Germany is one of the most highly developed industrial nations in the world and, after the USA and Japan has the world’s third largest national economy. With a population of 82.5 million Germany is also the largest and most important market in the European Union (EU). In 2004, Germany’s gross domestic product (GDP) totaled EUR 2.16 trillion, which translates into per-capita GDP of EUR 26,856. This figure can be attributed primarily to foreign trade. With an export volume of EUR 734 billion or one third of GDP in 2004, Germany is the biggest exporter of goods worldwide, and as such is considered to be the “export world champion”. The engine room behind this foreign trade is first and foremost industry, which accounts for some 84 percent (2004) of total Exports, making it more of a global player than almost any other country. The most important economic centers in the country are the Ruhr region (formerly characterized by heavy industry it is developing into a hub for high-tech and service providers), the Munich and Stuttgart conurbations (high-tech, automobiles), Frankfurt/Main (finance), Cologne, Hamburg (port, Airbus construction, media) and Leipzig.
In comparison with other countries, the living standard in Germany is extremely high. The average gross monthly income of a laborer is around EUR 2,500 and that of salaried employees EUR 3,400. Germany is also well- known for its price stability policies – in 2004 the rate of inflation was a mere 1.7 percent.
Currently the Germany economy is facing structural problems, in particular with regard to the welfare systems and the labor market. In late 2005 the unemployment rate was 9.4 percent in the West and 17 percent in the five new federal states in eastern Germany. In addition, the country is grappling with the enormous financial burden of reunification, which involves annual transfers of around EUR 80 billion. For this reason over the past few years the annual growth rate has only hovered around the one percent mark.
Sector Report: German Automotive Prowess
Germany would not be the industrial powerhouse it is today without the automobile. Combining engineering excellence with timeless design and utilitarian value, German cars have been defining the virtues of the country‘s manufacturing sector for decades.
In 2005, sales in the German automotive industry rose to a new record high of 236 billion euros. That reaffirmed the status of car manufacturing as the country‘s most important industrial sector by far. Sales increased by four percent across the board in 2005, the twelfth consecutive increase in a row.
Despite increased competition from abroad, the German automotive industry has managed to maintain its position in the market, particularly at the higher end of the scale. Overall German automotive companies have more than doubled their sales over the past ten years. Meanwhile, the car industry has raised its profile within Germany‘s own diverse industrial landscape , accounting for an ever greater share of the country‘s total industrial sales. While ten years ago sales of automotive products made up 12 percent of the overall turnover in the German industrial sector, in 2005 that figure had risen to a full 19 percent.
Most of the products manufactured by the German car industry are exported, with the lion‘s share going to the United States. Altogether, exports of German automotive products totaled 141 billion euros in 2005. That represents a four percent increase on the previous year. The German Association of the Automotive Industry (VDA) attributes the export growth in part to a “global trend towards premium vehicles and diesel automobiles”. According to VDA statistics, one out of every five motor vehicles produced worldwide in 2005 bears the name of a German manufacturer (including Chrysler). These manufacturers turned out 13.5 million vehicles during the year. In Germany itself, the country‘s carmakers produced 5.8 million vehicles, a three percent increase on the previous year. In a global context Germany ranks third (after the US and Japan) in terms of total vehicle production.
Of the many factors that account for the sustained success of Germany‘s automotive sector, two stand out: continuous innovation and a first-rate work force. As far as innovation is concerned, the industry is constantly seeking to improve on the systems that help to make driving cars safe, economical and – yes – fun. It‘s a tradition that goes all the way back to 1887, when Karl Benz first attached an internal combustion engine to a carriage – thus dispensing with the horse. Today the Ger-man automotive industry spends some 16 billion euros on research and development annually and registers more than 3,600 patents.
Obviously, the engineers and technicians who come up with these improvements have done their homework. An increasing number of the 766,000 employees in the Ger-man automotive sector hold degrees directly or indirectly related to their industry. Aspiring carmakers have dozens of automotive technology degree programs to choose from at universities around the country.
Finally, German carmakers are exploiting the country‘s leading position in environmental technology to develop the next generation of automobiles, vehicles that will help meet the need for cleaner air and make better use of dwindling natural resources.
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