Economy, Manufacturing and Industry

Manufacturing and Industry

Manufacturing and industry have long been important to German economic development, although recent global and European trends are forcing changes upon the German economy. Industry helped the country recover economically from World War II and from the unification of East and West Germany. Although the economy has long been moving in the direction of services, manufacturing and industry are still important in the country and accounted for 35 percent of the gross domestic product (GDP) in 1995. Germany is a leading producer of such products as iron and steel, cement, chemical products, electronics, food and beverages, machinery and machine tools, and motor vehicles.

Large-scale manufacturing enterprises are concentrated in several areas. The most important industrial area encompasses the state of North Rhine-Westphalia, which includes the steel-producing Ruhr region. The Ruhr region is one of the most intensely developed industrial areas in the world, and a large majority of Germany’s iron, steel, and bituminous coal comes from this area. Its early and intense development also make this region the equivalent of a rustbelt area in the United States, where traditional manufacturing is in decline and unemployment is high. The area around the confluence of the Rhine and Main rivers forms another major industrial region, comprising the cities of Frankfurt am Main, Wiesbaden, Mainz, and Offenbach. They produce metals, electronic equipment, pharmaceuticals, chemicals, and motor vehicles. To the south, Stuttgart and Munich are also manufacturing hubs. Their products include aircraft, textiles and clothing, office machinery, optical instruments, and beer. Berlin, the Hannover-Brunswick area, and the port cities of Hamburg, Bremen, Kiel, and Wilhelmshaven are other important industrial centers.

Since unification, East German industry has suffered from a number of problems stemming from the long years when it was protected from international and West German competition. Some industries—such as chemicals and plastics, shipbuilding, textiles, and motor vehicles—lost their markets to superior or less expensive West German or foreign products. All suffered from redundancy of labor, which made it necessary to halve most of the industrial labor force, leading to mass unemployment. Most industrial equipment was antiquated, and it especially lacked the automated and computerized advancements that had swept Western industry in the 1980s. After unification in 1990, Germany broke up most large eastern corporations and transferred them from state ownership into private hands. Some enterprises were taken over by their own managers; most were bought in bits and pieces by West German or foreign investors. By the late 1990s, former East Germany was well on its way in moving from a predominantly manufacturing economy toward an increasingly service-oriented economy.