When the industry of the world comes together at the Hanover Fair these days, everything revolves around the focus on transformation. Rarely before has a key topic been so topical: the change that almost all companies are going through is fundamental, challenging and, in view of climate change, there is no alternative. The trade fair is important right now because it makes a very important dimension of the industry visible: innovations.
When one speaks of the importance of industry for Germany, it is mostly about the approximately 7.5 million people who are employed in the manufacturing sector, or it is about the share of a good 23 percent that the industrial sector contributes to gross value added.
According to the German Economic Institute, a remarkable 86 percent of all patent applications in Germany come from industrial companies and closely associated service providers.
The industrial core sector alone accounts for more than 78 percent of patent applications. And this despite the fact that of all those in employment, only just under one in four works in industry.
The wave of innovation is primarily triggered by the considerable preliminary work that industrial companies put into the basic work. According to the Stifterverband für die deutsche Wissenschaft, of the 98.5 billion euros that companies invested in research and development in 2019, a good 85 billion euros came from the manufacturing industry, the largest share of which incidentally came from motor vehicle construction.
In the fight against climate change, we need more innovations
Of course, companies don’t allocate so much money to their development departments for the sheer joy of research. But because they know very well that a cost-intensive industry like the one in Germany can only ensure its success with products and processes that are among the very best in the world.
This innovative strength is now more necessary than ever. If we want to make our economy, our mobility, our everyday life climate-neutral, we need more technical solutions and not fewer.
Industry, as we all know, has not only contributed to prosperity in recent decades, but also to climate change. But now it can go from being part of the problem to being part of the solution.
Much has already been achieved – whether heat pumps or wind power, fuel cells or biomass. In order to further accelerate this transformation, we need growth and technical progress.
In this respect, it is worrying when the European Patent Office states in its most recent overview that the number of reports from Germany has fallen to its lowest level in more than a decade. Or when the German Reconstruction Loan Corporation has been reporting declining innovation activities in SMEs for years.
Germany is not threatened by an industrial exodus
These are not good signs. Some doomsayers already see German industry crumbling away like the autobahn bridges on the Sauerland line. In fact, German companies not only set up production lines abroad, but also research laboratories.
This results from the necessary proximity to customers and markets. But to knit an industrial exodus out of this is, in my opinion, an exaggeration.
Of course, the industry will change massively. But it does not necessarily have to shrink dramatically. Yes, one or the other particularly energy-intensive company may soon go where green electricity or green hydrogen are easier to get than under our gray skies.
>> Also read: Billions for cleantech companies – EU proposes new investment fund
On the other hand – and this is just one example – the price pressure will mean that many companies will develop even more efficient processes. And then there are opportunities again.
In any case, the federal government assumes that the greentech sector will contribute almost a fifth to the gross domestic product by 2025. However, the great transformation will only be successful if we largely leave the way to the common goal of climate protection to the market. Nothing chokes off innovation as reliably as exaggerated dirigisme.
So in ten or twelve years we will see a different economy in Germany. Whether this will be weaker or stronger than today depends on various factors: We must be able to offer electricity from renewable energies at tolerable prices; we must significantly expand the digital infrastructure, streamline bureaucratic processes and strengthen European cohesion.
Above all, however, we should finally agree on a coordinated immigration and education policy. And, of course, every innovation also needs specialists who then implement the technology: without electricians, there is no electricity – even the most modern power plant is useless. The path is clear: we shouldn’t paint it black, but lead the way.
The author: Stefan Hartung is the chairman of the Bosch board of management.
More: Are these seven technologies answers to current crises?