the last few years only a small number of German companies relocated research and development capacities (R&D) abroad. A sale of German development competences, as it was feared in the mid-2000s, is therefore no longer an issue. However, the research location Germany has to improve in different technology fields so that in future new key technologies are not developed abroad. All research results on relocation activities in the area of R&D can be found in the new Mitteilung Nummer 68 of the survey “Modernization of Production“.

Between 2010 and 2012 only about 1.4 percent of German companies relocated research and development capacities (R&D) abroad – as new research results of the survey “Modernization of Production“, which the Fraunhofer ISI conducts every three years, reveal. The figures refute the assumption that development competences could increasingly leave Germany. In 2012 the proportion of German companies with their own R&D capacities abroad was approximately 5 percent.

Dr. Christoph Zanker, author of the new Mitteilung 68 “Global R&D activities of German companies“, assesses the figures as follows, “Our survey results show that in recent years German companies from the manufacturing industry relocated considerably fewer research and development activities abroad than in the mid-2000s. The situation had previously been similar for the relocation of production facilities. This shows that Germany is attractive as a location for production and research“. According to Djerdj Horvat, co-author of the study, primarily large German companies increasingly conduct research abroad: “At least 60 percent of large German companies have research locations abroad. For large medium-sized enterprises the figure comes to 17 percent. For small and medium-sized companies, depending on the number of employees, it is not more than between two and six percent”. When looking at R&D relocation activities of different industries between 2010 and 2012, particularly companies in the high-tech sector such as automobile construction (22%); the chemical industry (14%) and the electrical and mechanical engineering industry (together about 30%) stand out.

The research results also show which countries and regions German companies relocate to most often: The most important target region at 57 percent still remained Europe although compared to the period 2007 to 2009 there was a decrease of 14 percent. On the other hand 36 percent relocated to China, which is virtually double. North America was also an attractive place for relocation at 15 percent.

“Despite these positive findings the efforts to further develop the industrial research location Germany should not be cut back, on the contrary“, says Dr. Zanker. Already today the shortage of qualified R&D personnel is noticeable. In future, the skills shortage could get worse and drive companies abroad. Furthermore, in many technology fields there are currently signs of innovation leaps. For example, information and communication technologies in core sectors of German industry are currently becoming increasingly important. However, Germany is not a global leader in all areas of technology. Therefore companies could in future advance the development of new key technologies at locations abroad so they do not lose out internationally – however, this would mean that Germany is seriously weakened as a location for innovation.

The Fraunhofer Institute for Systems and Innovation Research ISI analyzes the origins and impacts of innovations. We research the short- and long-term developments of innovation processes and the impacts of new technologies and services on society. On this basis, we are able to provide our clients from industry, politics and science with recommendations for action and perspectives for key decisions. Our expertise is founded on our scientific competence as well as an interdisciplinary and systemic research approach.