Germany has got a lot to offer as an industrial location

According to a new study by Kienbaum called „Wege aus der Standortfalle“ there are quite a lot of reasons for companies to chose Germany as an industrial location. For this study more than 100 top managers from traditional lines of industry such as mechanical and plant engineering, car manufacturing and the chemical and pharmaceutical industry were interviewed. Examples of the advantages which Germany offers as an industrial site are access to high technology, its service level as well as individual co-operations with clients with regard to research and development. In this respect Germany has much more to offer than industrial sites in Eastern Europe, China and India. The most important advantage of Germany, however, is the potential of German employees.

With regard to criteria such as experience, quality, availability and productivity of highly qualified people Germany has some very big competitive advantages to offer by international comparison. Additional strengths are advanced and well-established production processes, punctual deliveries and innovation potential. With regard to short development periods, the flexibility and motivation of employees, however, the findings of the study suggest that there is room for improvement in Germany.

According to the findings of the study, more than fifty percent of the companies interviewed plan to set up plants abroad. In particular businesses from the field of mechanical and plant engineering have such plans. It was also revealed that the willingness to relocate abroad increases with the size of a company.

The most important reason for relocating abroad is personnel costs. However, it was found out that the cost advantage gained by relocating abroad has to amount to at least 23.3% in order for a company to put relocation plans into practice. With regard to major companies which already have accumulated experience abroad the cost advantage reference value for relocating is about 10 percent lower.

According to the study, however, the personnel cost advantages to be gained outside Germany are becoming smaller and smaller. Labour cost increases in Eastern Europe for instance are currently between 10 and 25 times higher than in Germany. 11% of respondents said that they would relocate even if there were no cost advantages to be gained abroad. This may be due to the fact that about 60% of those interviewed consider “market entry” and “being close to clients” as even more important reasons for relocation abroad in the future. GERMAN