Industry 4.0: Upgrading of Germany's Industrial Capabilities on the Horizon

Abstract

Industry 4.0 will upgrade Germany’s industrial capabilities. With trade flows becoming increasingly internationally interlinked, automation, more flexible processes as well as horizontal and vertical integration are becoming more important features in a modern, competitive production structure. Germany in particular with its especially favourable fundamental features will find that “Industry 4.0” (aka integrated industry) provides a major long-term opportunity for the country to consolidate its leading position in the global marketplace – even against its fast-growing emerging market competitors.

Germany has been and will remain an industrial heavyweight, creating one-third of the EU’s value added. German firms create one-third of the EU’s total industrial value added. A long way behind comes Italy, followed by France, the UK and Spain. Since in other countries the value added share is steadily on the decline, Germany should retain its leading position as the industrial backbone of the EU for the foreseeable future.

The potential for upgrading industry is particularly pronounced in Germany. Industry 4.0 can progress if there is close exchange between the fields of electronics, electrical engineering, mechanical engineering and IT. With this approach Germany has special strengths as the “factory outfitter of the world”. These strengths are based on the country’s good general education system, its established development partnerships between suppliers and users, its market leadership in plant and mechanical engineering, its strong and dynamic SMEs and its position as the leading innovator in automation methods.

Keywords: Industry 4.0, digitalization, communications, innovation, industrial change, ICT

JEL Classification: L60, O31, O32, O33